Ppl Corporation · NYSE:PPL
Ppl — Investor Day (August 2005)
82 slides from Ppl's investor day presentation, Aug 2, 2005
Slide 1: Analyst Meeting
Analyst Meeting August 2, 2005
Slide 2: Bill Hecht, Chairman and Chief Executive Officer
Bill Hecht Chairman and Chief Executive Officer 1
Slide 3: What's New
What’s New Higher earnings forecast – ’05 $3.80-$4.20 $4.00-$4.20 Initial forecast – ’06 $4.30-$4.50 Higher long-term growth rate 3-5 % 6-7 % thru 2010 Higher dividend $1.84 $2.00 Stock split 2 for 1 2
Slide 4: What's Not New
What’s Not New Management Culture Operational execution Financial discipline Delivery on Promises Strategic Foresight 3
Slide 5: Key Questions
Key Questions What is PPL’s long-term direction? What is management’s focus? How is PPL going to grow? Why own PPL stock? 4
Slide 6: What We Do
What We Do Generation in two key markets Northeastern quadrant of U.S. Western U.S. Asset-backed marketing and hedging Regulated delivery Pennsylvania, United Kingdom, Latin America 5
Slide 7: Two Generation Markets Provide Clear Advantage
Two Generation Markets Provide Clear Advantage Less correlated markets Increased returns Reduced risk East Most liquid markets – PJM Largest concentration of assets Quality, low-cost assets West High prices Quality, low-cost assets Scale 6
Slide 8: A Balanced Business Model
A Balanced Business Model Competitive generation Growth opportunity Regulated delivery Stable returns Hedging opportunity Key advantage when wholesale prices fell 7
Slide 9: International: A Logical Part of the Mix
International: A Logical Part of the Mix Regulated delivery – a business we know United Kingdom Using operational skills to create value Progressive regulation High return Quality assets Chile Using operational skills to create value Top-line growth Strong economy Satisfied wit
Slide 10: Building Blocks for Growth
Building Blocks for Growth Generation asset upgrades Improved plant availability Expiration of long-term supply contracts Growth of electricity delivered 9
Slide 11: Why Own PPL Stock
Why Own PPL Stock - ’10) R (’05 C A G $6.00 6-7% $5.50 $5.00 $4.40 * $4.10 * $3.72 $4.00 $3.00 $2.00 $1.00 $0.00 2004A 2005 2006 2010 *Midpoint of forecast Target Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations 10
Slide 12: Agenda
Agenda PPL’s Growth Story – William F. Hecht Second Quarter Results – John R. Biggar Supply Business – James H. Miller Generation – Bryce L. Shriver International Delivery – Rick L. Klingensmith Financial Outlook – John R. Biggar Q&A 11
Slide 13: John Biggar, Executive Vice President and Chief Financial Officer
John Biggar Executive Vice President and Chief Financial Officer 12
Slide 14: Strong Second Quarter 2005 Results
Strong Second Quarter 2005 Results Earnings from Ongoing Operations Millions Per share $200 $175 $1.00 $0.91 $175 $0.72 $132 $150 $0.75 $125 $100 $0.50 $75 $50 $0.25 $25 $0 $0.00 2Q 2004 2Q 2005 2Q 2004 2Q 2005 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing
Slide 15: Increased Per Share Earnings From Ongoing Operations - Second Quarter
Increased Per Share Earnings From Ongoing Operations - Second Quarter (Dollars per Share) Quarter Ending June 30 2005 2004 Change Supply $0.45 $0.47 $(0.02) Pennsylvania Delivery 0.18 0.01 0.17 International Delivery 0.28 0.24 0.04 $0.91 $0.72 $0.19 Note: See Appendix for the per share reconciliatio
Slide 16: Supply Segment Second Quarter Earnings Drivers
Supply Segment Second Quarter Earnings Drivers (Dollars per Share) 2004 Earnings from Ongoing Operations $0.47 Earnings Drivers: Margins- East $(0.04) Margins- West - Synfuel 0.04 Dilution (0.02) (0.02) 2005 Earnings from Ongoing Operations $0.45 Note: See Appendix for the per share reconciliation o
Slide 17: Growth in Second Quarter Delivery Earnings
