10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2004
	OR
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________ to ___________

Commission File Number	Registrant; State of Incorporation; Address and Telephone Number	IRS Employer Identification No.
1-11459	PPL Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151	23-2758192
333-74794	PPL Energy Supply, LLC (Exact name of Registrant as specified in its charter) (Delaware) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151	23-3074920
1-905	PPL Electric Utilities Corporation (Exact name of Registrant as specified in its charter) (Pennsylvania) Two North Ninth Street Allentown, PA 18101-1179 (610) 774-5151	23-0959590

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

PPL Corporation	Yes  X	No
PPL Energy Supply, LLC	Yes  X	No
PPL Electric Utilities Corporation	Yes  X	No

Indicate by check mark whether the Registrants are accelerated filers (as defined in Rule 12b-2 of the Act).

PPL Corporation	Yes  X	No
PPL Energy Supply, LLC	Yes	No  X
PPL Electric Utilities Corporation	Yes	No  X

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

PPL Corporation	Common stock, $.01 par value, 177,820,831 shares outstanding at April 30, 2004, excluding 31,033,738 shares held as treasury stock
PPL Energy Supply, LLC	PPL Corporation indirectly holds all of the member interests in PPL Energy Supply, LLC.
PPL Electric Utilities Corporation	Common stock, no par value, 78,029,863 shares outstanding and all held by PPL Corporation at April 30, 2004, excluding 79,270,519 shares held as treasury stock

This document is available free of charge at the Investor Center on PPL's website at www.pplweb.com. However, information on this website does not constitute a part of this Form 10-Q.

PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION

FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2004

Table of Contents

				Page
GLOSSARY OF TERMS AND ABBREVIATIONS
FORWARD-LOOKING INFORMATION					1
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		PPL Corporation and Subsidiaries
			Condensed Consolidated Statement of Income		2
			Condensed Consolidated Statement of Cash Flows		3
			Condensed Consolidated Balance Sheet		4
		PPL Energy Supply, LLC and Subsidiaries
			Condensed Consolidated Statement of Income		6
			Condensed Consolidated Statement of Cash Flows		7
			Condensed Consolidated Balance Sheet		8
		PPL Electric Utilities Corporation and Subsidiaries
			Condensed Consolidated Statement of Income		10
			Condensed Consolidated Statement of Cash Flows		11
			Condensed Consolidated Balance Sheet		12
		Combined Notes to Condensed Consolidated Financial Statements			14
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
			PPL Corporation and Subsidiaries		38
			PPL Energy Supply, LLC and Subsidiaries		46
			PPL Electric Utilities Corporation and Subsidiaries		54
	Item 3. Quantitative and Qualitative Disclosures About Market Risk				57
	Item 4. Controls and Procedures				57
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings				57
	Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities				57
	Item 6. Exhibits and Reports on Form 8-K				58
SIGNATURES					59
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
			PPL Corporation and Subsidiaries		60
			PPL Energy Supply, LLC and Subsidiaries		61
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
			PPL Corporation		62
			PPL Energy Supply, LLC		64
			PPL Electric Utilities Corporation		66
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
			PPL Corporation		68
			PPL Energy Supply, LLC		70
			PPL Electric Utilities Corporation		72

GLOSSARY OF TERMS AND ABBREVIATIONS

£ - British pounds sterling.

1945 First Mortgage Bond Indenture - PPL Electric's Mortgage and Deed of Trust, dated as of October 1, 1945, to Deutsche Bank Trust Company Americas, as trustee, as supplemented.

ANEEL - National Electric Energy Agency, Brazil's agency that regulates the transmission and distribution of electricity.

APA - Asset Purchase Agreement.

ARB - Accounting Research Bulletin.

ARO - asset retirement obligation.

Bcf - billion cubic feet.

CEMAR - Companhia Energética do Maranhão, a Brazilian electric distribution company in which PPL Global had a majority ownership interest until the transfer of this interest in April 2004.

CGE - Compañia General de Electricidad, S.A., a distributor of electricity and natural gas with other industrial segments in Chile and Argentina in which PPL Global had an 8.7% direct and indirect minority ownership interest until the sale of this interest in March 2004.

Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions including acid rain, ozone and toxic air emissions.

CTC - competitive transition charge on customer bills to recover allowable transition costs under the Customer Choice Act.

Customer Choice Act - the Pennsylvania Electricity Generation Customer Choice and Competition Act, legislation enacted to restructure the state's electric utility industry to create retail access to a competitive market for generation of electricity.

DelSur - Distribuidora de Electricidad Del Sur, S.A. de C.V., an electric distribution company in El Salvador, a majority of which is owned by EC.

DEP - Department of Environmental Protection, a state government agency.

Derivative - a financial instrument or other contract with all three of the following characteristics:

1. It has (1) one or more underlyings and (2) one or more notional amounts or payment provisions or both. Those terms determine the amount of the settlement or settlements, and, in some cases, whether or not a settlement is required.
2. It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.
3. Its terms require or permit net settlement, it can readily be settled net by a means outside the contract, or it provides for delivery of an asset that puts the recipient in a position not substantially different from net settlement.

DIG - Derivatives Implementation Group.

EC - Electricidad de Centroamerica, S.A. de C.V., an El Salvadoran holding company and the majority owner of DelSur and El Salvador Telecom, S.A. de C.V. PPL Global has 100% ownership of EC.

EITF - Emerging Issues Task Force, an organization that assists the FASB in improving financial reporting through the identification, discussion and resolution of financial issues within the framework of existing authoritative literature.

EMF - electric and magnetic fields.

EPA - Environmental Protection Agency, a U.S. government agency.

EPS - earnings per share.

FASB - Financial Accounting Standards Board, a rulemaking organization that establishes financial accounting and reporting standards.

FERC - Federal Energy Regulatory Commission, the federal agency that regulates interstate transmission and wholesale sales of electricity and related matters.

FIN - FASB Interpretation.

FSP - FASB Staff Position.

GAAP - generally accepted accounting principles.

GWh - gigawatt-hour, one million kilowatt-hours.

Hyder - Hyder Limited, a subsidiary of WPDL that was the previous owner of South Wales Electricity plc. In March 2001, South Wales Electricity plc was acquired by WPDH Limited and renamed WPD (South Wales).

IRS - Internal Revenue Service, a U.S. government agency.

ISO - Independent System Operator.

LIBOR - London Interbank Offered Rate.

Mirant - Mirant Corporation, a diversified energy company based in Atlanta. PPL Global and Mirant jointly owned WPD from 1996 until September 6, 2002.

Montana Power - The Montana Power Company, a Montana-based company that sold its generating assets to PPL Montana in December 1999. Through a series of transactions consummated during the first quarter of 2002, Montana Power sold its electricity delivery business to NorthWestern.

MW - megawatt, one thousand kilowatts.

MWh - megawatt-hour, one thousand kilowatt-hours.

NorthWestern - NorthWestern Energy Division, a Delaware corporation and a division of NorthWestern Corporation and successor in interest to Montana Power's electricity delivery business, including Montana Power's rights and obligations under contracts with PPL Montana.

NPDES - National Pollutant Discharge Elimination System.

NRC - Nuclear Regulatory Commission, the federal agency that regulates operation of nuclear power facilities.

NUGs (Non-Utility Generators) - generating plants not owned by public utilities, whose electrical output must be purchased by utilities under the PURPA if the plant meets certain criteria.

PCB - polychlorinated biphenyl, an additive to oil used in certain electrical equipment up to the late-1970s. Now classified as a hazardous chemical.

PEPS Units (Premium Equity Participating Security Units, or PEPS^SM Units) - securities issued by PPL and PPL Capital Funding Trust I, consisting of a Preferred Security and a forward contract to purchase PPL common stock.

PEPS Units, Series B (Premium Equity Participating Security Units, or PEPS^SM Units, Series B) - securities issued by PPL and PPL Capital Funding, consisting of an undivided interest in a debt security issued by PPL Capital Funding and guaranteed by PPL, and a forward contract to purchase PPL common stock.

PJM (PJM Interconnection, L.L.C.) - operates the electric transmission network and electric energy market in the mid-Atlantic region of the U.S.

PLR (Provider of Last Resort) - PPL Electric providing electricity to retail customers within its delivery territory who have chosen not to shop for electricity under the Customer Choice Act.

PP&E - property, plant and equipment.

PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding and other subsidiaries.

PPL Capital Funding - PPL Capital Funding, Inc., a PPL financing subsidiary.

PPL Capital Funding Trust I - a Delaware statutory business trust created to issue PEPS Units, whose common securities are held by PPL.

PPL Electric - PPL Electric Utilities Corporation, a regulated utility subsidiary of PPL that transmits and distributes electricity in its service territory and provides electric supply to retail customers in this territory as a PLR.

PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent company of PPL Energy Supply.

PPL EnergyPlus - PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply, which markets wholesale and retail electricity, and supplies energy and energy services in deregulated markets.

PPL Energy Supply - PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the parent company of PPL Generation, PPL EnergyPlus, PPL Global and other subsidiaries.

PPL Gas Utilities - PPL Gas Utilities Corporation, a regulated utility subsidiary of PPL specializing in natural gas distribution, transmission and storage services, and the competitive sale of propane.

PPL Generation - PPL Generation, LLC, a subsidiary of PPL Energy Supply, which owns and operates U.S. generating facilities through various subsidiaries.

PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Supply, which acquires and develops domestic generation projects and acquires and holds international energy projects that are primarily focused on the distribution of electricity.

PPL Martins Creek - PPL Martins Creek, LLC, a generating subsidiary of PPL Generation.

PPL Montana - PPL Montana, LLC, an indirect subsidiary of PPL Generation, which generates electricity for wholesale sales in Montana and the Pacific Northwest.

PPL Services - PPL Services Corporation, a subsidiary of PPL, which provides shared services for PPL and its subsidiaries.

PPL Susquehanna - PPL Susquehanna, LLC, the nuclear generating subsidiary of PPL Generation.

PPL Transition Bond Company - PPL Transition Bond Company, LLC, a wholly-owned subsidiary of PPL Electric that was formed to issue transition bonds under the Customer Choice Act.

Preferred Securities - company-obligated mandatorily redeemable preferred securities issued by PPL Capital Funding Trust I, holding solely debentures of PPL Capital Funding, and by SIUK Capital Trust I, holding solely debentures of WPD LLP.

PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.

PUC Final Order - final order issued by the PUC on August 27, 1998, approving the settlement of PPL Electric's restructuring proceeding.

PURPA - Public Utility Regulatory Policies Act of 1978, legislation passed by the U.S. Congress to encourage energy conservation, efficient use of resources and equitable rates.

PURTA - the Pennsylvania Public Utility Realty Tax Act.

SCR - selective catalytic reduction, a pollution control process.

SEC - Securities and Exchange Commission, a U.S. government agency.

SFAS - Statement of Financial Accounting Standards, the accounting and financial reporting rules issued by the FASB.

SIUK Capital Trust I - a business trust created to issue preferred securities, whose common securities are held by WPD LLP.

Superfund - federal environmental legislation that addresses remediation of contaminated sites; states also have similar statutes.

Synfuel projects - production facilities that manufacture synthetic fuel from coal or coal byproducts. Favorable federal tax credits are available on qualified synfuel products.

WPD - refers collectively to WPDH Limited and WPDL. PPL Global purchased Mirant's 49% ownership interest in these entities on September 6, 2002, thereby achieving 100% ownership and operational control.

WPD LLP - Western Power Distribution LLP, a wholly-owned subsidiary of WPDH Limited, which owns WPD (South West) and WPD (South Wales).

WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electric utility company.

WPD (South West) - Western Power Distribution (South West) plc, a British regional electric utility company.

WPDH Limited - Western Power Distribution Holdings Limited, an indirect wholly-owned subsidiary of PPL Global. WPDH Limited owns WPD LLP.

WPDL - WPD Investment Holdings Limited, an indirect wholly-owned subsidiary of PPL Global. WPDL owns 100% of the common shares of Hyder.

Forward-looking Information

Statements contained in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts are "forward-looking statements" within the meaning of the federal securities laws. Although PPL, PPL Energy Supply and PPL Electric believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. These forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. In addition to the specific factors discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations sections herein, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements:

• market demand and prices for energy, capacity and fuel;
• weather variations affecting customer energy usage;
• competition in retail and wholesale power markets;
• the effect of any business or industry restructuring;
• the profitability and liquidity of PPL and its subsidiaries;
• new accounting requirements or new interpretations or applications of existing requirements;
• operation of existing facilities and operating costs;
• environmental conditions and requirements;
• transmission and distribution system conditions and operating costs;
• development of new projects, markets and technologies;
• performance of new ventures;
• asset acquisitions and dispositions;
• political, regulatory or economic conditions in states, regions or countries where PPL or its subsidiaries conduct business;
• receipt of necessary governmental permits, approvals and rate relief;
• impact of state or federal investigations applicable to PPL and its subsidiaries and the energy industry;
• the outcome of litigation against PPL and its subsidiaries;
• capital market conditions and decisions regarding capital structure;
• stock price performance;
• the market prices of equity securities and resultant cash funding requirements for defined benefit pension plans;
• securities and credit ratings;
• state and federal regulatory developments;
• foreign exchange rates;
• new state or federal legislation, including new tax legislation;
• national or regional economic conditions, including any potential effects arising from the September 11, 2001 terrorist attacks in the U.S., the situation in Iraq and any consequential hostilities or other hostilities; and
• the commitments and liabilities of PPL and its subsidiaries.

Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of PPL, PPL Energy Supply and PPL Electric on file with the SEC.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for PPL, PPL Energy Supply or PPL Electric to predict all of such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and PPL, PPL Energy Supply and PPL Electric undertake no obligations to update the information contained in such statement to reflect subsequent developments or information.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except per share data)
			Three Months Ended March 31,
			2004		2003
Operating Revenues
	Utility		$	1,085	$	1,019
	Unregulated retail electric and gas			31		51
	Wholesale energy marketing			278		298
	Net energy trading margins			7		(7	)
	Energy related businesses			119		127
	Total			1,520		1,488
Operating Expenses
	Operation
		Fuel		203		197
		Energy purchases		270		302
		Other operation and maintenance		316		277
		Amortization of recoverable transition costs		71		71
	Depreciation			99		96
	Taxes, other than income			57		65
	Energy related businesses			138		121
	Total			1,154		1,129
Operating Income				366		359
Other Income - net				12		8
Interest Expense				125		108
Income from Continuing Operations Before Income Taxes, Minority Interest   and Distributions on Preferred Securities				253		259
Income Taxes				72		69
Minority Interest				2		1
Distributions on Preferred Securities				1		13
Income from Continuing Operations				178		176
Loss from Discontinued Operations (net of income taxes)				1
Income Before Cumulative Effect of a Change in Accounting Principle				177		176
Cumulative Effect of a Change in Accounting Principle (net of income taxes)						63
Net Income			$	177	$	239
Earnings Per Share of Common Stock:
	Income from Continuing Operations:
		Basic	$	1.00	$	1.06
		Diluted	$	0.99	$	1.06
	Net income:
		Basic	$	1.00	$	1.43
		Diluted	$	0.99	$	1.43
Dividends Declared Per Share of Common Stock			$	0.41	$	0.385
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
			Three Months Ended March 31,
			2004			2003
Net Cash Provided by Operating Activities			$	318		$	154
Cash Flows from Investing Activities
	Expenditures for property, plant and equipment			(174	)		(170	)
	Investment in generating assets and electric energy projects			(18	)
	Proceeds from the sale of CGE			123
	Other investing activities - net			1			(2	)
		Net cash used in investing activities		(68	)		(172	)
Cash Flows from Financing Activities
	Issuance of common stock			12			73
	Issuance of long-term debt			14			90
	Retirement of long-term debt			(107	)		(248	)
	Payment of common dividends			(69	)		(59	)
	Payment of preferred distributions			(1	)		(13	)
	Net increase (decrease) in short-term debt			(6	)		332
	Other financing activities - net			(1	)		(4	)
		Net cash provided by (used in) financing activities		(158	)		171
Effect of Exchange Rates on Cash and Cash Equivalents				4			(1	)
Net Increase in Cash and Cash Equivalents				96			152
Cash and Cash Equivalents at Beginning of Period				476			245
Cash and Cash Equivalents at End of Period			$	572		$	397
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
			March 31, 2004		December 31, 2003
Assets
Current Assets
	Cash and cash equivalents		$	572	$	476
	Accounts receivable (less reserve: 2004, $93; 2003, $93)			560		555
	Unbilled revenues			366		341
	Fuel, materials and supplies - at average cost			243		256
	Prepayments			160		54
	Deferred income taxes			116		105
	Price risk management assets			131		90
	Other			125		143
				2,273		2,020
Investments
	Investment in unconsolidated affiliates - at equity			209		230
	Investment in unconsolidated affiliates - at cost					126
	Nuclear plant decommissioning trust fund			370		357
	Other			29		29
				608		742
Property, Plant and Equipment - net
	Electric plant in service
		Transmission and distribution		5,714		5,456
		Generation		3,348		3,362
		General		465		435
				9,527		9,253
	Construction work in progress			676		627
	Nuclear fuel			146		144
		Electric plant		10,349		10,024
	Gas and oil plant			207		205
	Other property			213		221
				10,769		10,450
Regulatory and Other Noncurrent Assets
	Recoverable transition costs			1,616		1,687
	Goodwill			1,137		1,068
	Other intangibles			229		230
	Other			951		926
				3,933		3,911
			$	17,583	$	17,123
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
		March 31, 2004			December 31, 2003
Liabilities and Equity
Current Liabilities
	Short-term debt	$	53		$	56
	Long-term debt		550			395
	Accounts payable		498			456
	Above market NUG contracts		74			74
	Taxes		202			178
	Interest		127			121
	Dividends		74			70
	Price risk management liabilities		139			82
	Other		315			337
			2,032			1,769
Long-term Debt (Note 6)			7,874			7,464
Long-term Debt with Affiliate Trusts (Note 6)			89			681
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits		2,282			2,205
	Above market NUG contracts		260			278
	Other		1,506			1,362
			4,048			3,845
Commitments and Contingent Liabilities
Minority Interest			57			54
Preferred Stock without Sinking Fund Requirements			51			51
Shareowners' Common Equity
	Common stock		2			2
	Capital in excess of par value		2,987			2,973
	Treasury stock		(837	)		(837	)
	Earnings reinvested		1,582			1,478
	Accumulated other comprehensive loss		(247	)		(297	)
	Capital stock expense and other		(55	)		(60	)
			3,432			3,259
		$	17,583		$	17,123
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
			Three Months Ended March 31,
			2004		2003
Operating Revenues
	Wholesale energy marketing		$	278	$	298
	Wholesale energy marketing to affiliates			410		389
	Utility			279		241
	Unregulated retail electric and gas			31		51
	Net energy trading margins			7		(7	)
	Energy related businesses			114		125
	Total			1,119		1,097
Operating Expenses
	Operation
		Fuel		158		153
		Energy purchases		215		249
		Energy purchases from affiliates		38		45
		Other operation and maintenance		236		208
	Depreciation			69		69
	Taxes, other than income			26		21
	Energy related businesses			131		119
	Total			873		864
Operating Income				246		233
Other Income - net				11		16
Interest Expense				56		42
Income from Continuing Operations Before Income Taxes, Minority Interest and Distributions on Preferred Securities				201		207
Income Taxes				52		51
Minority Interest				2		1
Distributions on Preferred Securities						2
Income from Continuing Operations				147		153
Loss from Discontinued Operations (net of income taxes)				1
Income Before Cumulative Effect of a Change in Accounting Principle				146		153
Cumulative Effect of a Change in Accounting Principle (net of income taxes)						63
Net Income			$	146	$	216
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
			Three Months Ended March 31,
			2004			2003
Net Cash Provided by Operating Activities			$	272		$	120
Cash Flows from Investing Activities
	Expenditures for property, plant and equipment			(114	)		(109	)
	Investment in generating assets and electric energy projects			(18	)
	Proceeds from the sale of CGE			123
	Net (increase) decrease in notes receivable from affiliates			(4	)		33
	Other investing activities - net			1
		Net cash used in investing activities		(12	)		(76	)
Cash Flows from Financing Activities
	Contributions from Member			8
	Distributions to Member			(63	)		(305	)
	Issuance of long-term debt			14
	Retirement of long-term debt			(5	)		(8	)
	Net increase (decrease) in short-term debt			(51	)		210
	Net increase in short-term debt to affiliate						13
		Net cash used in financing activities		(97	)		(90	)
Effect of Exchange Rates on Cash and Cash Equivalents				4			(1	)
Net Increase (Decrease) in Cash and Cash Equivalents				167			(47	)
Cash and Cash Equivalents at Beginning of Period				227			149
Cash and Cash Equivalents at End of Period			$	394		$	102
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
			March 31, 2004		December 31, 2003
Assets
Current Assets
	Cash and cash equivalents		$	394	$	227
	Accounts receivable (less reserve: 2004, $68; 2003, $68)			314		320
	Unbilled revenues			234		215
	Accounts receivable from affiliates			105		71
	Fuel, materials and supplies - at average cost			196		198
	Price risk management assets			126		88
	Other			157		158
				1,526		1,277
Investments
	Investment in unconsolidated affiliates - at equity			209		212
	Investment in unconsolidated affiliates - at cost					126
	Nuclear plant decommissioning trust fund			370		357
	Other			6		5
				585		700
Property, Plant and Equipment - net
	Electric plant in service
		Transmission and distribution		3,368		3,129
		Generation		3,348		3,362
		General		234		204
				6,950		6,695
	Construction work in progress			635		593
	Nuclear fuel			146		144
		Electric plant		7,731		7,432
	Gas and oil plant			21		21
	Other property			155		163
				7,907		7,616
Other Noncurrent Assets
	Goodwill			1,081		1,013
	Other intangibles			95		96
	Other			572		548
				1,748		1,657
			$	11,766	$	11,250
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
		March 31, 2004		December 31, 2003
Liabilities and Equity
Current Liabilities
	Short-term debt	$	8	$	56
	Long-term debt		185		6
	Accounts payable		429		381
	Accounts payable to affiliates		62		53
	Above market NUG contracts		74		74
	Taxes		133		110
	Interest		86		74
	Deferred revenue on PLR energy supply to affiliate		12		12
	Price risk management liabilities		134		76
	Other		214		222
			1,337		1,064
Long-term Debt			4,027		4,140
Long-term Debt with Affiliate Trust			89		89
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits		1,097		1,012
	Above market NUG contracts		260		278
	Deferred revenue on PLR energy supply to affiliate		55		58
	Other		1,222		1,077
			2,634		2,425
Commitments and Contingent Liabilities
Minority Interest			57		54
Member's Equity			3,622		3,478
		$	11,766	$	11,250
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
			Three Months Ended March 31,
			2004		2003
Operating Revenues
	Retail electric		$	732	$	706
	Wholesale electric			4		8
	Wholesale electric to affiliate			37		39
	Total			773		753
Operating Expenses
	Operation
		Energy purchases		55		53
		Energy purchases from affiliate		410		387
		Other operation and maintenance		78		75
		Amortization of recoverable transition costs		71		71
	Depreciation			26		24
	Taxes, other than income			31		44
	Total			671		654
Operating Income				102		99
Other Income - net				1		3
Interest Expense				49		56
Income Before Income Taxes				54		46
Income Taxes				20		16
Income Before Distributions on Preferred Securities				34		30
Distributions on Preferred Securities				1		1
Income Available to PPL Corporation			$	33	$	29
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
			Three Months Ended March 31,
			2004			2003
Net Cash Provided by Operating Activities			$	44		$	46
Cash Flows from Investing Activities
	Expenditures for property, plant and equipment			(54	)		(55	)
	Net decrease in notes receivable from affiliates						90
	Other investing activities - net			3			2
		Net cash provided by (used in) investing activities		(51	)		37
Cash Flows from Financing Activities
	Issuance of long-term debt						90
	Retirement of long-term debt			(102	)		(178	)
	Contribution from parent						75
	Payment of preferred distributions			(1	)		(1	)
	Payment of common dividends to PPL Corporation			(1	)		(2	)
	Net increase in short-term debt			45			121
	Other financing activities - net						(4	)
		Net cash provided by (used in) financing activities		(59	)		101
Net Increase (Decrease) in Cash and Cash Equivalents				(66	)		184
Cash and Cash Equivalents at Beginning of Period				162			29
Cash and Cash Equivalents at End of Period			$	96		$	213
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
			March 31, 2004		December 31, 2003
Assets
Current Assets
	Cash and cash equivalents		$	96	$	162
	Accounts receivable (less reserve: 2004, $24; 2003, $24)			216		212
	Unbilled revenues			126		123
	Accounts receivable from affiliates			20		27
	Income tax receivable			35		35
	Prepayments			114		5
	Prepayment on PLR energy supply from affiliate			12		12
	Deferred income taxes			40		45
	Other			51		54
				710		675
Property, Plant and Equipment - net
	Electric plant in service
		Transmission and distribution		2,345		2,327
		General		226		226
				2,571		2,553
	Construction work in progress			38		31
		Electric plant		2,609		2,584
	Other property			5		5
				2,614		2,589
Regulatory and Other Noncurrent Assets
	Recoverable transition costs			1,616		1,687
	Intangibles			116		116
	Prepayment on PLR energy supply from affiliate			55		58
	Other			341		344
				2,128		2,205
			$	5,452	$	5,469
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
		March 31, 2004			December 31, 2003
Liabilities and Equity
Current Liabilities
	Short-term debt	$	45
	Long-term debt		265		$	289
	Accounts payable		42			44
	Accounts payable to affiliates		135			92
	Taxes		70			86
	Interest		17			32
	Other		78			83
			652			626
Long-term Debt			2,570			2,648
Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes and investment tax credits		738			728
	Other		188			194
			926			922
Commitments and Contingent Liabilities
Preferred Stock without Sinking Fund Requirements			51			51
Shareowner's Common Equity
	Common stock		1,476			1,476
	Additional paid-in capital		361			361
	Treasury stock		(912	)		(912	)
	Earnings reinvested		335			304
	Capital stock expense and other		(7	)		(7	)
			1,253			1,222
		$	5,452		$	5,469
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

Combined Notes to Condensed Consolidated Financial Statements

Terms and abbreviations appearing in Combined Notes to Condensed Consolidated Financial Statements are explained in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

1. Interim Financial Statements

   (PPL, PPL Energy Supply and PPL Electric)

   The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments (including normal, recurring accruals) considered necessary for a fair presentation in accordance with accounting principles generally accepted in the U.S. are reflected in the condensed consolidated financial statements. The Balance Sheet as of December 31, 2003 is derived from each Registrant's 2003 audited Balance Sheet. The financial statements and notes thereto should be read in conjunction with the financial statements and notes contained in each Registrant's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the full year ending December 31, 2004 or other future periods, because results for interim periods can be disproportionately influenced by various factors and developments and seasonal variations.

