Ppl Corporation · NYSE:PPL
Ppl — Q4 2006 Earnings Presentation
41 slides from Ppl's earnings presentation, Feb 1, 2007
Slide 1: Fourth Quarter Earnings Webcast
Exhibit 99.2 Fourth Quarter Earnings Webcast February 1,
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
J. H. Miller J. R. Biggar W. H. Spence Agenda n Fourth Quarter and Year-End 2006 Earnings and Review of Longer-Term Earnings and Outlook n Operating Results, 2007 Forecast and Financial Overview n Operational Review n Q&A
Slide 4: Solid Results
Solid Results Millions Per share Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Earnings from Ongoing Operations
Slide 5: Strong Long-Term Earnings Growth
** Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Forecast * * Midpoint of $2.30 to $2.40 earnings forecast. Strong Long-Term Earnings Growth
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: Ongoing Earnings Contributions
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Ongoing Earnings Contributions
Slide 8: Earnings Forecast
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) $2.22 $2.30 to $2.40
Slide 9: Expected Ongoing Earnings Contributions
(Dollars per Share) * Midpoint of forecast Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. $2.35* Expected Ongoing Earnings Contributions
Slide 10: Cash Flow Forecast
Millions Note: See Appendix for the reconciliation of cash flow measures. Cash Flow Forecast
Slide 11: Strong Balance Sheet
Equity % Actual Forecast Strong Balance Sheet
Slide 12: Annualized Dividend / Payout Ratio Greater than 50% after 2006
$/share Annualized Dividend Payout Ratio Greater than 50% after 2006
Slide 13: Key Drivers of Margin Growth
Supply Margins (Millions) $1,488 $1,675 $1,818 $1,845 $1,984 $2,748 Key Drivers of Margin Growth
Slide 14: Generation Equivalent Availability
Generation Equivalent Availability
Slide 15: Completed and Proposed Uprate Projects
Completed mW In-Service Dates Brunner Island 3 Turbine 18 2006 Colstrip 1&4 10 2006 Total 2B Proposed Brunner Island 1 Turbine 70 2007 Brunner Island 2 Turbine " 2009 Montour Turbine 16 2008 Susquehanna 45 2008 Susquehanna 90 2009 Susquehanna 50 2010 Colstrip 2& 3 10 2007-2008 Kerr 12 2007 Holtwood
Slide 16: Global Climate Change
Global Climate Change n Pre-eminent public policy issue n Efforts should be national in scope and cover all major industrial and transportation sectors n If mandatory program is adopted we support cap-and-trade system n PPL to be fully involved in policy debate n PPL is active in renewable energy as
Slide 17: Scrubbers Expected to be Completed on Budget and on Schedule
In-Service Dates Montour Q1-08 Montour Q2-08 Brunner Island 3 Q4-08 Brunner Island 1 & 2 Q2-09 Montour Unit #2 Absorber Scrubbers Expected to be Completed on Budget and on Schedule
Slide 18: Reserve Margin Shrinking
Reserve Margin Shrinking Reserve Margins Create Potential Value for PPL
Slide 19: PPL Electric Utilities Regulatory Update
PPL Electric Utilities Regulatory Update n Modest rate increase request to be filed in late March n For the 12-months ending September 30, 2006 Rate Base $1,926B Equity 43.4% Return on Rate Base 6.97% Return on Equity 8.10% n New rates to be effective beginning in 2008 n PUC action expected shortly
Slide 20: Slide 20
Slide 21: Market Prices
(1) Market prices based on the average of broker quotes as of 12/29/2006. (2) 24-hour average. (3) NYMEX forward gas price on 12/29/2006. Market Prices
Slide 22: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions - Electricity and Fuel
Slide 23: PPL's Generation Portfolio
East 9,907 MW* Coal 3,454* Nuclear 2,120 Oil 1,722 Gas 1,524 Hydro 337 CTs 451 QFs 299 West 1,289 MW Coal 687 PPL’s Generation Portfolio Total Domestic Generation: 11,196 MW Planned Uprate Projects: 369 MW Nuclear Uprate (2008-2010) 185 Hydro Uprate (2011) 125 Coal Uprate (2007-2009) Hydro Coal Upra
Slide 24: PPL Supply Business Overview
Coal 39% Gas/Oil 32% Nuclear 18% Hydro 8% QFs 3% Coal 55% Gas/Oil 7% Nuclear 30% Hydro 8% n In 2007, 93% 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
Proactive Coal Supply Management Supports Growth in Margins Projected 2007 Coal Supply Central Appalachia Southwest PA Central PA Powder River Basin Montana Mine-mouth 17% 45% 11% 21% 6% n Supply region diversity n Fleet trains (1600 cars) n Average delivered costs n 4%-5% annual increase 2006 to
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: PPL Proposal to Transition to Competitive Electricity Markets
PPL Proposal to Transition to Competitive Electricity Markets n Conduct procurements for 2010 POLR supply in March and September of 2007, 2008 and 2009 n Reduce the risk of customer exposure to price spikes in wholesale markets n PUC approval would remove risk for PPL Electric Utilities by ensuring
Slide 29: Improving Cash from Operations
Millions Note: See Appendix for the reconciliation of cash flow measures. Improving Cash from Operations
Slide 30: 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 31: Reconciliation of GAAP Equity Ratios to Adjusted Equity Ratios
Reconciliation of GAAP Equity Ratios to Adjusted Equity Ratios Actual Actual Forecast Forecast 12/31/05 12/31/06 12/31/07 12/31/10 GAAP Equity to Total Capitalization Ratio 38% 41% 43% 45% Adjustments to Debt (millions of dollars) Less Non-Recourse Debt: Transition Bonds $ $ $ 305 $ - - Internationa
Slide 32: Capital Expenditures by Segment
Millions Capital Expenditures by Segment
Slide 33: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
(Millions of Dollars) Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
Slide 34: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
(Dollars Per Share) Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
Slide 35: Reconciliation of Reported Earnings and Earnings from Ongoing Operations
(Millions of Dollars) Reconciliation of Reported Earnings and Earnings from Ongoing Operations
Slide 36: Reconciliation of Reported Earnings and Earnings from Ongoing Operations
(Dollars Per Share) Reconciliation of Reported Earnings and Earnings from Ongoing Operations
Slide 37: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations
Slide 38: Credit Ratings: PPL Corporation and Subsidiaries
Moodys Standard & Poor's Fitch PPL Comporation Iosuer Rates Baa? BBB EB Subordinated Debt BEB. Serior Unsecired Baad BEB. BEB Shertierm debt Outlook STABLE STABLE STABLE PPLEreraySupply Ipsuer Rating BBB EB Serior Notes Baad BBB BBB+ Commercial Paper P.2 a2 F2 Outlook STABLE STABLE STABLE PPL Capita
Slide 39: Credit Ratings: PPL Transition Bond, PPL Montana, WPD
Moodve Standard &Poots Fite 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. pee. Senior Uneecured Debt Bax2 Bee. B88 Commercial Paper re Preferred Stock utleae STABLE STABLE STABLE \WPD
Slide 40: Forward-Looking Statements
Statements contained in this presentation, including statements with respect to future earnings, energy prices, margins and sales, growth, rates, revenues, expenses, cash flows, cash from operations, dividends, credit profile, financing, capital additions and expenditures, and generating capacity an
Slide 41: Non-GAAP Measures: Earnings from Ongoing Operations and Free Cash Flow
“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