Ppl Corporation · NYSE:PPL
Ppl — Investor Presentation (September 2007)
36 slides from Ppl's investor presentation, Sep 4, 2007
Slide 1: PPL Facts
PPL Corporation (NYSE: PPL) is a Fortune 500 company with headquarters in Allentown, Pa. The Company’s diversified corporate strategy is to achieve growth in energy supply margins while limiting volatility in both cash flows and earnings and to achieve stable, long-term growth in regulated delivery
Slide 2: PPL Facts (cont.) Financial and Operating Information
PPL Facts (cont.) Financial and Operating Information Note: See Appendix for the reconciliation of reported earnings per share and earnings from ongoing operations. ii(Unaudited) ($ in millions, except per share amounts) 12 Months Ended June 2007 June 2006 Common Equity $5,369 $4,890 Preferred Equit
Slide 3: 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 4: Growing Shareowner Value
Growing Shareowner Value • Continued focus on execution of our current growth plan • Extract additional value from our energy marketing operations • Multi-faceted expansion of the generation portfolio • Complete previously announced divestiture plans 2
Slide 5: Optimize Energy Marketing
Optimize Energy Marketing • Expand marketing capabilities • Active participation in energy and commodity markets • Manage market, operational and financial risks 3
Slide 6: Shrinking Reserve Margins Create Potential Value for PPL
Shrinking Reserve Margins Create Potential Value for PPL Reserve Margin 4 5% 10% 15% 20% 2007 2008 2009 2010 PJM Mid-Atlantic Expected Reserve Margin PJM Required 15% Reserve Margin
Slide 7: Growing Constrained Region in PJM Increases Value of PPL Generation
Growing Constrained Region in PJM Increases Value of PPL Generation 5 Constrained Region Constrained Region Montour Brunner Island Holtwood Wallenpaupack Martins Creek Keystone Conemaugh Safe Harbor Lower Mt. Bethel PA Combustion Turbines Susquehanna Existing Constraint PJM Projected Constrained Reg
Slide 8: RPM Auction Provided Robust Prices
RPM Auction Provided Robust Prices 6 $111.92 $148.80 $210.11 $188.54 $197.67 $40.80 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 $180.00 $200.00 $220.00 Rest of Pool Eastern MAAC Southwest MAAC April 2007 Auction Results - 07/08 Planning Year July 2007 Auction Results - 08/09 Pl
Slide 9: Pennsylvania Generation Expansion
Pennsylvania Generation Expansion Montour/Coal1,542 MW +16 MW +600-800 MW Brunner Island Coal 1,483 MW +21 MW Holtwood Hydro 109 MW +125 MW Wallenpaupack Hydro 44 MW Martins Creek Coal, Gas, Oil 1970 MW Keystone Coal 211 MW Conemaugh Coal 278 MW Safe Harbor Hydro 140 MW Lower Mt. Bethel Gas 582 MWPA
Slide 10: Expanding Renewable Energy Portfolio
Expanding Renewable Energy Portfolio • Currently there are not enough renewable energy credits in the market • Plan to invest $100 million to develop renewable projects over next five years – Included in current capex program • Contracts in place with renewable energy facilities 8
Slide 11: PPL EU Completed First RFP for 2010
PPL EU Completed First RFP for 2010 • Solicitation for 850 MWs of residential and small commercial and industrial load • PUC approval of winning bids received July 26, 2007 • Based on first solicitation results, residential bills could increase by approximately 28% • Second solicitation bids due Oct
Slide 12: PPL Electric Utilities Distribution Rate Case Settlement
PPL Electric Utilities Distribution Rate Case Settlement $2,020 million Distribution rate base 43.1%Common equity 11.5%Return on equity $55.0 million$77.0 million Revenue increase Global Settlement PPL Electric Utilities Request 10 Fall 2007 ALJ to issue recommended decision (non-binding) By Decembe
Slide 13: PA Energy Legislation Update
PA Energy Legislation Update • Two energy-related bills recently enacted – HB1203 – Alternative Energy Portfolio Standard Act – HB1530 – Electric Choice and Competition Act • Amendments allow voluntary contracts between EDCs and industrial customers; • Allow EDC ownership of generation to serve larg
Slide 14: Special Session on Energy