   Certain amounts in the March 31, 2003 and December 31, 2003 financial statements have been reclassified to conform to the presentation in the March 31, 2004 financial statements.

2. Summary of Significant Accounting Policies

   The following accounting policy disclosures represent updates to the "Summary of Significant Accounting Policies" Note in each Registrant's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003.

   Goodwill (PPL and PPL Energy Supply)

   The change in the carrying amount of "Goodwill," as shown on the Balance Sheet, was due to the effect of foreign exchange rates.

   Stock-Based Compensation (PPL, PPL Energy Supply and PPL Electric)

   Stock-based compensation expense, including awards granted to employees and an allocation of costs of awards granted to employees of PPL Services, was insignificant to net income and EPS under both the intrinsic value and fair value methods of accounting for stock-based compensation for the three months ended March 31, 2004 and 2003. Also, there would not have been a material impact on reported net income and EPS had the fair value method been used to account for all outstanding stock-based compensation awards in both periods.

   New Accounting Standards (PPL, PPL Energy Supply and PPL Electric)

   See Note 15 for a discussion of new accounting standards adopted in 2004 or pending adoption.

3. Segment and Related Information

   (PPL and PPL Energy Supply)

   See the "Segment and Related Information" Note in each Registrant's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a discussion of reportable segments.

   Financial data for the segments are as follows:

   		PPL				PPL Energy Supply
   		Three Months Ended March 31,				Three Months Ended March 31,
   		2004		2003		2004		2003
   Income Statement Data
   Revenues from external customers
   	Supply	$	419	$	450	$	824	$	837
   	International		295		260		295		260
   	Delivery (a)		806		778
   			1,520		1,488		1,119		1,097
   Intersegment revenues
   	Supply		410		389
   	Delivery		38		43
   Net Income
   	Supply (b)		89		151		98		165
   	International (c)		48		51		48		51
   	Delivery (a)		40		37
   		$	177	$	239	$	146	$	216

   
   

   		PPL				PPL Energy Supply
   		March 31, 2004		December 31, 2003		March 31, 2004		December 31, 2003
   Balance Sheet Data
   Total assets
   	Supply	$	6,623	$	6,491	$	6,487	$	6,308
   	International		5,273		4,942		5,279		4,942
   	Delivery (a)		5,687		5,690
   		$	17,583	$	17,123	$	11,766	$	11,250

   
   

   (a)	The Delivery segment is not a component of PPL Energy Supply.
   (b)	2003 includes the "Cumulative Effect of a Change in Accounting Principle" recorded in January 2003. See Note 13 for additional information.
   (c)	2004 includes the "Loss from Discontinued Operations." See Note 7 for additional information.

   
   
4. Earnings Per Share

   (PPL)

   Basic EPS is calculated by dividing "Net Income" on the Statement of Income by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated similarly, except that weighted-average shares outstanding are increased for additional shares that would be outstanding if potentially dilutive securities were converted to common stock. Potentially dilutive securities consist of:

   • stock options, restricted stock and restricted stock units granted under the incentive compensation plans,

   • stock units representing common stock granted under the directors compensation programs,

   • common stock purchase contracts that are a component of the PEPS Units and PEPS Units, Series B, and

   • convertible senior notes.

   The basic and diluted EPS calculations, and the reconciliation of the shares (in thousands) used in the calculations, are shown below:

   		Three Months Ended March 31,
   		2004		2003
   Income (Numerator)
   Income from continuing operations		$	178	$	176
   	Loss from discontinued operations (net of tax)		1
   	Cumulative effect of a change in accounting principle (net of tax)				63
   Net Income		$	177	$	239
   Shares (Denominator)
   Shares for Basic EPS			177,150		166,506
   Add: Incremental shares
   	Stock options and other share-based awards		607		510
   Shares for Diluted EPS			177,757		167,016
   Basic EPS
   Income from continuing operations		$	1.00	$	1.06
   	Cumulative effect of a change in accounting principle (net of tax)				0.37
   Net Income		$	1.00	$	1.43

   
   

   		Three Months Ended March 31,
   		2004		2003
   Diluted EPS
   Income from continuing operations		$	0.99	$	1.06
   	Cumulative effect of a change in accounting principle (net of tax)				0.37
   Net Income		$	0.99	$	1.43

   In May 2001, PPL and PPL Capital Funding Trust I issued 23 million PEPS Units that contain a purchase contract component for PPL's common stock. The purchase contracts will only be dilutive if the average price of PPL's common stock exceeds a threshold appreciation price, which is adjusted for cash distributions on PPL common stock. The threshold appreciation price was initially set at $65.03 and has been adjusted to $63.38 as of April 1, 2004, based on dividends paid on PPL's common stock since issuance. Since the average price has not exceeded the threshold appreciation price, the purchase contracts were excluded from the diluted EPS calculations.

   In January 2004, PPL completed an exchange offer resulting in the exchange of approximately 4 million PEPS Units for PEPS Units, Series B. The primary difference in the units relates to the debt component. The purchase contract components of both units, which are potentially dilutive, are identical. The threshold appreciation price for the purchase contract component of the PEPS Units, Series B is adjusted in the same manner as that of the PEPS Units and currently is $63.38 as a result of the adjustment as of April 1, 2004. See Note 6 for a more detailed discussion of the exchange offer.

   In May 2003, PPL Energy Supply issued $400 million of 2.625% Convertible Senior Notes due 2023. The notes are guaranteed by PPL and can be converted into shares of PPL common stock if:

   • during any fiscal quarter starting after June 30, 2003, the market price of PPL's common stock trades at or above $59.67 per share over a certain period during the preceding fiscal quarter;

   • PPL calls the debt for redemption;

   • the holder exercises its right to put the debt on any five-year anniversary of the offering;

   • the long-term credit rating assigned to the notes by Moody's and Standard & Poor's falls below Ba2 and BB or the notes are not rated; or

   • certain specified corporate transactions occur, e.g., change in control and certain distributions to the holders of PPL common stock.

   The initial conversion rate is 20.1106 shares per $1,000 principal amount of notes. It will be adjusted if certain specified distributions, whether in the form of cash, stock, other equity interests, evidence of indebtedness or assets, are made to holders of PPL common stock. Additionally, the conversion rate can be increased by PPL if its board of directors has made a determination that to do so would be in the best interests of either PPL or holders of PPL common stock.

   Depending upon which of the conversion events identified above occurs, the Notes can be settled in cash or shares. As none of these events has occurred, the Convertible Senior Notes were excluded from the diluted EPS calculations.

   The following number of stock options to purchase PPL common shares and unvested restricted stock awards were excluded in the periods' computations of diluted EPS because the effect would have been antidilutive.

   	Three Months Ended March 31,
   (Thousands of Shares)	2004		2003
   Antidilutive stock options		747		1,673
   Antidilutive restricted stock				42

5. Comprehensive Income

   (PPL and PPL Energy Supply)

   The following tables show the after-tax components of comprehensive income:

   		PPL						PPL Energy Supply
   		Three Months Ended March 31,						Three Months Ended March 31,
   		2004			2003			2004			2003
   Net Income		$	177		$	239		$	146		$	216
   Other comprehensive income:
   	Foreign currency translation adjustments		78			(15	)		78			(15	)
   	Disposition of investment in CGE - currency translation adjustment		10						10
   	Unrealized loss on available-for-sale securities		(3	)		(3	)		(3	)		(3	)
   	Unrealized gain (loss) on qualifying derivatives		(35	)		27			(32	)		29
   	Total other comprehensive income		50			9			53			11
   Comprehensive Income		$	227		$	248		$	199		$	227

   
   

   (PPL Electric)

   PPL Electric's comprehensive income approximates net income.

6. Credit Arrangements and Financing Activities

   Credit Arrangements

   (PPL, PPL Energy Supply and PPL Electric)

   In February 2004, PPL Energy Supply reduced the size of its $500 million three-year credit facility expiring in June 2004 to $200 million. At March 31, 2004, no cash borrowings were outstanding under any credit facilities of PPL Electric or PPL Energy Supply. Both PPL Electric and PPL Energy Supply have the ability to cause the lenders to issue letters of credit under their respective facilities. At March 31, 2004, PPL Electric had $42 million of letters of credit outstanding under its $100 million three-year facility expiring in June 2006, and PPL Energy Supply had $59 million of letters of credit outstanding under its $200 million three-year facility expiring in June 2004 and $64 million of letters of credit under its $300 million three-year facility expiring in June 2006. In April 2004, PPL Energy Supply issued a letter of credit in the amount of $300 million to PPL Electric under its $300 million three-year facility expiring June 2005. The $300 million letter of credit was provided to PPL Electric to satisfy the performance assurance provisions under one of the PLR contracts. See Note 9 for additional information.

   (PPL and PPL Energy Supply)

   At March 31, 2004, WPD (South West) had £4.1 million (approximately $8 million based on current exchange rates) of outstanding borrowings under its £100 million 364-day credit facility expiring in October 2004 and no outstanding borrowings under its £150 million five-year credit facility expiring in October 2008.

   (PPL, PPL Energy Supply and PPL Electric)

   The subsidiaries of PPL are separate legal entities. PPL's subsidiaries are not liable for the debts of PPL. Accordingly, creditors of PPL may not satisfy their debts from the assets of the subsidiaries absent a specific contractual undertaking by a subsidiary to pay PPL's creditors or as required by applicable law or regulation. Similarly, absent a specific contractual undertaking or as required by applicable law or regulation, PPL is not liable for the debts of its subsidiaries. Accordingly, creditors of PPL's subsidiaries may not satisfy their debts from the assets of PPL absent a specific contractual undertaking by PPL to pay the creditors of its subsidiaries or as required by applicable law or regulation.

   Similarly, the subsidiaries of PPL Energy Supply and PPL Electric are separate legal entities. These subsidiaries are not liable for the debts of PPL Energy Supply and PPL Electric. Accordingly, creditors of PPL Energy Supply and PPL Electric may not satisfy their debts from the assets of their subsidiaries absent a specific contractual undertaking by a subsidiary to pay the creditors or as required by applicable law or regulation. In addition, absent a specific contractual undertaking or as required by applicable law or regulation, PPL Energy Supply and PPL Electric are not liable for the debts of their subsidiaries. Accordingly, creditors of these subsidiaries may not satisfy their debts from the assets of PPL Energy Supply or PPL Electric absent a specific contractual undertaking by that parent to pay the creditors of its subsidiaries or as required by applicable law or regulation.

   Financing Activities

   (PPL)

   In November 2003, PPL initiated an offer to exchange up to $573 million of its outstanding PEPS Units for up to $573 million of its PEPS Units, Series B and a cash payment by PPL of $0.375 for each validly tendered and accepted outstanding PEPS Unit. The exchange offer, which closed in January 2004, resulted in $99 million, or 17.28%, of the outstanding PEPS Units, being exchanged.

   In February 2004, pursuant to the terms of the PEPS Units, PPL remarketed $257 million of the PPL Capital Funding Trust I trust preferred securities that were a component of the PEPS Units. The trust preferred securities were remarketed at a price of 107.284% of their aggregate stated liquidation amount, resulting in a yield to maturity of 3.912% based on the reset distribution rate of 7.29% per annum. Under the terms of the PEPS Units, holders were entitled to surrender their trust preferred securities for remarketing in order to settle the purchase contract component of the PEPS Units in May 2004. Holders of an aggregate of $218 million of the trust preferred securities elected not to participate in the remarketing. Those holders retained their trust preferred securities at a distribution rate of 7.29% per annum.

   Additionally, in February 2004, PPL Capital Funding issued $201 million of senior unsecured notes guaranteed by PPL in exchange for $185 million of the trust preferred securities of PPL Capital Funding Trust I and a payment of $400,000 in cash. The senior notes bear interest at a rate of 4.33% per year that is payable semi-annually on March 1 and September 1 of each year, from September 1, 2004 through the maturity date of March 1, 2009. The senior notes are not redeemable by PPL or PPL Capital Funding, and the holders will not be entitled to require PPL or PPL Capital Funding to repurchase the senior notes before maturity. The senior notes were issued in an SEC Rule 144A private offering to qualified institutional buyers. Pursuant to a registration rights agreement with the initial purchasers, PPL and PPL Capital Funding intend to consummate an exchange offer for the notes to register them with the SEC for resale.

   The January and February 2004 exchanges resulted in the cancellation of an aggregate of $284 million of the trust preferred securities and an aggregate of $9 million of PPL Capital Funding Trust I's common securities held by PPL Capital Funding, as well as a corresponding cancellation of the $293 million of PPL Capital Funding 7.29% subordinated notes due 2006 underlying these trust securities. The cancellation of the underlying PPL Capital Funding subordinate notes together with the issuance of the new PPL Capital Funding debt, as a result of the exchanges, resulted in a net decrease of $9 million of long-term debt, including "Long-term Debt with Affiliate Trusts," as reflected in the Balance Sheet. Following these exchanges, there remained outstanding $290 million of trust preferred securities and $9 million of trust common securities, as well as $299 million of underlying PPL Capital Funding 7.29% subordinated notes due 2006.

   In March 2004, PPL liquidated PPL Capital Funding Trust I, resulting in the cancellation of all of the outstanding trust preferred securities and the trust common securities. In exchange for the cancellation of the trust securities, PPL Capital Funding Trust I caused $290 million of underlying PPL Capital Funding 7.29% subordinated notes due 2006 to be distributed to the holders of the trust preferred securities and $9 million of PPL Capital Funding 7.29% subordinated notes due 2006, held by the trust, to be cancelled. The impact to PPL Capital Funding as a result of these cancellations was an additional net decrease of $9 million of long-term debt, including "Long-term Debt with Affiliate Trusts," as reflected in the Balance Sheet.