Growth in Second Quarter Delivery Earnings (Dollars per Share) Pennsylvania International Delivery Delivery 2004 Earnings from Ongoing Operations $0.01 $0.24 Earnings Drivers: Electric Delivery Margins 0.15 0.05 Pension Expense - (0.03) Dilution - (0.01) Currency Effect - 0.01 Other 0.02 0.02 2005 E
Slide 18: Solid Year-To-Date 2005 Results
Solid Year-To-Date 2005 Results Earnings from Ongoing Operations Millions Per share $500 $2.50 $381 $1.99 $400 $2.00 $1.75 $317 $300 $1.50 $200 $1.00 $100 $0.50 $0 $0.00 YTD 6/30/04 YTD 6/30/05 YTD 6/30/04 YTD 6/30/05 Note: See Appendix for the reconciliation of reported earnings and earnings from o
Slide 19: Forecast Reflects 10% Increase in Earnings From Ongoing Operations
Forecast Reflects 10% Increase in Earnings From Ongoing Operations EPS $4.50 $4.00 - $4.20 $4.00 $3.72 $3.50 $3.00 2004 2005 Forecast Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations 18
Slide 20: Initial Earnings Forecast - 2006
Initial Earnings Forecast - 2006 EPS $4.50 $4.30 - $4.50 $4.00 - $4.20 $4.00 $3.72 $3.50 $3.00 2004* 2005* 2006 *Earnings from ongoing operations Forecast Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations 19
Slide 21: Jim Miller, President and Chief Operating Officer
Jim Miller President and Chief Operating Officer 20
Slide 22: Energy Supply Is a Growing Portion of PPL's Earnings
Energy Supply Is a Growing Portion of PPL’s Earnings Energy Supply Percentage of PPL Corporation Earnings 70% 70% 65% 63% 60% 54% 50% 2005 2006 2007 2010 21
Slide 23: Strong Growth in Energy Supply Margins
Strong Growth in Energy Supply Margins Supply Margins (Millions) Key Drivers: • 2005-2009 annual POLR increases $2,150 • Plant uprates and availability • New wholesale contracts $2,000 • POLR expiration in 2009 $1,820 $1,790 $1,730 $1,680 $1,580 $1,560 $1,500 2004A 2005 2006 2007 2008 2009 2010 22
Slide 24: Key Drivers of Margin Growth
Key Drivers of Margin Growth Supply Margins (Millions) POLR expiration in 2009 Plant uprates and availability $2,000 New wholesale contracts Annual POLR price increases 2005 Base $1,500 2005 2006 2007 2008 2009 2010 23
Slide 25: Improved Earnings and Reduced Risk by Actively Managing Fuel Supply
Improved Earnings and Reduced Risk by Actively Managing Fuel Supply Percent Hedged Current Hedge Percentages 120% 100% 90% 84% 80% 2005 60% 2006 40% 2007 20% 0% Coal Nuclear Average fuel and emissions cost for our generation fleet less than $16/MWh through 2010 24
Slide 26: Demand Has Pushed SO2 Prices Higher
Demand Has Pushed SO2 Prices Higher Price per Allowance $1,000 $900 $800 SO2 Actual $700 SO2 Market $600 S02 $500 $400 $300 $200 $100 $0 Jan 04 June 05 2006 2008 2007 2009 2010 July 04 Jan 05 Jan 03 July 03 25
Slide 27: Improved Earnings and Reduced Risk by Actively Managing Emission Allowances
Improved Earnings and Reduced Risk by Actively Managing Emission Allowances Percent Hedged 120% 105% 100% 80% 2005 60% 2006 40% 2007-2010 Avg 20% 0% SO2 NOX 26
Slide 28: Proactive Coal Supply Management Supports Growth in Margins
Proactive Coal Supply Management Supports Growth in Margins 2005 Coal Supply Powder River Basin Montana Supply region diversity Mine-mouth Central PA 5% Fleet trains (>1200 cars) 20% 27% Average delivered costs Central 10% Appalachia 10% increase from 2005 to 2006 38% 4% annual inc
Slide 29: Shrinking Reserve Margins Create More Value for PPL
Shrinking Reserve Margins Create More Value for PPL Reserve Margin a cit y value 30% as ing cap Incr e 20% 10% 2005 2006 2007 2008 2009 PJM Expected Reserve Margin 15% Reserve Margin 28
Slide 30: Additional Value Drivers (Margins)
Additional Value Drivers (Margins) $1 per MW-day change in capacity price post-POLR ~ $3 million per year 1% change in equivalent availability ~ $20 million per year $1 per MWh change in electricity price ~ $10 million per year 2006-2009 ~ $57 million per year in 2010 10 MW increase in basel
Slide 31: Bryce Shriver, President – PPL Generation