Special Session on Energy • Begins September 17 and runs concurrently with regular legislative session • Remaining components of Governor's Energy Strategy to be addressed – Funding for alternative energy (asurcharge on customers’ bills) – Conservation and demand management – Governor proposed “leas
Slide 15: PPL Electric Utilities Initiatives
PPL Electric Utilities Initiatives • Complete the transition from generation rate caps in ways that foster trust and confidence • Rate design strategies • Energy efficiency and DSM programs • Education and outreach 13
Slide 16: Divestiture Update
Divestiture Update Assets Latin America El Salvador Bolivia Chile Telecom Gas Utilities Status SOLD SOLD Closing by end of 2007 SOLD Closing by end of 2008 14
Slide 17: Cash Flow Forecast
Cash Flow Forecast Millions -$300 -$100 $100 $300 $500 $700 $900 $1,100 2006A 2007 2008 2009 2010 Free cash flow before dividends 15 Note: See Appendix for the reconciliation of cash flow measures.
Slide 18: Continued Dividend Growth
$0.82 $0.92 $1.00 $1.10 $1.22 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 2004 April 2005 October 2005 April 2006 April 2007* $/share Annualized Continued Dividend Growth 16 *Annualized rate based on quarterly dividend declared in February 2007.
Slide 19: Strong Long-Term Earnings Growth
Strong Long-Term Earnings Growth 17 * Forecast $3.50 $2.45 $2.25 $0.00 $1.00 $2.00 $3.00 $4.00 2006A** 2007** 2010 To be updated later in 2007 ** Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. * Midpoint of
Slide 20: Strong Long-Term Earnings Growth
-Term Earnings Growth $4.00 $3.50) pdated later in $3.00 mer 58 $2.45* $2.00 $1.00 $0.00 + : : 2006A** 2007" 2010 Forecast * Midpoint of $2.40 to $2.50 eamings forecast. ~ Eamings from ongoing operations ~ See Appendix forthe per share reconciliation of reported earnings and earnings from ‘ongoing o
Slide 21: Market Prices
Market Prices EAST PJM On-Peak Off-Peak ATC (2) WEST Mid-Columbia On-Peak Off-Peak ATC (2) GAS (3) NYMEX TZ6NNY PJM MARKET HEAT RATE (5) Actual Forward (1) At 12/05 (4) 2006 2007 2008 2010 2010 8.5 $7.30 $7.25 $45 $39 $50 $51 $37 $62 8.08.48.28.5 $9.01$9.38$9.52$8.27 $8.00$8.36$8.41$7.24 $58$66$64$5
Slide 22: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions -Electricity and Fuel A-2 78%86%97%Total Coal 70%80%96%East 100%100%100%West 94%97%98%Total 77%100%100%West 97%97%97%East Electricity Sales 200920082007
Slide 23: PPL's Generation Portfolio
PPL’s Generation Portfolio Total Domestic Generation: 11,196 MW Planned Uprate Projects: 355 MW *Reflects reduction of 300 MW at Martins Creek that PPL has agreed to shut down by September 2007 and 60 MW expected loss due to increased plant usage during scrubber operation. A-3 Coal 3,454* Nuclear 2,
Slide 24: PPL Supply Business Overview
..In 2007, 94% of our owned generation output is expected to be produced at a fuel cost of approximately $16/MWh or less. PPL Supply Business Overview Production GWh A-4 Gas/Oil 32% Coal 39% Nuclear 18% Hydro 8% QFs 3% Installed Capacity MW Gas/Oil 6% Coal 56% Nuclear 30% Hydro 8%
Slide 25: Proactive Coal Supply Management Supports Growth in Margins
Proactive Coal Supply Management Supports Growth in Margins Projected 2007 Coal Supply • Supply region diversity • Fleet trains (1600 cars) • Average delivered costs – 4%-5% annual increase 2006 to 2010 A-5 Central PA 16% PRB 6% Montana Mine-mouth 21% Central Appalachia 12% Southwest PA 45%
Slide 26: Key Drivers/Challenges Through 2010
Key Drivers/Challenges Through 2010 • Increased prices for POLR sales • Expiration of supply contracts remarketed at current forward prices • Power plant uprates • Net economic benefits from the installation of scrubbers at the Montour and Brunner Island coal- fired power plants • Increased fuel and
Slide 27: Increasing Prices Under the POLR Contract
Increasing Prices Under the POLR Contract $42.30 $42.70 $43.30 $44.10 $47.80 $48.40 $49.10 $50.20 0 10 20 30 40 50 60 2002 2003 2004 2005 2006 2007 2008 2009 $/MWh A-7 Note: Includes Gross Receipts Tax (GRT) at a rate of 4.4%.