   In April 2004, PPL Capital Funding repurchased $4 million of its 8-3/8% Medium-term Notes due 2007 at a market value of approximately $5 million.

   (PPL and PPL Energy Supply)

   During the three months ended March 31, 2004, a Bolivian subsidiary of PPL Global issued $12 million of bonds with interest rates varying from 6.8% to 7.4% and serial maturities from December 2005 to December 2008. In addition, the PPL Global subsidiary issued bonds denominated in UFVs (inflation-indexed bolivianos) totaling 13.5 million bolivianos (approximately $2 million at current exchange rates) maturing in December 2007. The proceeds of both issuances were used to repay intercompany and short-term bank borrowings.

   At March 31, 2004, PPL Energy Supply had no commercial paper outstanding.

   During the three months ended March 31, 2004, PPL Energy Supply distributed approximately $63 million to its parent company, PPL Energy Funding, and received capital contributions of $8 million.

   (PPL and PPL Electric)

   In March 2004, PPL Electric retired approximately $25 million of its outstanding First Mortgage Bonds, 6.875% Series due March 2004, at par value. Also in March, PPL Electric redeemed approximately $6 million aggregate principal amount of its First Mortgage Bonds, 7.30% Series due 2024, at par value, through the application of cash deposited with the trustee to release certain transmission lines and other equipment from the lien of the 1945 First Mortgage Bond Indenture.

   In March 2004, PPL Transition Bond Company made principal payments on transition bonds totaling approximately $72 million.

   At March 31, 2004, PPL Electric had $45 million of commercial paper outstanding.

   In April 2004, PPL Electric completed an offer to repurchase its outstanding First Mortgage Bonds, 6-1/2% Series due 2005. Pursuant to the offer, PPL Electric repurchased approximately $40 million of the bonds at a market value of $43 million. PPL Electric also repurchased in the open market $45 million of outstanding 5-7/8% Senior Secured Bonds and $14 million of outstanding 6-1/4% Senior Secured Bonds at market values of $48 million and $16 million, respectively. Approximately $53 million of these open market purchases settled in May 2004. The purpose of the repurchases was to reduce future interest expense.

   Dividends and Dividend Restrictions

   (PPL)

   In February 2004, PPL announced an increase to its quarterly common stock dividend, payable April 1, 2004, from 38.5 cents per share to 41 cents per share (equivalent to $1.64 per annum). Future dividends, declared at the discretion of the Board of Directors, will be dependent upon future earnings, cash flows, financial requirements and other factors.

7. Acquisitions, Development and Divestitures

   Domestic Generation Projects (PPL and PPL Energy Supply)

   In February 2004, a subsidiary of PPL Generation sold a spare gas combustion turbine generator and related equipment for approximately $10 million. There was an insignificant gain on the sale.

   The turbine upgrade for PPL Susquehanna Unit 1 was completed in April 2004. This project provides a nominal power increase of 50 MW of generation capacity, of which PPL Susquehanna has a 90% undivided interest. Through March 31, 2004, a total of approximately $62 million had been incurred on the Unit 1 upgrade.

   The 600 MW Lower Mt. Bethel facility is expected to be in-service in the second quarter of 2004.

   International Energy Projects (PPL and PPL Energy Supply)

   Write-down of International Energy Projects

   In 2001, PPL Global estimated that the long-term viability of its CEMAR investment was jeopardized and that there was minimal probability of positive future cash flows. At that time, PPL Global recorded an impairment loss in the carrying value of its net assets in CEMAR. In March 2002, PPL Global recorded a further impairment loss. In June 2002, PPL made a decision to exit the investment. At that time, PPL Global's remaining portion of its CEMAR investment, which related to foreign currency translation adjustments (CTA), was written-off. Accounting guidance prohibited the inclusion of CTA in impairment calculations prior to designating such assets as held for disposal.

   On August 21, 2002, ANEEL authorized an administrative intervention in CEMAR and fully assumed operational and financial control of the company. The intervener appointed by ANEEL initiated efforts to transfer the ownership interest in CEMAR to a new owner. As of February 11, 2003, due to the inability to discharge their obligations under the continuing intervention, PPL-related officers and directors of CEMAR resigned from their respective positions.

   In April 2004, PPL Global transferred its interest in CEMAR to two companies controlled by a private equity fund managed by GP Investimentos, a Brazilian private equity firm. The sale resulted in a credit of approximately $22 million, which will be included in the second quarter 2004 results. This credit is a result of the reversal of the negative carrying value, created by previous consolidated operating losses for this investment, and the associated CTA. At March 31, 2004, the negative investment in CEMAR of $18 million was included in "Deferred Credits and Other Noncurrent Liabilities - Other."

   PPL Global no longer controlled or managed CEMAR, and PPL Global had deconsolidated the assets and liabilities of CEMAR from its financial statements after ANEEL assumed control of the company. Consistent with the cost method of accounting, PPL Global had not been recording CEMAR's operating results since such time.

   Discontinued Operations

   In December 2003, PPL Global's Board of Managers authorized PPL Global to sell its investment in a Latin American telecommunications company, and approved a plan of sale. It was determined that the viability of this non-strategic business was not economical. PPL Global plans to sell the telecommunications company in 2004.

   As a result, PPL Global recorded a write-down in the carrying value of the company's net assets to their estimated fair value of approximately $1 million. The operating results of the Latin American telecommunications company, a loss of approximately $1 million and an insignificant amount for the three months ended March 31, 2004 and 2003, are reflected as "Loss from Discontinued Operations" on the Statement of Income. The assets and liabilities of the discontinued operation totaled $5 million and $4 million at March 31, 2004, and are included in "Current Assets - Other" and "Current Liabilities - Other" on the Balance Sheet.

   Sale of CGE

   In March 2004, PPL Global completed the sale of its minority interest in shares of CGE for approximately $123 million. The sale resulted in a charge of approximately $15 million pre-tax, which is included in operating expenses, as "Energy related businesses," on the Statement of Income. This charge was due primarily to a currency translation adjustment tied to the devaluation of the Chilean peso since the original acquisition in 2000.

   DelSur Tender Offer

   In April 2004, EC, a wholly owned subsidiary of PPL Global, launched a tender offer for outstanding shares of DelSur for up to an aggregate purchase price of $17 million. PPL currently owns approximately 80.5% of DelSur. The closing of the offer is expected to occur in May 2004. EC reserves the right to cancel the offer if a minimum of 12.53% of the outstanding shares are not tendered.

8. Commitments and Contingent Liabilities

   Energy Purchases and Sales Commitments

   Liability for Above Market NUG Contracts (PPL, PPL Energy Supply and PPL Electric)

   In 1998, PPL Electric recorded a loss accrual for above market contracts with NUGs of $854 million, due to its generation business being deregulated. Effective January 1999, PPL Electric began reducing this liability as an offset to "Energy purchases" on the Statement of Income. This reduction is based on the estimated timing of the purchases from the NUGs and projected market prices for this generation. The final existing NUG contract expires in 2014. In connection with the corporate realignment in 2000, the remaining balance of this liability was transferred to PPL EnergyPlus. At March 31, 2004, the remaining liability associated with the above market NUG contracts was $334 million.

   Wholesale Energy Commitments

   (PPL and PPL Energy Supply)

   As part of the purchase of generation assets from Montana Power, PPL Montana assumed a power purchase agreement and a power sales agreement (for the Flathead Irrigation Project), which were still in effect at March 31, 2004. In accordance with purchase accounting guidelines, PPL Montana recorded liabilities of $66 million as the estimated fair value of these agreements at the acquisition date. These liabilities are being reduced over the terms of the agreements, through 2010, as adjustments to "Wholesale energy marketing" revenues and "Energy purchases" on the Statement of Income. The unamortized balance of the liability related to the power purchase agreement at March 31, 2004 was $55 million and is included in "Deferred Credits and Other Noncurrent Liabilities - Other" on the Balance Sheet.

   On July 1, 2002, PPL EnergyPlus began to sell to NorthWestern an aggregate of 450 MW of energy to be supplied by PPL Montana. Under two five-year agreements, PPL EnergyPlus is supplying 300 MW of around-the-clock electricity and 150 MW of unit-contingent on-peak electricity. PPL Montana also makes short-term energy sales to NorthWestern. Following NorthWestern's credit downgrades to below investment grade in late-2002, PPL Montana and NorthWestern agreed to modify the payment provisions of the energy contracts such that NorthWestern would pay PPL Montana on a weekly basis, in arrears.

   In September 2003, NorthWestern filed a voluntary petition for relief seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code. NorthWestern made its filing in federal bankruptcy court in Delaware. Between the time of NorthWestern's last weekly payment and the bankruptcy filing date, PPL Montana made approximately $1.6 million of energy sales to NorthWestern.

   Following the date that NorthWestern filed for bankruptcy, PPL Montana and NorthWestern agreed to amend the power supply agreements to, among other things, eliminate the weekly payment arrangements and resume more typical monthly invoicing and payment arrangements. The amendments were contingent on NorthWestern's assumption of the power supply agreements in its bankruptcy proceeding.

   In September 2003, NorthWestern filed a motion with the bankruptcy court seeking, among other things, to assume the two five-year power supply agreements (as amended) and to pay PPL Montana for the approximately $1.6 million of energy sales made immediately prior to the time of the bankruptcy filing. In October 2003, the bankruptcy court entered an order granting NorthWestern's motion. NorthWestern has, in accordance with the terms of the judge's order, paid PPL Montana for the pre-filing energy sales, and the parties have resumed monthly invoicing and payment arrangements.

   In April 2003, the Maryland Public Service Commission authorized the competitive provision of the Standard Offer Service (SOS) to allow utilities to procure SOS for customers through the competitive selection of wholesale supply. In March 2004, PPL EnergyPlus was awarded an 11-month fixed-price SOS contract for customer load (approximately 60 MW) for Potomac Electric Power Company. This contract commences in July 2004.

   As a result of New Jersey's Electric Discount and Energy Competition Act, its Board of Public Utilities authorized and made available to power suppliers, on a competitive basis, the opportunity to provide Basic Generation Service (BGS) to all non-shopping New Jersey customers. In February 2003, PPL EnergyPlus was awarded a 34-month fixed-price BGS contract for a fixed percentage of customer load (approximately 1,000 MW) for Atlantic City Electric Company, Jersey Central Power & Light Company and Public Service Electric & Gas Company. In February 2003, PPL EnergyPlus was also awarded about 500 MW for a 10-month hourly energy price supply. These contracts commenced in August 2003. Additionally, in February 2004, PPL EnergyPlus was awarded a 12-month hourly energy price supply BGS contract for a fixed percentage of customer load (approximately 450 MW) for Atlantic City Electric Company, Jersey Central Power & Light Company and Public Service Electric & Gas Company. These contracts commence in June 2004.

   Legal Matters

   (PPL, PPL Energy Supply and PPL Electric)

   PPL and its subsidiaries are involved in numerous legal proceedings, claims and litigation in the ordinary course of business. PPL and its subsidiaries cannot predict the ultimate outcome of such matters, or whether such matters may result in material liabilities.

   Montana Power Shareholders' Litigation (PPL and PPL Energy Supply)

   In August 2001, a purported class-action lawsuit was filed by a group of shareholders of Montana Power against Montana Power, the directors of Montana Power, certain advisors and consultants of Montana Power and PPL Montana. The plaintiffs allege, among other things, that Montana Power was required to, and did not, obtain shareholder approval of the sale of Montana Power's generation assets to PPL Montana in 1999. Although most of the claims in the complaint are against Montana Power, its board of directors, and its consultants and advisors, two claims are asserted against PPL Montana. In the first claim, plaintiffs seek a declaration that because Montana Power shareholders did not vote on the 1999 sale of generating assets to PPL Montana, that sale "was null and void ab initio." The second claim alleges that PPL Montana was privy to and participated in a strategy whereby Montana Power would sell its generation assets to PPL Montana without first obtaining Montana Power shareholder approval, and that PPL Montana has made net profits in excess of $100 million as the result of this alleged illegal sale. In the second claim, plaintiffs request that the court impose a "resulting and/or constructive trust" on both the generation assets themselves and all profits, plus interest on the amounts subject to the trust. This lawsuit is currently pending in the U.S. District Court of Montana, Butte Division. PPL and PPL Energy Supply cannot predict the outcome of this matter.

   NorthWestern Corporation Litigation (PPL and PPL Energy Supply)

   In connection with the acquisition of the Montana generation assets, the Montana Power APA, which was previously assigned to PPL Montana by PPL Global, includes a provision concerning the proposed purchase by PPL Montana of a portion of NorthWestern's interest in the 500-kilovolt Colstrip Transmission System (CTS) for $97 million. During 2002, PPL Montana had been in discussions with NorthWestern regarding the proposed purchase of the CTS and the claims that PPL Montana believes it has against NorthWestern arising from the Montana Power APA and related agreements. Notwithstanding such discussions, in September 2002, NorthWestern filed a lawsuit against PPL Montana in Montana state court seeking specific performance of PPL Montana's purchase of the CTS or, alternatively, damages for breach of contract. Pursuant to PPL Montana's application, the matter was removed to the U.S. District Court of Montana, Butte Division. Following removal, NorthWestern asserted additional claims for damages against PPL Montana, and PPL Montana filed defenses denying liability for NorthWestern's claims as well as counterclaims against NorthWestern seeking damages PPL Montana believes it has suffered under the Montana Power APA and related agreements. This matter currently is scheduled for trial in the Montana federal district court in mid-2005.

