Slide 1: Second Quarter Earnings Webcast, August 3, 2006
Second Quarter Earnings Webcast August 3, 2006
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
W. F. Hecht J. H. Miller J. R. Biggar Agenda n Second Quarter 2006 Earnings and Review of Longer-Term Earnings n Second Quarter 2006 Operating Results and 2006 and 2007 Forecast n Dividend Growth, Improving Cash Flow and Stronger Balance Sheet n Q&A
Slide 4: Significant Increase in Second Quarter 2006 Earnings from Ongoing Operations
Per Share Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Significant Increase in Second Quarter 2006 Earnings from Ongoing Operations
Slide 5: 11% Long-Term Growth Rate
* Midpoint of $2.20 to $2.30 ongoing earnings forecast. * * Midpoint of $2.30 to $2.40 earnings forecast. *** Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. ** * Forecast 11% Long-Term Growth Rate
Slide 6: Ongoing Earnings Overview
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Ongoing Earnings Overview
Slide 7: Supply Segment Earnings Drivers
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Supply Segment Earnings Drivers
Slide 8: Pennsylvania Delivery Segment Earnings Drivers
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Pennsylvania Delivery Segment Earnings Drivers
Slide 9: International Delivery Segment Earnings Drivers
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. International Delivery Segment Earnings Drivers
Slide 10: 2006 Ongoing Earnings Contributions
(Dollars per Share) * Midpoint of forecast Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. $2.25* 2006 Ongoing Earnings Contributions
Slide 11: 2006 and 2007 Earnings Forecast
2006 and 2007 Earnings Forecast EPS *Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.08 (Dollars per Share) $2.20 to $2.30 $2.30 to $2.40
Slide 12: Per Share Earnings by Segment
$2.20 - $2.30* Forecast $2.08* $2.30 - $2.40 Forecast *Earnings from ongoing operations - see Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per Share Earnings by Segment
Slide 13: Supply Margins: Key Drivers of Margin Growth
3 Supply Margins (Millions) Key Drivers of Margin Growth
Slide 14: SO2 Allowance Position
SO 2 Allowance Position % Hedged SO 2 Price ($/ton)
Slide 15: Strong Dividend Growth
$/share Annualized Strong Dividend Growth 16% CAGR since 2001
Slide 16: Cash Flow Forecast
Millions Note: See Appendix for the reconciliation of cash flow measures. Cash Flow Forecast
Slide 17: Stronger Balance Sheet
Equity % Note: See Appendix for the reconciliation of GAAP equity to adjusted equity. Stronger Balance Sheet
Slide 18: 11% Long-Term Growth Rate
** * Forecast * Midpoint of $2.20 to $2.30 ongoing earnings forecast. * * Midpoint of $2.30 to $2.40 earnings forecast. *** Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. 11% Long-Term Growth Rate
Slide 19: Additional Value Drivers (Margins)
Additional Value Drivers (Margins) n $1 per MW-day change in capacity price post-POLR ~ $3 million per year n 1% change in equivalent availability ~ $20 million per year n $1 per MWh change in electricity price ~ $10 million per year 2006-2009 ~ $57 million per year in 2010 n MW increase in baseload
Slide 20: Appendix
Slide 21: Market Prices
A-1 (1) Market prices based on the average of broker quotes as of 6/30/2006. (2) 24-hour average. (3) NYMEX forward gas price on 6/30/2006. Market Prices
Slide 22: Current Hedge Positions - Electricity and Fuel
A-2 Current Hedge Positions - Electricity and Fuel
Slide 23: PPL's Generation Portfolio
East 10,263 MW Coal 3,814* Nuclear 2,120 Oil 1,722 Gas 1,524 Hydro 337 CTs 451 QFs 295 Nuclear Upgrade (2006-2008) 185 Coal Upgrade (2006-2009) 53 Coal 687 Hydro 602 West 1,289 MW Coal Upgrade (2006-2008) 20 Hydro Upgrade (2007) 12 PPL’s Generation Portfolio Total Domestic Generation: 11,552 MW Plan
Slide 24: PPL Supply Business Overview
Coal 39% Gas/Oil 32% Nuclear 18% Hydro 8% QFs 3% Coal 56% Gas/Oil 5% Nuclear 31% Hydro 8% n In 2006, 95% of our owned generation output is expected to be produced at a fuel cost of approximately $16/MWh or less. PPL Supply Business Overview Installed Capacity MW Production GWh
Slide 25: Proactive Coal Supply Management Supports Growth in Margins