Slide 28: Scrubbers Expected to be Completed on Budget and on Schedule
Scrubbers Expected to be Completed on Budget and on Schedule Montour Unit #2 Absorber A-8 Q2-09Brunner Island 1 & 2 Q4-08Brunner Island 3 Q2-08Montour 2 Q1-08Montour 1 In-Service Dates
Slide 29: 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-9 $832$391$90$(89)$167Free Cash Flow before Dividends 34(2)1931085Other Investing Activities-net (1,284)(1,286)(1,398)(1,747)(1,394)Capital Expenditures --(310)(294)(282)Transition Bond Repayment Increa
Slide 30: Capital Expenditures by Segment
Millions $738 $1,121 $819 $643 $570 $603 $340 $315 $291 $348 $409 $469 $316 $311 $288 $295 $305 $311 $0 $400 $800 $1,200 $1,600 $2,000 2006A 2007E 2008E 2009E 2010E 2011E Supply PA Delivery International Delivery $1,394 $1,284 $1,383$1, 286 $1,398 $1,747 Capital Expenditures by Segment A-10
Slide 31: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations High Low 2007 2007 2006 2005 Per Share Earnings from Ongoing Operations $2.50 $2.40 $2.25 $2.08 Special items (net of taxes): economic hedges 0.07 0.07 (0.03) Write-off of Hurricane Isabel regulatory asset (0.02) Synfuels
Slide 32: Credit Ratings
Credit Ratings A-12 STABLE STABLE STABLE Outlook A-A-A3Senior Secured Debt F-2A-2P-2Commercial Paper BBB+ BBBBaa3Preferred Stock A-Baa1Issuer Rating A-A-A3First Mortgage Bonds AAAAaaPollution Control Bonds* BBBBBBBaa3Preference Stock PPL Electric Utilities BBBBBB-Baa2Senior Unsecured Debt BBB-BB+ Ba
Slide 33: Credit Ratings (cont.)
Credit Ratings (cont.) A-13 A-3Commercial Paper BBB+ BBB+ Baa1Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2Commercial Paper STABLE STABLE STABLE Outlook Western Power Distribution (South West) PLC BBB+ BBB+ Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2Commercial Paper STABLE STABLE
Slide 34: Forward-Looking Information Statement
Forward-Looking Information Statement A-14 Statements contained in this news release, including statements with respect to future earnings, energy prices, margins, sales and supply, marketing performance, growth, revenues, expenses, rates, cash flows, credit profile, financing, dividends, business d
Slide 35: Definitions of Financial Measures
Definitions of Financial Measures A-15 “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
Slide 36: Definitions of Financial Measures
Definitions of Financial Measures “Earnings from ongoing operations” excludes the impact of special items. Special items inotude charges, credits or gains thal ara unusual or non-recurring and the mark-to-marke! impact of eneray-related, non-trading economic hedges. The mark-o-market impact of these