Bryce Shriver President – PPL Generation 30
Slide 32: Generation Portfolio Focused on Two Markets
Generation Portfolio Focused on Two Markets Total Domestic Generation: 11,822 MW Upgrade Projects Planned: 255 MW Montana 1,259 MW 28 MW Maine 96 MW Connecticut 243 MW New York 159 MW Pennsylvania 9,225 MW 227 MW Arizona 300 MW Illinois 540 MW Operating Upgrade Projects Planned 31
Slide 33: Balanced Generation Mix Delivers Low-Cost Electricity
Balanced Generation Mix Delivers Low-Cost Electricity Generation Type Projected 2005 Production Nuclear Peaking 12% 31% Intermediate Hydro Gas/ 7% Oil 7% 22% 66% 55% Base-load Coal 2005 average fuel and emission allowance cost of less than $14/MWh 32
Slide 34: Operational Excellence Delivers Record Generation
Operational Excellence Delivers Record Generation Availability 94% >91% • Record generation 2002, 2003, & 2004 • 2005 availability > 91% (projected) 82% • 2007 target availability = 94% 2001 2002 2003 2004 2005 2006 2007 1% change in availability = $20 million in margin 33
Slide 35: Susquehanna Delivers Top Quartile Performance
Susquehanna Delivers Top Quartile Performance INPO Performance Indicator Index 110.0 100.0 98.6 98.1 98.7 98.7 99.3 99.0 99.3 98.4 99.5 99.0 98.9 Index Value . 90.0 86.2 80.0 70.0 2000 2001 2002 2003 2004 2005 April Susquehanna Threshold for Top Quartile YTD • Record generation four of the past five
Slide 36: Increasing Returns by Investing in the Fleet
Increasing Returns by Investing in the Fleet Generation Capital Millions $800 $738 $700 $79 $585 $600 $552 $82 $49 $500 $498 $400 $347 $297 $374 $300 $21 $ 251 $57 $200 $148 $50 $100 $156 $161 $144 $129 $128 $0 2005 2006 2007 2008 2009 Sustenance Environmental Economic Growth 35
Slide 37: Emission Controls Are Economically Compelling
Emission Controls Are Economically Compelling 1000 Current SO2 900 Allowance Price 800 Annual savings 700 > $70M by 2010 600 $/Ton 500 400 300 200 Capital O&M 100 0 2008 2009 2010 36
Slide 38: New Generation Increases Margins
New Generation Increases Margins Base-Load Unit Upgrade Projects in Progress MW Susquehanna extended power uprate 177 Montour/Brunner Island LP turbine projects 32 Colstrip HP turbine projects 20 Corette turbine upgrades 8 Other minor projects 18 Total 255 255 MW of Additional Generation ~
Slide 39: Top Performing Fleet Contributes to Shareowners
Top Performing Fleet Contributes to Shareowners By 2010 Operational Excellence 2004 Availability – 91% $60M/Yr Future Availability – 94% Increased Generation – 255 MW $100M/Yr Environmental Benefits $70M/Yr 38
Slide 40: Rick Klingensmith, President – PPL Global
Rick Klingensmith President – PPL Global 39
Slide 41: Energy Delivery
Energy Delivery United States United Kingdom Pennsylvania United Kingdom United Kingdom PPL Electric and PPL Gas Utilities WPD (South West) WPD (South Wales) 1.5 million customers 1.5 million customers 1.1 million customers El Salvador Del Sur 274,000 customers Latin America Chile Bolivia Emel Elfec
Slide 42: Solid Growth in Electric Delivery Unit Sales
Solid Growth in Electric Delivery Unit Sales (GWH) 90 CAGR 75.9 80 70.1 71.4 68.3 5.2 4.5% 70 4.0 4.2 4.4 Thousands 60 1.3% 28.4 29.3 29.7 30.8 50 40 30 1.8% 20 35.9 36.6 37.3 39.9 10 0 2004A 2005 2006 2010 Target Pennsylvania United Kingdom Latin America 41
Slide 43: Impressive International Delivery Performance
Impressive International Delivery Performance Since 2002, earnings from ongoing operations have increased 133% 2002 2005 est. Earnings per share $0.44 Î $1.00 - $1.05 42
Slide 44: 85% of International Earnings from United Kingdom Operations
85% of International Earnings from United Kingdom Operations United Kingdom Strong economy (rated “AAA”) and strong currency Well established regulatory framework Western Power Distribution Best-run electric delivery utility in the UK Award winning customer service 43