Projected 2007 Coal Supply Central Appalachia Southwest PA Central PA Powder River Basin Montana Mine-mouth Proactive Coal Supply Management Supports Growth in Margins 21% 41% 12% 20% 6% n Supply region diversity n Fleet trains (1600 cars) n Average delivered costs n 5% annual increase 2006 to 2010
Slide 26: Key Drivers/Challenges Through 2010
Key Drivers/Challenges Through 2010 n Increased prices for POLR sales n Expiration of supply contracts remarketed at current forward prices n Power plant uprates n Net benefits from the installation of scrubbers at the Montour and Brunner Island coal-fired power plants n Increased fuel and O&M costs
Slide 27: Increasing Prices Under the POLR Contract
Increasing Prices Under the POLR Contract
Slide 28: New NorthWestern Contract Highlights
New NorthWestern Contract Highlights n FERC reaffirmed PPL Montana’s market-based rate authority n PPL Montana signed long-term electricity supply deal with NorthWestern Energy Period On-Peak Supply Off-Peak Supply 7/1/2007-6/30/2010 325 MW 175 MW 7/1/2010-6/30/2012 275 MW 150 MW 7/1/2012-6/30/2014
Slide 29: Scrubbers on Budget and Ahead of Schedule
Scrubbers on Budget and Ahead of Schedule
Slide 30: Improving Cash from Operations
Millions Note: See Appendix for the reconciliation of cash flow measures. Improving Cash from Operations
Slide 31: Reconciliation of Cash from Operations to Free Cash Flow before Dividends
(millions of dollars) Reconciliation of Cash from Operations to Free Cash Flow before Dividends
Slide 32: Reconciliation of GAAP Equity Ratios to Adjusted Equity Ratios
Reconciliation of GAAP Equity Ratios to Adjusted Equity Ratios
Slide 33: Capital Expenditures by Segment
Millions Capital Expenditures by Segment
Slide 34: Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations
(Millions of Dollars) Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations
Slide 35: Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations
(Dollars Per Share) Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations
Slide 36: Reconciliation of YTD Reported Earnings and Earnings from Ongoing Operations
(Millions of Dollars) Reconciliation of YTD Reported Earnings and Earnings from Ongoing Operations
Slide 37: Reconciliation of YTD Reported Earnings and Earnings from Ongoing Operations
(Dollars per Share) Reconciliation of YTD Reported Earnings and Earnings from Ongoing Operations
Slide 38: Reconciliation of Months Ending Reported Earnings and Earnings from Ongoing Operations
(Millions of Dollars) Reconciliation of 12 Mos. Ending Reported Earnings and Earnings from Ongoing Operations
Slide 39: Reconciliation of Months Ending Reported Earnings and Earnings from Ongoing Operations
(Dollars per Share) Reconciliation of 12 Mos. Ending Reported Earnings and Earnings from Ongoing Operations
Slide 40: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations
Slide 41: Credit Ratings
Mosdys Standard @ Poor's Fitch PPL Cotporation Iosuer Rati Baa? BBB Subordinated Debt BEB. Serior Unsecired Baa? BEB. BEB Shortierm debt Outlook STABLE STABLE STABLE PPLErergySupply Iosuer Rating BBB Serior Notes Baad BBB BBB+ Commercial Paper P2 AD F2 Outlook STABLE STABLE STABLE PPL Capital Fundin
Slide 42: Credit Ratings (continued)
Moov Slandand &Poots Fie PPL Tranetton Bond Co, Traneiton Bonds Aaa pon pon PPL Montana Pass-Though Certfioates Baas bee. Bee tle STABLE STABLE WD Holdings Lirited tesuer Rating Baas BEB. eee. Senior Uneecured Debt Bax2 Bee. Be. Commercial Paper re Preferred Stock utleae STABLE STABLE STABLE \WPD Ho
Slide 43: Forward-looking statements
Statements contained in this news release, including statements with respect to future earnings, energy prices, margins and sales, growth, revenues, expenses and pension costs, cash flows, cash from operations, dividends, credit profile, capital expenditures and generating capacity, are “forward-loo
Slide 44: Non-GAAP measures definitions
“Earnings from ongoing operations” excludes the impact of unusual items. Earnings from ongoing operations should not be considered as an alternative to reported earnings, or net income, which is an indicator of operating performance determined in accordance with generally accepted accounting princip