   In September 2003, NorthWestern filed a petition in Delaware for reorganization under the U.S. Bankruptcy Code, which resulted in an automatic stay of PPL Montana's counterclaims against NorthWestern. In December 2003, NorthWestern filed a motion to transfer this litigation from the Montana federal district court to the federal district court in Delaware where NorthWestern's bankruptcy proceeding is pending. In March 2004, the Montana federal district court denied this motion to transfer. As a result of the court's decision and a prior stipulation of NorthWestern and PPL Montana in NorthWestern's bankruptcy proceeding, the automatic stay of PPL Montana's counterclaims has been lifted. PPL and PPL Energy Supply cannot predict the outcome of this litigation.

   Montana Hydroelectric Litigation (PPL and PPL Energy Supply)

   In October 2003, a lawsuit was filed against PPL Montana, PPL Services, Avista Corporation, PacifiCorp and nine John Doe defendants in the U.S. District Court of Montana, Missoula Division, by two residents allegedly acting in a representative capacity on behalf of the State of Montana. In January 2004, the complaint was amended to, among other things, include the Great Falls school districts as additional plaintiffs. The action seeks a declaratory judgment, compensatory damages for unjust enrichment, trespass and negligence, and attorneys fees on a "private attorney general" theory for use of state and/or "school trust" lands without the compensation required by law and to require defendants to adequately compensate the state and/or the State School Trust fund for full market value of lands occupied. Generally, the suit is founded on allegations that the bed of navigable rivers is state-owned property following admission to statehood, and that the use thereof for placement of dam structures, affiliated structures and reservoirs should trigger lease payments for use of land underneath. The plaintiffs allege that the State Land Board and Department of Natural Resources and Conservation failed to exercise their duty to administer riverbeds for the maximum benefit of public education and/or the state. No specific amount of damages or future rental value has been claimed. PPL Montana and PPL Services cannot predict the outcome of this litigation.

   Proposed Montana Energy Security Initiative (PPL and PPL Energy Supply)

   On April 30, 2004, the Montana Secretary of State certified, in accordance with applicable statutes, that it had approved the form of a proposed "Montana Energy Security Act" initiative. The proposed initiative may be placed on the November 2004 statewide ballot if the Montana Attorney General determines that the initiative is legally sufficient and if sufficient signatures are obtained prior to June 18, 2004. Among the stated purposes of the proposed initiative is to create a Montana public power board appointed by the governor to determine whether it is in the public interest to purchase electric and natural gas generation, transmission and distribution facilities in Montana on behalf of the state. The proposed initiative would permit the board to purchase such facilities, including any or all of PPL Montana's hydroelectric dams or coal-fired facilities, at fair market value. However, the proposed initiative does not provide the power of condemnation to acquire generation facilities. At this time, PPL and PPL Energy Supply cannot predict whether the Attorney General will determine that the initiative is legally sufficient, whether the proposed initiative will garner enough signatures for placement on the November 2004 statewide ballot, whether there might be a successful legal challenge to the initiative, whether it would pass if on the ballot or what impact, if any, the measure might ultimately have upon PPL Montana or its generation operations. PPL intends to oppose the initiative, if it qualifies for the November ballot.

   Regulatory Issues

   California ISO and Western Markets (PPL and PPL Energy Supply)

   Through its subsidiaries, PPL has made approximately $18 million of sales to the California ISO, of which $17 million has not been paid to PPL subsidiaries. Given the myriad of electricity supply problems presently faced by the California electric utilities and the California ISO, PPL cannot predict whether or when it will receive payment. As of March 31, 2004, PPL has fully reserved for possible underrecoveries of payments for these sales.

   Regulatory proceedings arising out of the California electricity supply situation have been filed at the FERC. The FERC has determined that all sellers of energy into markets operated by the California ISO and the California Power Exchange, including PPL Montana, should be subject to refund liability for the period beginning October 2, 2000 through June 20, 2001 and initiated an evidentiary hearing concerning refund amounts. In April 2003, the FERC changed the manner in which this refund liability is to be computed and ordered further proceedings to determine the exact amounts that the sellers, including PPL Montana, would be required to refund.

   In June 2003, the FERC took several actions as a result of a number of related investigations. The FERC terminated proceedings pursuant to which it had been considering whether to order refunds for spot market bilateral sales made in the Pacific Northwest, including sales made by PPL Montana, during the period December 2000 through June 2001. The FERC explained that the totality of the circumstances made refunds unfeasible and inequitable, and that it had provided adequate relief by adopting a price cap throughout the western U.S. The FERC also denied pending complaints against long-term contracts in the western U.S. In these complaints, various power buyers challenged selected long-term contracts that they entered into during 2000 and 2001, complaining that the power prices were too high and reflected manipulation of those energy markets. The FERC found that the complainants had not met their burden of showing that changing or canceling the contracts was "in the public interest" and that the dysfunction in the California markets did not justify changing these long-term contracts. In two separate orders, the FERC also ordered 65 different companies, agencies or municipalities to show cause why they should not be ordered to disgorge profits for "gaming" or anomalous market behavior during 2000 and 2001. These orders to show cause address both unilateral and joint conduct identified as the "Enron trading strategies." Neither PPL EnergyPlus nor PPL Montana was included in these orders to show cause, and they previously have explained in responses to data requests from the FERC that they have not engaged in such trading strategies. Finally, the FERC issued a new investigation order directing its staff to investigate any bids made into the California markets in excess of $250/MWh during the period from May 2000 to October 2000, a period of time prior to the period examined in connection with most of the proceedings described above. To their knowledge, neither PPL EnergyPlus nor PPL Montana is being investigated by the FERC under this new order.

   Litigation arising out of the California electricity supply situation has been filed in California courts against sellers of energy to the California ISO. The plaintiffs and interveners in these legal proceedings allege, among other things, abuse of market power, manipulation of market prices, unfair trade practices and violations of state antitrust laws, and seek other relief, including treble damages and attorneys' fees. While PPL's subsidiaries have not been named by the plaintiffs in these legal proceedings, PPL Montana was named by a defendant in its cross-complaint in a consolidated court proceeding, which combined into one master proceeding several of the lawsuits alleging antitrust violations and unfair trade practices. This generator denies that any unlawful, unfair or fraudulent conduct occurred but asserts that, if it is found liable, the other generators and power marketers, including PPL Montana, caused, contributed to and/or participated in the plaintiffs' alleged losses.

   In May 2003, the Port of Seattle filed a lawsuit in the U.S. District Court for the Western District of Washington against eighteen defendants, including PPL Montana. The lawsuit asserts claims against all defendants under the federal and state antitrust laws, the federal Racketeer Influenced and Corrupt Organizations Act and for common law fraud. The complaint centers on many of the same alleged activities that are the basis for the litigation arising out of the California electricity supply situation described above. The Port of Seattle is seeking actual, trebled and punitive damages, as well as attorneys' fees. PPL Montana and several other defendants have filed a motion to dismiss this complaint that has not been ruled on by the court. In December 2003, this matter was transferred to the U.S. District Court for the Southern District of California for inclusion with proceedings already centralized and pending in that court.

   In February 2004, the Montana Public Service Commission initiated a limited investigation of the Montana retail electricity market for the years 2000 and 2001, focusing on how that market was affected by transactions involving the possible manipulation of the electricity grid in the western U.S. The investigation includes all public utilities and licensed electricity suppliers in Montana, as well as other entities that may possess relevant information. Through its subsidiaries, PPL is a licensed electricity supplier in Montana and a wholesale supplier in the western U.S. As with the other investigations taking place as a result of the issues arising out of the electricity supply situation in California and other western states, PPL and its subsidiaries believe that they have not engaged in any improper trading or marketing practices affecting the Montana retail electricity market.

   While PPL and its subsidiaries believe that they have not engaged in any improper trading practices, they cannot predict whether, or the extent to which, any PPL subsidiaries will be the target of any additional governmental investigations or named in other lawsuits or refund proceedings, the outcome of any such lawsuits or proceedings or whether the ultimate impact on them of the electricity supply situation in California and other western states will be material.

   PJM Capacity Transactions (PPL, PPL Energy Supply and PPL Electric)

   In September 2002, PPL was served with a complaint filed by Utilimax.com, Inc., which was a member of PJM, in the U.S. District Court for the Eastern District of Pennsylvania against PPL and PPL EnergyPlus alleging, among other things, violations of the federal antitrust laws in connection with the pricing of installed capacity in the PJM daily market during the first quarter of 2001. The court dismissed the complaint with prejudice in July 2003, and Utilimax has appealed the court's dismissal to the U.S. Court of Appeals for the Third Circuit.

   In December 2002, PPL was served with a complaint against PPL, PPL EnergyPlus and PPL Electric filed in the U.S. District Court for the Eastern District of Pennsylvania by a group of 14 Pennsylvania boroughs that apparently alleges, in broad terms, similar violations of the federal antitrust laws. These boroughs were wholesale customers of PPL Electric. The claims of the boroughs are similar to those previously alleged by a single borough in litigation that is still pending in the same court. In addition, in November 2003, PPL and PPL EnergyPlus were served with a complaint which was filed in the same court by Joseph Martorano, III (d/b/a ENERCO), that also alleges violations of the federal antitrust laws in early 2001. The complaint indicates that ENERCO provides consulting and energy procurement services to clients in Pennsylvania and New Jersey.

   Each of the U.S. Department of Justice - Antitrust Division, the FERC and the Pennsylvania Attorney General conducted investigations regarding PPL's PJM capacity market transactions in early 2001 and did not find any reason to take action against PPL.

   Although PPL, PPL EnergyPlus and PPL Electric believe the claims in these complaints are without merit, they cannot predict the outcome of these matters.

   New England Investigation (PPL and PPL Energy Supply)

   In January 2004, PPL became aware of an investigation by the Connecticut Attorney General and the FERC's Office of Market Oversight and Investigation (OMOI) regarding allegations that natural gas-fired generators located in New England illegally sold natural gas instead of generating electricity during the week of January 12, 2004. Subsequently, PPL and other generators were served with a data request by OMOI. The data request indicated that PPL was not under suspicion of a regulatory violation, but that OMOI was conducting an initial investigation. PPL has responded to this data request. PPL also has responded to data requests of the ISO - New England and data requests served by subpoena from the Connecticut Attorney General. While PPL does not believe that it committed any regulatory or other violations concerning the subject matter of these investigations, PPL cannot predict the outcome of these investigations.

   PJM Billing (PPL, PPL Energy Supply and PPL Electric)

   In March 2004, an Exelon Corporation subsidiary, PECO Energy, Inc. (PECO), alleged that PJM overcharged PECO by approximately $45 million, exclusive of interest, from April 1998 through May 2003 as a result of an error by PJM in the State Estimator Program used in connection with billing all PJM customers for certain transmission, spot market energy and ancillary services charges. PECO further alleged that PPL Electric or other PPL subsidiaries should be responsible for all these overcharges, plus interest. PPL, PECO and PJM have begun discussions under the dispute resolution procedures of the PJM Operating Agreement. Although participating in the discussions, PPL Electric and PPL Energy Supply do not believe that they or any PPL subsidiaries have any financial responsibility or liability to PJM or PECO as a result of PJM's alleged error. PJM has not taken a position on this matter. PPL Electric and PPL Energy Supply cannot predict the outcome of these discussions, whether any legal proceedings may result from these allegations, the outcome of such proceedings, or the ultimate impact on any PPL subsidiary.

   FERC Market-Based Rate Authority (PPL and PPL Energy Supply)

   In December 1998, the FERC issued an order authorizing PPL EnergyPlus to make wholesale sales of electric power and related products at market-based rates. In that order, the FERC directed PPL EnergyPlus to file an updated market analysis within three years of the date of the order, and every three years thereafter. PPL EnergyPlus filed its initial updated market analysis in December 2001. Several parties thereafter filed interventions and protests requesting that PPL EnergyPlus be required to provide additional information demonstrating that it has met the FERC's market power tests necessary for PPL EnergyPlus to continue its market-based rate authority. PPL EnergyPlus has responded that the FERC does not require the economic test suggested by the interveners and that, in any event, it would meet such economic test if required by the FERC. PPL EnergyPlus cannot predict the outcome of this matter.

   FERC Proposed Rules (PPL, PPL Energy Supply and PPL Electric)

   In July 2002, the FERC issued a Notice of Proposed Rulemaking entitled "Remedying Undue Discrimination through Open Access Transmission Service and Standard Electricity Market Design." The proposed rule is currently available for public comment and contains a proposed implementation date of July 31, 2003. However, since the issuance of the proposed rule, the FERC has delayed the implementation date. This far-reaching proposed rule, in its current form, purports to establish uniform transmission rules and a standard market design by, among other things:

   • enacting standard transmission tariffs and uniform market mechanisms,

   • monitoring and mitigating "market power,"

   • managing transmission congestion through pricing and tradable financial rights,

   • requiring independent operational control over transmission facilities,

   • forming state advisory committees on regional transmission organizations and resource adequacy, and

   • exercising FERC jurisdiction over all transmission service.

   In April 2003, the FERC issued a white paper describing certain modifications to the proposed rule. The FERC has requested comments and is holding numerous public comment sessions concerning the white paper.

   If adopted, this proposed rule may have a significant impact on PPL and its subsidiaries, which cannot be predicted at this time.