Slide 45: Latin America Investment Primarily in Chile
Latin America Investment Primarily in Chile Chile 5.5% to 6% per year real GDP growth Strong central bank (rated “A”) Highest growth rate in electricity delivery El Salvador and Bolivia “Dollarized” economy in El Salvador Bolivian operations remain profitable 44
Slide 46: Certain and Transparent Regulatory Frameworks
Certain and Transparent Regulatory Frameworks In the United Kingdom 5 year tariff cycles (next adjustment in 2010) Tariffs adjust with inflation Incentive regulation Capital expenditures plan reflected in rates In Latin America 4 and 5 year tariff cycles (next adjustments in 2008 and 2
Slide 47: International Delivery Works for PPL
International Delivery Works for PPL Concentration in the United Kingdom and Chile Regulatory structures have well-defined cycles and are incentive-based Cost effective, profitable operations Solid earnings contributor through active management 46
Slide 48: John Biggar, Executive Vice President and Chief Financial Officer
John Biggar Executive Vice President and Chief Financial Officer 47
Slide 49: Superior Total Shareowner Return
Superior Total Shareowner Return Value of Investment ($) $350 $300 $250 $200 $150 $100 $50 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 6/30/05 PPL Corporation EEI Index of Investor-owned Electric Utilities S&P 500 Index 48
Slide 50: Improving Cash from Operations
Improving Cash from Operations $ Millions $1,600 $1,400 $1,200 $1,000 $800 $600 2005 2006 2007 2008 2009 2010 Cash from operations related to transition bond maturities Cash from operations available to meet corporate cash needs Note: See Appendix for the reconciliation of cash flow measures 49
Slide 51: Cash Flow Forecast
Cash Flow Forecast $ Millions $900 $700 $500 $300 $100 -$100 2005 2006 2007 2008 2009 2010 Free cash flow before dividends $2.2 Billion of available credit facilities Note: See Appendix for the reconciliation of cash flow measures 50
Slide 52: Strengthening Balance Sheet
Strengthening Balance Sheet Through 2010 Total debt reduced by $330 million Equity grows by $2.1 billion 51
Slide 53: Improving Credit Metrics (PPL Energy Supply)
Improving Credit Metrics (PPL Energy Supply) A FFO Interest Coverage A- BBB+ FFO/ Total BBB Debt BBB- BB+ Total Debt/ Total Cap 2005 2006 2007 2008 2009 2010 Includes the impact of about $700 million in stock buybacks through 2010 Note: See Appendix for FFO definition 52
Slide 54: Key Drivers/Assumptions Through 2010
Key Drivers/Assumptions Through 2010 Increased prices and volume for POLR sales Capacity additions and improved capacity factors Increased fuel and O&M costs Loss of synfuel tax credits after 2007 Expiration of supply contracts provides opportunity to remarket generation at higher prices 5
Slide 55: Why Own PPL Stock
Why Own PPL Stock - ’ 10) (’0 5 C A GR $6.00 6-7% $5.50 $5.00 $4.40 * $4.10 * $3.72 $4.00 $3.00 $2.00 $1.00 $0.00 2004A 2005 2006 2010 *Midpoint of forecast Target Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations 54
Slide 56: Additional Value Drivers (Margins)
Additional Value Drivers (Margins) $1 per MW-day change in capacity price post-POLR ~ $3 million per year 1% change in equivalent availability ~ $20 million per year $1 per MWh change in electricity price ~ $10 million per year 2006-2009 ~ $57 million per year in 2010 10 MW increase in basel
Slide 57: Why Own PPL Stock
Why Own PPL Stock $5.50+ d e $6.00 GR Upsi + CA $5.50 % GR 6-7 C A 7% 6- $5.00 $4.40 * $4.10 * $4.00 $3.72 $3.00 2004A 2005 2006 2010 *Midpoint of forecast Target Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations 56
Slide 58: Appendix
Appendix
Slide 59: Ongoing Earnings vs Reported Earnings
Ongoing Earnings vs Reported Earnings (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending June 30, 2005 Reported earnings $40 $34 $54 128 Unusual Items: Sale of Sundance (47) (47) (47) - - (47) Earnings from ongoing operations $87 $34 $54 $175 Qtr. Ending June
Slide 60: Per Share Earnings Ongoing vs. Reported Earnings
Per Share Earnings Ongoing vs. Reported Earnings (Dollars Per Share) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending June 30, 2005 Reported earnings $0.21 $0.18 $0.28 $0.67 Unusual Items: Sale of Sundance (0.24) (0.24) (0.24) - - (0.24) Earnings from ongoing operations $0.45 $0
Slide 61: Increased Year-to-Date Per Share Earnings from Ongoing Operations
Increased Year-to-Date Per Share Earnings from Ongoing Operations (Dollars per Share) YTD June 30 2005 2004 Change Supply $0.95 $0.97 $(0.02) Pennsylvania Delivery 0.43 0.23 0.20 International Delivery 0.61 0.55 0.06 $1.99 $1.75 $0.24 A-3
Slide 62: Ongoing Earnings vs Reported Earnings
Ongoing Earnings vs Reported Earnings (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total YTD June 30, 2005 Reported earnings $126 $54 $116 $296 Unusual Items: PJM billing dispute (27) (27) NorthWestern litigation (6) (6) Sale of Sundance (47) (47) Stock-based compensatio
Slide 63: Per Share Earnings Ongoing vs. Reported Earnings
Per Share Earnings Ongoing vs. Reported Earnings (Dollars per Share) Pennsylvania International Supply Delivery Delivery Total YTD June 30, 2005 Reported earnings $0.66 $0.28 $0.61 $1.55 Unusual Items: PJM billing dispute (0.14) (0.14) NorthWestern litigation (0.03) (0.03) Sale of Sundance (0.24) (0
Slide 64: Supply Segment YTD June 30, 2005 Earnings Drivers
Supply Segment YTD June 30, 2005 Earnings Drivers (Dollars per Share) YTD 6/30/04 Earnings from Ongoing Operations $0.97 Margins- East $0.07 Margins- West (0.05) O&M (0.05) Synfuel 0.08 Dilution (0.05) Other (0.02) (0.02) YTD 6/30/05 Earnings from Ongoing Operations $0.95 A-6
Slide 65: Delivery Segment YTD June 30, 2005 Earnings Drivers
Delivery Segment YTD June 30, 2005 Earnings Drivers (Dollars per Share) Pennsylvania International Delivery Delivery YTD 6/30/04 Earnings from Ongoing Operations $0.23 $0.55 Earnings Drivers: Electric delivery margins 0.30 0.06 O&M (0.07) 0.03 Pension expense - (0.07) Dilution (0.01) (0.03) Other (0
Slide 66: Segment Data – Per Share Earnings from Ongoing Operations
Segment Data – Per Share Earnings from Ongoing Operations 100% 12% 21% 26% 25% 13% 75% 6% 12% 21% 50% 75% 73% 62% 25% 54% 0% 2002 2003 2004 2005 $3.54 $3.71 $3.72 $4.00 - $4.20 Supply Delivery International Forecast A-8
Slide 67: Reconciliation of Segment Earnings from Ongoing Operations and Reported Earnings
Reconciliation of Segment Earnings from Ongoing Operations and Reported Earnings 2004 Supply Delivery International Total Earnings from Ongoing Operations $2.31 $0.43 $0.98 $3.72 Unusual Items (0.03) 0.08 0.05 Earnings - Reported $2.28 $0.43 $1.06 $3.77 2003 Supply Delivery International Total Earni
Slide 68: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations Forecast * Actual High Low 2005 2005 2004 2003 2002 Earnings from Ongoing Operations (per share) $ 4.20 $ 4.00 $ 3.72 $ 3.71 $ 3.54 Unusual items (net of tax) Accounting changes: Stock-based compensation adjustment (0.03)
Slide 69: Reconciliation of Cash from Operations to Free Cash Flow before Dividends
Reconciliation of Cash from Operations to Free Cash Flow before Dividends 2005 2006 2007 2008 2009 2010 Cash from Operations 1,565 1,515 1,600 1,630 1,520 1,600 Less: Transition Bond Repayment 265 288 300 305 0 0 Capital Expenditures 870 1,231 1,361 1,143 907 816 Free Cash Flow Before Dividends 430
Slide 70: Reconciliation of GAAP and Adjusted Equity to Total Capitalization Ratios
Reconciliation of GAAP and Adjusted Equity to Total Capitalization Ratios Forecast 12/31/04 6/30/05 12/31/05 GAAP Equity to Total Capitalization Ratio 36% 38% 39% (millions of dollars) Adjustments to Debt Less Non-Recourse Debt: Transition Bonds 1,158 1,017 834 International 2,332 2,187 2,180 Adjust