   In November 2003, the FERC adopted a proposed rule to require all existing and new electric market-based tariffs and authorizations to include provisions prohibiting the seller from engaging in anticompetitive behavior or the exercise of market power. The FERC order adopts a list of market behavior rules that apply to all electric market-based rate tariffs and authorizations, including those of PPL EnergyPlus and any other PPL subsidiaries that hold market-based rate authority. PPL does not expect this rule to have a significant impact on its subsidiaries.

   Wallingford Deactivation (PPL and PPL Energy Supply)

   In January 2003, PPL negotiated an agreement with the ISO - New England that would declare that four of the five units at PPL's Wallingford, Connecticut facility are "reliability must run" units and put those units under cost-based rates. This agreement and the cost-based rates are subject to the FERC's approval, and PPL filed a request with the FERC for such approval. PPL requested authority for cost-based rates because the current and anticipated wholesale prices in New England are insufficient to cover the costs of keeping these units available for operation. In March 2003, PPL filed an application with the New England Power Pool to temporarily deactivate these four units. In May 2003, the FERC denied PPL's request for cost-based rates in light of the FERC's changes to the market and bid mitigation rules of the ISO - New England made in a similar case involving generating units owned by NRG Energy, Inc. PPL subsequently has explained to the FERC that its changes to the market and bid mitigation rules of ISO - New England will not provide sufficient revenues to PPL, and PPL continues to seek approval of its cost-based rates. However, PPL has informed the New England Power Pool that it will not pursue its request to temporarily deactivate certain Wallingford units. In February 2004, PPL appealed the FERC's denial of its request for cost-based rates to the U.S. Court of Appeals for the D.C. Circuit. PPL cannot predict the outcome of this matter.

   IRS Synthetic Fuels Tax Credits (PPL and PPL Energy Supply)

   PPL, through its subsidiaries, has interests in two synthetic fuel production facilities: the Somerset facility located in Pennsylvania and the Tyrone facility to be relocated to Kentucky. PPL receives tax credits pursuant to Section 29 of the Internal Revenue Code based on the sale of synfuel from these facilities to unaffiliated third-party purchasers. Section 29 of the Internal Revenue Code provides tax credits for the production and sale of solid synthetic fuels produced from coal. To qualify for the Section 29 tax credits, the synthetic fuel must meet three primary conditions: (i) there must be a significant chemical change in the coal feedstock, (ii) the product must be sold to an unaffiliated entity, and (iii) the production facility must have been placed in service before July 1, 1998. Section 29 tax credits are currently scheduled to expire at the end of 2007.

   A PPL subsidiary owns and operates the Somerset facility. In November 2001, PPL received a private letter ruling from the IRS pursuant to which, among other things, the IRS concluded that the synthetic fuel produced at the Somerset facility qualifies for Section 29 tax credits. The Somerset facility uses the Covol technology to produce synfuel, and the IRS issued the private letter ruling after its review and approval of that technology. In reliance on this private letter ruling, PPL has sold synfuel produced at the Somerset facility resulting in an aggregate of approximately $161 million of tax credits as of March 31, 2004. PPL owns a limited partnership interest in the entity that owns and plans to operate the Tyrone facility. In April 2004, this entity received a private letter ruling from the IRS. Similar to its conclusions relating to the Somerset facility, the IRS concluded that the synfuel to be produced at the Tyrone facility qualifies for Section 29 tax credits. The Tyrone facility currently is being relocated from Pennsylvania to a site in Kentucky. PPL anticipates that the Tyrone facility will commence commercial operations in mid-2004. PPL also purchases synfuel from unaffiliated third parties, at prices below the market price of coal, for use at its coal-fired power plants.

   In June 2003, the IRS announced that it had reason to question the scientific validity of certain test procedures and results that have been presented to it by taxpayers with interests in synfuel operations as evidence that the required significant chemical change has occurred, and that it was reviewing information regarding these test procedures and practices. In conjunction with such review, the IRS suspended the issuance of private letter rulings concerning whether a significant chemical change has occurred for requests relying on the procedures and results being reviewed. In addition, the IRS indicated that it might revoke existing private letter rulings that relied on the procedures and results under review if it determined that those test procedures and results do not demonstrate that a significant chemical change has occurred.

   In October 2003, the IRS announced that it had completed its review of the scientific validity of test procedures and results presented by taxpayers as evidence of significant chemical change and determined that the test procedures and results used by taxpayers are scientifically valid, if the procedures are applied in a consistent and unbiased manner. Further, the IRS announced that it will continue to issue rulings on significant chemical change under applicable IRS guidelines, despite some question by the IRS as to whether those processes result in the level of significant chemical change required by Section 29 of the Internal Revenue Code and IRS revenue rulings. Finally, the IRS indicated that it would require taxpayers to comply with certain sampling and data/record retention practices to obtain or maintain a ruling on significant chemical change.

   PPL believes that the October IRS announcement and its receipt of the private letter ruling for the Tyrone facility following this announcement confirms that PPL is justified in its reliance on the private letter rulings for the Somerset and Tyrone facilities and that the test results that PPL presented to the IRS in connection with its private letter rulings are scientifically valid. In addition, PPL believes that it has operated the Somerset facility in compliance with the private letter ruling and Section 29 of the Internal Revenue Code.

   In October 2003, following the IRS announcement, it was reported that the U.S. Senate Permanent Subcommittee on Investigations, of the Committee on Governmental Affairs, had begun an investigation of the synthetic fuel industry and its producers. That investigation is ongoing. PPL cannot predict when the investigation will be completed or the potential results of the investigation.

   U.K. Electricity Regulation (PPL and PPL Energy Supply)

   The principal legislation governing the structure of the electricity industry in Great Britain is the Electricity Act 1989 (the "Electricity Act"), as amended by the Utilities Act 2000 (the "Utilities Act").

   The provisions in the Utilities Act include the replacement of individual gas and electricity regulators with the Gas and Electricity Markets Authority (the "Regulator"). The principal objective of the Regulator is to protect the interests of consumers, wherever appropriate, by promoting effective competition in electricity generation and supply. There currently is no competition in electricity distribution, but recently a small operator has applied to the Regulator for a license to operate in Great Britain.

   Each distribution business constitutes a natural regional monopoly and is subject to control on the prices it can charge and the quality of supply it must provide. The operations of WPD are regulated under its distribution licenses, pursuant to which income generated is subject to an allowed revenue regulatory framework that provides economic incentives to minimize operating, capital and financing costs. Under the Electricity Act, WPD is under a statutory duty to offer terms to connect any customer requiring electricity within their area and to maintain that connection. The allowed revenue that is recovered from electricity supply businesses through charges by the Distribution Network Operator (DNO) made for the use of the distribution network is regulated on the basis of the Retail Price Index (RPI) minus X formula. The allowed revenue is increased by RPI minus X during the tenure of each price control period. (RPI is a measure of inflation and equals the percentage change in the U.K. RPI between the six-month period of July to December in the previous year. The X factor is established by the Regulator following review and represents an annual efficiency factor.) The Regulator currently sets the Distribution Price Control Formula for five-year periods.

   The current Distribution Price Control Formula permits DNOs, within a review period, to partially retain additional revenues due to increased distribution of units and to retain all increases in operating profit due to efficient operations and the reduction of expenses (including financing costs). The Regulator may reduce this increase in operating profit through a one-off price reduction in the first year of the new pricing regime, if the Regulator determines that it is not a function of efficiency savings, or if genuine efficiency savings have been made and the Regulator determines that customers should benefit through lower prices.

   In December 1999, the Regulator published final price proposals for distribution price control for the 12 DNOs in England and Wales. These proposals represented a reduction to distribution prices of 20% for WPD (South West) and 26% for WPD (South Wales) effective April 2000, followed by a reduction in real terms (i.e., before inflation is taken into account) of 3% each year from April 2001. This price control is scheduled to operate until March 2005.

   Improvements in quality of supply form an important part of the final proposals. Revised targets for system performance, in terms of the security and availability of supply, were implemented with new targets for reductions in minutes lost and interruptions.

   The Regulator has introduced a quality of service incentive plan for the period from April 2002 to March 2005. Companies will be penalized annually up to 2% of revenue for failing to meet their quality of supply targets for the incentive plan. The plan includes a mechanism for rewarding companies which exceed their targets based on their rate of improvement of performance during the period and a process for rewarding exceptional performance by specifying how the targets will be reset.

   Distribution businesses must also meet the Guaranteed and Overall Standards of Performance, which are set by the Regulator to ensure an appropriate level of quality of supply. If a company fails to provide the level of service specified, it must make a fixed payment to the retail customer affected.

   In June 2003, the Regulator published a report on the quality of supply from April 2001 through March 2002. The report confirms that WPD (South West) and WPD (South Wales) met or exceeded such standards and that no payments were required to be made by either company.

   Any significant lowering of rates implemented by the Regulator after the current price control ends in March 2005 could lower the amount of revenue WPD generates in relation to its operational cost and could materially lower the income of WPD.

   Environmental Matters - Domestic

   (PPL, PPL Energy Supply and PPL Electric)

   Due to the environmental issues discussed below or other environmental matters, PPL subsidiaries may be required to modify, replace or cease operating certain facilities to comply with statutes, regulations and actions by regulatory bodies or courts. In this regard, PPL subsidiaries also may incur capital expenditures or operating expenses in amounts which are not now determinable, but which could be significant.

   Air (PPL and PPL Energy Supply)

   The Clean Air Act deals, in part, with acid rain, attainment of federal ambient ozone standards and toxic air emissions in the U.S. PPL's subsidiaries are in substantial compliance with the Clean Air Act. The Bush administration and certain members of Congress have made proposals regarding possible amendments to the Clean Air Act. These amendments could require significant further reductions in nitrogen oxide, sulfur dioxide and mercury and could possibly require measures to limit carbon dioxide. The cost of these reductions could be substantial. The federal government is seeking commitments from many major industries to voluntarily reduce carbon dioxide emissions. In addition, several states have taken their own actions requiring mandatory carbon dioxide emission reductions. Pennsylvania and Montana have not, at this time, established any formal programs to address carbon dioxide and other greenhouse gases.

   Pennsylvania began requiring further seasonal (May-June) nitrogen oxide reductions to 80% from 1990 levels starting in 2003. This requirement is pursuant to EPA's 1998 State Implementation Plan (SIP) call to 22 eastern states, including Pennsylvania, to revise their state implementation plans. PPL achieved the 2003 nitrogen oxide reductions with the installation of SCR technology on the Montour units, and may install SCR or other additional nitrogen oxide reduction technology on one or more Brunner Island units at a later date.

   The EPA has also developed new standards for ambient levels of ozone and fine particulates in the U.S. These standards have been upheld following court challenges. To facilitate attainment of these standards, the EPA has also proposed a rule (called the Interstate Air Quality Rule) for 28 midwest and eastern states, including Pennsylvania, to reduce sulfur dioxide emissions by 40% and nitrogen oxide emissions by 55% from today's levels, starting in 2010. Starting in 2015, the proposed rule requires reductions in sulfur dioxide and nitrogen oxide of 70% and 65%, respectively, from today's levels. The proposed rule allows these reductions to be achieved through cap and trade programs, and is consistent with the Bush administration's proposed amendments to the Clean Air Act, except that it applies to only the 28 states.

   The EPA has proposed mercury and nickel regulations and is expected to finalize these regulations in 2004. The proposed mercury regulations affect coal-fired plants. With respect to mercury, the EPA has proposed two alternative approaches: an emission trading program to take effect beginning January 2010 or a requirement to take effect in 2007 that every unit install maximum achievable control technology (MACT). The proposed nickel regulations impose MACT requirements on oil-fired units to take effect in 2007. The nickel regulations would affect Martins Creek Units 3 and 4. The cost of complying with these regulations is not now determinable, but could be significant.

   In 1999, the EPA initiated enforcement actions against several utilities, asserting that older, coal-fired power plants operated by those utilities have, over the years, been modified in ways that subject them to more stringent "New Source" requirements under the Clean Air Act. The EPA has since issued notices of violation and commenced enforcement activities against other utilities. The future direction of the EPA's enforcement initiative is presently unclear. Therefore, at this time, PPL is unable to predict whether such EPA enforcement actions will be brought with respect to any of its affiliates' plants. However, the EPA regional offices that regulate plants in Pennsylvania (Region III) and Montana (Region VIII) have indicated an intention to issue information requests to all utilities in their jurisdiction. The Region VIII office issued such a request to PPL Montana's Corette plant in 2000 and the Colstrip plant in 2003. The Region III office issued such a request to PPL Generation's Martins Creek plant in 2002. PPL and its subsidiaries have responded to the Corette and Martins Creek information requests and are in the process of responding to the Colstrip information request. The EPA has taken no further action following the Martins Creek and Corette submittals. PPL cannot presently predict what, if any, action the EPA might take in this regard. Should the EPA or any state initiate one or more enforcement actions against PPL or its subsidiaries, compliance with any such enforcement actions could result in additional capital and operating expenses in amounts which are not now determinable, but which could be significant.

   In 2003, the EPA issued changes to its "New Source" regulations that clarify what projects are exempt from "New Source" requirements as routine maintenance and repair. Under these clarifications, any project to replace existing equipment with functionally equivalent equipment would be considered routine maintenance and excluded from "New Source" review if the cost of the replaced equipment does not exceed 20% of the replacement cost of the entire process unit, the basic design is not changed and no permit limit is exceeded. These clarifications would substantially reduce the uncertainties under the prior "New Source" regulations; however, they have been stayed by the U.S. Court of Appeals for the District of Columbia Circuit. PPL is therefore continuing to operate under the "New Source" regulations as they existed prior to the EPA's clarifications.

   The New Jersey DEP and some New Jersey residents raised environmental concerns with respect to the Martins Creek plant, particularly with respect to sulfur dioxide emissions and the opacity of the plant's plume. These issues were raised in the context of an appeal by the New Jersey DEP of the Air Quality Plan Approval issued by the Pennsylvania DEP to the adjacent Lower Mt. Bethel facility. In October 2003, PPL finalized an agreement with the New Jersey DEP and the Pennsylvania DEP pursuant to which it will reduce sulfur dioxide emissions from its Martins Creek power plant. Under the agreement, PPL Martins Creek will shut down the plant's two coal-fired generating units by September 2007 and may repower them any time after shutting them down so long as it follows all applicable state and federal requirements, including installing the best available pollution control technology. PPL Martins Creek also will reduce the fuel sulfur content for those units as well as the plant's two oil-fired units beginning in 2004. In addition, PPL will donate to a non-profit organization 70% of the excess emission allowances and emission reduction credits that result from shutting down or repowering the coal units. As a result of the agreement, the New Jersey DEP withdrew its challenge to the Air Quality Plan Approval for the Lower Mt. Bethel facility. The agreement will not result in material costs to PPL. The agreement does not address the issues raised by the New Jersey DEP regarding the visible opacity of emissions from the Martins Creek plant. If it is determined that actions must be taken to address the visible opacity of these emissions, such actions could result in costs that are not now determinable, but which could be significant.

   In addition to the opacity concerns raised by the New Jersey DEP, the Pennsylvania DEP also has raised concerns about the opacity of emissions from the Martins Creek and Montour plants. PPL is discussing these concerns with the Pennsylvania DEP. If it is determined that actions must be taken to address the Pennsylvania DEP's concerns, such actions could result in costs that are not now determinable, but which could be significant.

   In December 2003, PPL Montana, as operator of the Colstrip facility, received an Administrative Compliance Order (ACO) from the EPA pursuant to the Clean Air Act. The ACO alleges that Units 3 and 4 of the facility have been in violation of the Clean Air Act permit at Colstrip since 1980. The permit required Colstrip to submit for review and approval by the EPA an analysis and proposal for reducing emissions of nitrogen oxide to address visibility concerns if and when EPA promulgates Best Available Retrofit Technology requirements for nitrogen oxide. The EPA is asserting that regulations it promulgated in 1980 triggered this requirement. PPL believes that the ACO is unfounded and is discussing the matter with the EPA. The ACO does not expressly seek penalties, and it is unclear at this time what, if any, additional control technology the EPA may consider to be required. Accordingly, the costs to install any additional controls for nitrogen oxide, if required, are not now determinable, but could be significant. In addition, the Montana Department of Environmental Quality is questioning whether the permit limits for sulfur dioxide emissions from Colstrip Units 3 and 4 are too high under provisions of the Clean Air Act that limit allowable emissions from sources built after 1978. PPL cannot predict the outcome of this matter.

   Water/Waste (PPL and PPL Energy Supply)

   Brunner Island's NPDES permit contains a provision requiring further studies on the thermal impact of the cooling water discharge from the plant. These studies are underway and are expected to be completed in 2006. The Pennsylvania DEP has stated that it believes the studies to date show that the temperature of the discharge must be lowered. The Pennsylvania DEP has also stated that it believes the plant is in violation of a permit condition prohibiting the discharge from changing the river temperature by more than two degrees per hour. PPL is discussing these matters with the agency. Depending on the outcome of these discussions, the plant could be subject to additional capital and operating costs that are not now determinable, but which could be significant.

   The Pennsylvania DEP has issued a water quality certification and NPDES permit to PPL Holtwood, LLC in the FERC license renewal proceeding for its Lake Wallenpaupack hydroelectric facility. PPL has appealed both the certification and the NPDES permit. The parties are discussing settlement. If these discussions are unsuccessful, then depending on the outcome of these appeals, each of the certification and the NPDES permit could impose additional costs on PPL, which are not now determinable, but which could be significant.

   The EPA has significantly tightened the water quality standard for arsenic. The revised standard may require several PPL subsidiaries to either further treat wastewater or take abatement action at their power plants, or both. The cost of complying with the revised standard is not now determinable, but could be significant.

   The EPA recently finalized requirements for new or modified water intake structures. These requirements affect where generating facilities are built, establish intake design standards, and could lead to requirements for cooling towers at new and modified power plants. Another new rule expected to be finalized in 2004 addresses existing structures. Based on PPL's preliminary analyses, PPL does not believe that these rules will impose material costs on PPL subsidiaries.

   Superfund and Other Remediation

   (PPL and PPL Energy Supply)

   Under the Pennsylvania Clean Streams Law, subsidiaries of PPL Generation are obligated to remediate acid mine drainage at former mine sites and may be required to take additional measures to prevent potential acid mine drainage at previously capped refuse piles. One PPL Generation subsidiary is pumping and treating mine water at two mine sites. Another PPL Generation subsidiary plans to install passive wetlands treatment at a third site, and the Pennsylvania DEP has suggested that it may require that PPL Generation subsidiary to pump and treat the mine water at that third site. At March 31, 2004, a PPL Energy Supply subsidiary had accrued $29 million to cover the costs of pumping and treating groundwater at two mine sites for 50 years and for installing passive wetlands treatment at the third site.

   (PPL, PPL Energy Supply and PPL Electric)

   In 1995, PPL Electric and PPL Generation entered into a consent order with the Pennsylvania DEP to address a number of sites that were not being addressed under another regulatory program such as Superfund, but for which PPL Electric or PPL Generation may be liable for remediation. This may include potential PCB contamination at certain PPL Electric substations and pole sites; potential contamination at a number of coal gas manufacturing facilities formerly owned or operated by PPL Electric; oil or other contamination which may exist at some of PPL Electric's former generating facilities; and potential contamination at abandoned power plant sites owned by PPL Generation. As of March 31, 2004, work has been completed for 96% of the sites included in the consent order. Additional sites formerly owned or operated by PPL Electric are added to the consent order on a case-by-case basis.

   In 1996, PPL Gas Utilities entered into a similar consent order with the Pennsylvania DEP to address a number of sites where subsidiaries of PPL Gas Utilities may be liable for remediation. The sites primarily include former coal gas manufacturing facilities. Subsidiaries of PPL Gas Utilities are also investigating the potential for any mercury contamination from gas meters and regulators. Accordingly, PPL Gas Utilities and the Pennsylvania DEP have agreed to add 72 meter/regulation sites to the consent order. As of March 31, 2004, PPL Gas Utilities had addressed 34% of the sites under its consent order.

   At March 31, 2004, PPL Electric and PPL Gas Utilities had accrued approximately $3 million and $8 million, representing the estimated amounts they will have to spend for site remediation, including those sites covered by each company's consent orders mentioned above. Depending on the outcome of investigations at sites where investigations have not begun or have not been completed, the costs of remediation and other liabilities could be substantial. PPL also could face other non-remediation liabilities at sites included in the consent order or other contaminated sites, the costs of which are not now determinable, but which could be significant.

   (PPL and PPL Energy Supply)

   In conjunction with its 1999 acquisition of generating assets from Montana Power, PPL Montana required Montana Power to prepare a Phase I and Phase II Environmental Site Assessment. The assessment identified various groundwater remediation issues. Based upon subsequent assessments and actions taken by PPL Montana, the costs to PPL Montana of the groundwater remediation measures identified in those assessments are expected to be approximately $3 million. However, additional expenditures could be required in amounts which are not now determinable, but which could be significant.

   In May 2003, approximately 40 plaintiffs brought an action in the Montana Second Judicial District Court, Butte-Silver Bow County, against PPL Montana and the other owners of the Colstrip plant alleging property damage from freshwater pond seepage and contamination from wastewater ponds at the plant. This action has been moved to the Montana Sixteenth Judicial District Court, Rosebud County. This action could result in PPL Montana and the other Colstrip owners being liable for damages and being required to take additional remedial measures. The cost to PPL Montana of any such damages and remedial measures is not now determinable but could be significant.

   In 1999, the Montana Supreme Court held in favor of several citizens' groups that the right to a clean and healthful environment is a fundamental right guaranteed by the Montana Constitution. The court's ruling could result in significantly more stringent environmental laws and regulations, as well as an increase in citizens' suits under Montana's environmental laws. The effect on PPL Montana of any such changes in laws or regulations or any such increase in legal actions is not currently determinable, but it could be significant.

   Future cleanup or remediation work at sites currently under review, or at sites not currently identified, may result in material additional operating costs for PPL subsidiaries that cannot be estimated at this time.

   Asbestos (PPL and PPL Energy Supply)

   There have been increasing litigation claims throughout the U.S. based on exposure to asbestos against companies that manufacture or distribute asbestos products or that have these products on their premises. Certain of PPL's generation subsidiaries and certain of its energy services subsidiaries, such as those that have supplied, may have supplied or installed asbestos material in connection with the repair or installation of process piping and heating, ventilating and air conditioning systems, have been named as defendants in asbestos-related lawsuits. PPL cannot predict the outcome of these lawsuits or whether additional claims may be asserted against its subsidiaries in the future. PPL does not expect that the ultimate resolution of the current lawsuits will have a material adverse effect on its results of operations.

   Electric and Magnetic Fields (PPL, PPL Energy Supply and PPL Electric)

   Concerns have been expressed by some members of the public regarding the potential health effects of EMFs. These fields are emitted by all devices carrying electricity, including electric transmission and distribution lines and substation equipment. Government officials in the U.S. and the U.K. have focused attention on this issue. PPL and its subsidiaries support the current efforts to determine whether EMFs cause any human health problems and are taking steps to reduce EMFs, where practical, in the design of new transmission and distribution facilities. PPL is unable to predict what effect, if any, the EMF issue might have on its operations and facilities either in the U.S. or abroad, and the associated cost, or what, if any, liabilities it might incur related to the EMF issue.

   Lower Mt. Bethel (PPL and PPL Energy Supply)

   In August 2002, the Northampton County Court of Common Pleas issued a decision concerning the permissible noise levels from the Lower Mt. Bethel facility when it becomes operational. Specifically, the court's decision sets certain permissible noise levels required for plant operation. PPL appealed the court's decision to the Commonwealth Court, and an intervener in the lawsuit cross-appealed the court's decision. In May 2003, the Commonwealth Court remanded the case to the Court of Common Pleas for further findings of fact concerning the zoning application relating to the construction of the facility. In September 2003, the Court of Common Pleas ruled in PPL's favor while also reaffirming its decision on the noise levels, and the intervener appealed this ruling to the Commonwealth Court. In April 2004, the Commonwealth Court affirmed the decision of the Court of Common Pleas. The Lower Mt. Bethel facility is expected to be operational in the second quarter of 2004.

   Environmental Matters - International (PPL and PPL Energy Supply)

   U.K.

   WPD's distribution businesses are subject to numerous regulatory and statutory requirements with respect to environmental matters. PPL believes that WPD has taken and continues to take measures to comply with the applicable laws and governmental regulations for the protection of the environment. There are no material legal or administrative proceedings pending against WPD with respect to environmental matters. See "Environmental Matters - Domestic - Electric and Magnetic Fields" for a discussion of EMFs.

   Latin America

   Certain of PPL's affiliates have electric distribution operations in Latin America. PPL believes that these affiliates have taken and continue to take measures to comply with the applicable laws and governmental regulations for the protection of the environment. There are no material legal or administrative proceedings pending against PPL's affiliates in Latin America with respect to environmental matters.

   Other

   Nuclear Insurance (PPL and PPL Energy Supply)

   PPL Susquehanna is a member of certain insurance programs which provide coverage for property damage to members' nuclear generating stations. Facilities at the Susquehanna station are insured against property damage losses up to $2.75 billion under these programs. PPL Susquehanna is also a member of an insurance program which provides insurance coverage for the cost of replacement power during prolonged outages of nuclear units caused by certain specified conditions. Under the property and replacement power insurance programs, PPL Susquehanna could be assessed retroactive premiums in the event of the insurers' adverse loss experience. At March 31, 2004, this maximum assessment was about $40 million.

   PPL Susquehanna's public liability for claims resulting from a nuclear incident at the Susquehanna station is limited to about $10.8 billion under provisions of The Price Anderson Amendments Act of 1988. PPL Susquehanna is protected against this liability by a combination of commercial insurance and an industry assessment program. In the event of a nuclear incident at any of the reactors covered by The Price Anderson Amendments Act of 1988, PPL Susquehanna could be assessed up to $201 million per incident, payable at $20 million per year.

   Guarantees and Other Assurances

   (PPL)

   PPL fully and unconditionally guarantees all of the debt securities of PPL Capital Funding, a wholly-owned financing subsidiary of PPL.

   (PPL, PPL Energy Supply and PPL Electric)

   The table below provides an update to those guarantees specifically disclosed in Note 14 to the Financial Statements contained in each Registrant's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003. Not reflected in the table below is the guarantee by PPL of all of the obligations of PPL Capital Funding Trust I under its trust preferred securities that were a component of the PEPS Units. PPL was released from this guarantee upon cancellation of the trust preferred securities as discussed in Note 6.