Slide 71: Strong Dividend Growth
Strong Dividend Growth $/share Annualized 17% CAGR since 2001 $2.25 $2.00* $1.84 $2.00 $1.64 $1.75 $1.54 $1.44 $1.50 $1.25 $1.06 $1.00 $0.75 $0.50 $0.25 $0.00 2001 2002 2003 2004 2005 New 2005 Expected to reach 50% payout in 2006 *Annualized level beginning with the dividend payable October 1, 2005
Slide 72: Generation Portfolio Focused on Two Markets
Generation Portfolio Focused on Two Markets Total Domestic Generation: 11,822 MW Upgrade Projects Planned: 255 MW Montana 1,259 MW Montana 28 MW Maine 96 MW Coal 683 Oil 52 Coal (2005-2008) 28 Hydro 576 Hydro 44 Connecticut 243 MW Gas (CTs) 243 New York 159 MW Gas (CTs) 159 Pennsylvania 9,225 MW Coa
Slide 73: Visible Growth Opportunities
Visible Growth Opportunities Increases in POLR prices under contract with PPL Electric Utilities 60 $49.10 $50.20 $47.80 $48.40 50 $42.30 $42.70 $43.30 $44.10 40 ($/MWh) 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 Increases in POLR volumes A-15
Slide 74: Capital Expenditures by Business Segment
Capital Expenditures by Business Segment Millions of Dollars $1,600 $1,361 $1,231 $282 $1,143 $1,200 $290 $870 $247 $284 $907 $800 $734 $222 $286 $234 $290 $276 $203 $249 $400 $172 $832 $719 $625 $381 $368 $286 $0 2004 2005 2006 2007 2008 2009 Actual Forecast Supply Pennsylvania Delivery Internation
Slide 75: Growing Base of Energy Delivery Customers
Growing Base of Energy Delivery Customers 6 5.50 CAGR 5.03 5.14 5.20 5 1.28 3.0% 1.07 1.11 1.14 4 Millions 3 2.54 2.59 2.61 2.69 1.0% 2 1 1.42 1.44 1.45 1.53 1.2% 0 2004A 2005 2006 2010 Target Pennsylvania United Kingdom Latin America A-17
Slide 76: PPL Electric Utilities Rate Case Summary
PPL Electric Utilities Rate Case Summary Rate Request PUC Filed with the PUC Final Rate Order (millions of dollars) Distribution Revenue Increase $160.0 $137.1 Transmission Revenue Increase 57.2 57.2 Total T&D Revenue Increase $217.2 $194.3 Return on Rate Base 8.8% 8.4% Return on Equity 11.5% 10.7%
Slide 77: Highest Quality Customer Service
Highest Quality Customer Service J.D. Power Awards 11 awards for customer satisfaction More awards than any utility in the country American Customer Satisfaction Index (ACSI) 5 awards Highest scoring combination utility each year Highest overall utility score in 2005 Charter Mark Awa
Slide 78: International and Domestic Electric Delivery
International and Domestic Electric Delivery International Delivery Domestic Delivery Business Distribution, Distribution, Sub-transmission, Transmission, Metering, Default Supply, Customer Billing (LA) Customer Billing Service Area 17,000 sq. miles 10,000 sq. miles Customers 3.7 million 1.3 million
Slide 79: Credit Ratings
Credit Ratings Moody's Standard & Poor's Fitch PPL Corporation Issuer Rating BBB Subordinated Debt BBB- Senior Unsecured Baa3 BBB- BBB Short-term debt Outlook STABLE STABLE STABLE PPL Energy Supply Issuer Rating BBB Senior Notes Baa2 BBB BBB+ Commercial Paper P-2 A-2 F-2 Outlook STABLE STABLE STABLE
Slide 80: Credit Ratings (cont.)
Credit Ratings (cont.) Moody's Standard & Poor's Fitch PPL Transition Bond Co. Transition Bonds Aaa AAA AAA PPL Montana Pass-Through Certificates Baa3 BBB- BBB Outlook STABLE STABLE WPD Holdings Limited Issuer Rating Baa3 BBB- Senior Unsecured Debt Baa3 BBB- BBB- Commercial Paper A-3 Preferred Stock
Slide 81: 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, or reported earnings, which is an indicator of operating performance determined in accordance with GAA
Slide 82: Forward-Looking Information Statement
Forward-Looking Information Statement Statements contained in this presentation, including statements with respect to future earnings, revenues, expenses and pension costs, net income, credit profile, dividends, electric rates, capital structure, cash flows, cash from operations, capital expenditure