   	PPL
   	PPL Energy Supply										PPL Electric
   	Recorded Liability at				Exposure at						Recorded Liability at				Exposure at
   	March 31, 2004		December 31, 2003		March 31, 2004		(a)	Expiration Date			March 31, 2004		December 31, 2003		March 31, 2004		(a)	Expiration Date
   WPD LLP guarantee of obligations under SIUK Capital Trust I preferred securities						$    82	(b)		2027
   Letters of credit issued on behalf of affiliates						8	(c)		2004
   Support agreements to guarantee partnerships' obligations for the sale of coal						9			2007
   Potential retroactive premiums under nuclear insurance programs						40
   Nuclear claims under the Price Anderson Amendments Act of 1988						201	(d)
   Obligation to purchase commodities under option contracts						6			2004
   Contingent purchase price payments to former owners of synfuel projects		$    4		$    4		60			2007
   Guarantee of a portion of an unconsolidated entity's debt																$    7	(b)		2008
   Residual value guarantees of leased equipment						4			2005	(e)		$    14		$    16		89			2005 (e)
   WPD guarantee related to a contract assigned as part of a sale of one of its businesses						35			2005

   
   

   (a)	Represents the estimated maximum potential amount of future payments that could be required to be made under the guarantee.
   (b)	Reflects principal payments only.
   (c)	Represents letters of credit issued at the direction of PPL Energy Supply for the benefit of third parties for assurance against nonperformance by PPL and PPL Gas Utilities. This is not a guarantee by PPL on a consolidated basis.
   (d)	Amount is per incident.
   (e)	Although the expiration date noted is 2005, equipment of similar value is generally leased and guaranteed on an on-going basis.

   
   
9. Related Party Transactions

   Affiliate Trust (PPL)

   See Note 6 for a discussion of various transactions involving PPL Capital Funding subordinated notes that were held by PPL Capital Funding Trust I.

   PLR Contracts (PPL Energy Supply and PPL Electric)

   PPL Electric has power sales agreements with PPL EnergyPlus, effective January 1, 2002, to supply all of PPL Electric's PLR load through 2009. Under these contracts, PPL EnergyPlus will provide electricity at the pre-determined capped prices that PPL Electric is authorized to charge its PLR customers. For the three months ended March 31, 2004 and 2003, these purchases totaled $410 million and $387 million, including nuclear decommissioning recovery and amortization of an up-front contract payment. These purchases are included in the Statement of Income as "Energy purchases from affiliate" by PPL Electric and as "Wholesale energy marketing to affiliates" revenues by PPL Energy Supply.

   Under the PLR contracts, PPL Electric is required to make performance assurance deposits with PPL EnergyPlus when the market price of electricity is less than the contract price by more than its contract collateral threshold. Conversely, PPL EnergyPlus is required to make performance assurance deposits with PPL Electric when the market price of electricity is greater than the contract price by more than its contract collateral threshold. At March 31, 2004, PPL Energy Supply was required to provide PPL Electric with performance assurance of $300 million, the maximum amount required under the contract. PPL Energy Supply caused a $300 million letter of credit to be issued under its bank credit facilities to satisfy the requirements.

   In 2001, PPL Electric made a $90 million up-front payment to PPL EnergyPlus in connection with the PLR contracts. The up-front payment is being amortized by both parties over the term of the PLR contracts. The unamortized balance of this payment and other payments under the contract was $67 million at March 31, 2004 and $70 million at December 31, 2003. This balance is reported on the Balance Sheet as "Prepayment on PLR energy supply from affiliate" by PPL Electric and as "Deferred revenue on PLR energy supply to affiliate" by PPL Energy Supply.

   NUG Purchases (PPL Energy Supply and PPL Electric)

   PPL Electric has a reciprocal contract with PPL EnergyPlus to sell electricity purchased under contracts with NUGs. PPL Electric purchases electricity from the NUGs at contractual rates and then sells the electricity at the same price to PPL EnergyPlus. For the three months ended March 31, 2004 and 2003, these NUG purchases totaled $37 million and $39 million and are included in the Statement of Income as "Wholesale electric to affiliate" revenues by PPL Electric, and as "Energy purchases from affiliates" by PPL Energy Supply.

   Allocations of Corporate Service Costs (PPL Energy Supply and PPL Electric)

   PPL Services provides corporate functions such as financial, legal, human resources and information services. PPL Services bills the respective PPL subsidiaries for the cost of such services when they can be specifically identified. The cost of these services that is not directly charged to PPL subsidiaries is allocated to certain of the subsidiaries based on an average of the subsidiaries' relative invested capital, operation and maintenance expenses, and number of employees. PPL Services allocated the following charges to PPL Energy Supply and PPL Electric:

   	PPL Energy Supply				PPL Electric
   	Three Months Ended March 31,				Three Months Ended March 31,
   	2004		2003		2004		2003
   Direct expenses	$	24	$	21	$	20	$	14
   Overhead costs		14		14		6		6

   Intercompany Borrowings (PPL Energy Supply)

   PPL Energy Supply, primarily through its financing subsidiary, PPL Investment Corporation, had a note receivable from PPL Energy Funding totaling $6 million and $2 million at March 31, 2004 and December 31, 2003, with interest equal to the one-month LIBOR plus 3%. Interest earned on loans to affiliates, included in "Other Income - net" on the Statement of Income, was insignificant for the three months ended March 31, 2004 and $7 million for the same period in 2003.

   Trademark Royalties (PPL Energy Supply)

   In the fourth quarter of 2002, a PPL subsidiary that owns PPL trademarks began billing certain affiliates which use these trademarks. PPL Energy Supply was allocated $8 million and $11 million of this license fee for the three months ended March 31, 2004 and 2003, which is primarily included in "Other operation and maintenance" on the Statement of Income.

10. Other Income - Net

    (PPL)

    The breakdown of PPL's "Other Income - net" was as follows:

    		Three Months Ended March 31,
    		2004		2003
    Other Income
    	Interest income	$	3	$	3
    	Equity earnings (loss)		1		(1	)
    	Realized earnings on nuclear decommissioning trust		4		2
    	Hyder-related activity		2		1
    	Gain by WPD on the disposition of property		1
    	Legal claims				2
    	Profit on redemption of investment				1
    	Miscellaneous - International		3		4
    	Miscellaneous - Domestic		4		1
    	Total		18		13
    Other Deductions
    	Charitable contributions		2		1
    	Miscellaneous - International		1		3
    	Miscellaneous - Domestic		3		1
    Other Income - net		$	12	$	8

    (PPL Energy Supply)

    The breakdown of PPL Energy Supply's "Other Income - net" was as follows:

    		Three Months Ended March 31,
    		2004		2003
    Other Income
    	Affiliated interest income			$	7
    	Interest income	$	2		1
    	Equity earnings		1		1
    	Realized earnings on nuclear decommissioning trust		4		2
    	Hyder-related activity		2		1
    	Gain by WPD on the disposition of property		1
    	Legal claims				2
    	Profit on redemption of investment				1
    	Miscellaneous - International		3		5
    	Miscellaneous - Domestic		1		(1	)
    	Total		14		19
    Other Deductions
    	Miscellaneous - International		1		3
    	Miscellaneous - Domestic		2
    Other Income - net		$	11	$	16

11. Derivative Instruments and Hedging Activities

    Fair Value Hedges (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply enter into financial or physical contracts to hedge a portion of the fair value of firm commitments of forward electricity sales. These contracts range in maturity through 2006. Additionally, PPL and PPL Energy Supply enter into financial contracts to hedge fluctuations in market value of existing debt issuances. These contracts range in maturity through 2029.

    PPL and PPL Energy Supply did not recognize any net gains or losses resulting from hedges of firm commitments that no longer qualified as fair value hedges for the three months ended March 31, 2004 or 2003.

    PPL and PPL Energy Supply did not recognize any gains or losses resulting from the ineffective portion of fair value hedges for the three months ended March 31, 2004 or 2003.

    Cash Flow Hedges (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply enter into financial and physical contracts, including forwards, futures and swaps, to hedge the price risk associated with electric, gas and oil commodities. These contracts range in maturity through 2010. Additionally, PPL and PPL Energy Supply enter into financial interest rate swap contracts to hedge interest expense associated with both existing and anticipated debt issuances. These swaps range in maturity through 2014. PPL and PPL Energy Supply also enter into foreign currency forward contracts to hedge exchange rates associated with firm commitments denominated in foreign currencies and to hedge the net investment of foreign operations. These forward contracts range in maturity through 2028.

    Cash flow hedges may be discontinued because it is probable that the original forecasted transaction will not occur by the end of the originally specified time period. PPL and PPL Energy Supply did not discontinue any cash flow hedges during the three months ended March 31, 2004 or 2003.

    Due to hedge ineffectiveness, PPL and PPL Energy Supply reclassified amounts that were not significant from other comprehensive income (reported in "Wholesale energy marketing" revenues and "Energy purchases" on the Statement of Income) for the three months ended March 31, 2004 and 2003.

    As of March 31, 2004, the deferred net loss, after tax, on derivative instruments in "Accumulated other comprehensive loss" expected to be reclassified into earnings during the next twelve months was $11 million and $6 million for PPL and PPL Energy Supply.

    The following table shows the change in accumulated unrealized gains or losses on derivatives in other comprehensive income for the following periods:

    		Three Months Ended March 31,
    		2004			2003
    PPL
    	Beginning accumulated derivative gain	$	36		$	7
    	Net change associated with current period hedging activities and other		40			49
    	Net change associated with net investment hedges		1
    	Net change from reclassification into earnings		(76	)		(22	)
    	Ending accumulated derivative gain	$	1		$	34

    		Three Months Ended March 31,
    		2004			2003
    PPL Energy Supply
    	Beginning accumulated derivative gain	$	55		$	23
    	Net change associated with current period hedging activities and other		44			47
    	Net change associated with net investment hedges		1
    	Net change from reclassification into earnings		(77	)		(18	)
    	Ending accumulated derivative gain	$	23		$	52

    Related Implementation Issues (PPL and PPL Energy Supply)

    In June 2001, the FASB issued definitive guidance on DIG Issue C15, "Scope Exceptions: Normal Purchases and Normal Sales Exception for Certain Option-Type Contracts and Forward Contracts in Electricity." DIG Issue C15 provides additional guidance on the classification and application of derivative accounting rules relating to purchases and sales of electricity utilizing forward and option contracts. This guidance became effective as of July 1, 2001. In December 2001, the FASB revised the guidance in DIG Issue C15, principally related to the eligibility of options for the normal purchases and normal sales exception. The revised guidance was effective April 1, 2002. In November 2003, the FASB again revised the guidance in DIG Issue C15 to clarify the application of derivative accounting rules for contracts that may involve capacity. The guidance was effective January 1, 2004 for PPL. PPL had no financial statement impact from this revised guidance.

    PPL Energy Supply adopted the final provisions of EITF 03-11, "Reporting Realized Gains and Losses on Derivative Instruments That Are Subject to FASB Statement No. 133 and Not 'Held for Trading Purposes' as Defined in Issue No. 02-3," prospectively as of October 1, 2003. As a result of the adoption, non-trading bilateral sales of electricity at major market delivery points are netted with purchases that offset the sales at those same delivery points. A major market delivery point is any delivery point with liquid pricing available. The impact of applying EITF 03-11 for the first quarter of 2004 was a reduction in both "Wholesale energy marketing" revenues and "Energy purchases" of $81 million in PPL's and PPL Energy Supply's Statement of Income.

    Credit Concentration (PPL, PPL Energy Supply and PPL Electric)

    PPL and PPL Energy Supply enter into contracts with many entities for the purchase and sale of energy. Most of these contracts are considered a normal part of doing business and, as such, the mark-to-market value of these contracts is not reflected in the financial statements. However, the mark-to-market value of these contracts is considered when committing to new business from a credit perspective.

    PPL and PPL Energy Supply have credit exposures to energy trading partners. The majority of these exposures were the mark-to-market value of multi-year contracts for energy sales. Therefore, if these counterparties fail to perform their obligations under such contracts, the companies would not experience an immediate financial loss, but would experience lower revenues in future years to the extent that replacement sales could not be made at the same prices as sales under the defaulted contracts.

    At March 31, 2004, PPL had a credit exposure of $243 million to energy trading partners. Eleven counterparties accounted for 59% of this exposure. No other individual counterparty accounted for more than 3% of the exposure. With two exceptions, each of the eleven primary counterparties had an investment grade credit rating from Standard & Poor's Ratings Services (S&P). One non-investment grade counterparty, NorthWestern, has filed for Chapter 11 bankruptcy protection. This contract has been affirmed by the bankruptcy court, and PPL Montana has been granted critical vendor status. NorthWestern has assumed the power supply agreements in its bankruptcy proceeding. NorthWestern has remained current on all post-bankruptcy obligations with PPL Montana. See Note 8 under "Wholesale Energy Commitments" for additional information regarding the NorthWestern bankruptcy proceeding. The other non-investment grade counterparty is also current on its obligations under the existing contract.

    At March 31, 2004, PPL Energy Supply had a credit exposure of $237 million to energy trading partners. Eleven counterparties accounted for 61% of this exposure. No other individual counterparty accounted for more than 3% of the exposure. With two exceptions, each of the eleven counterparties had an investment grade credit rating from S&P. One non-investment grade counterparty, NorthWestern, has filed for Chapter 11 bankruptcy protection, as discussed above. The other non-investment grade counterparty is also current on its obligations under the existing contract.

    PPL and PPL Energy Supply have the right to request collateral from each of these counterparties, except for one government agency, in the event their credit ratings fall below investment grade. PPL Montana and NorthWestern have mutually agreed not to request collateral from each other while NorthWestern's Chapter 11 bankruptcy proceeding is pending. It is also the policy of PPL and PPL Energy Supply to enter into netting agreements with all of their counterparties to minimize credit exposure.

    In past periods, PPL Energy Supply has had an exposure to PPL Electric under the long-term contract to provide PPL Electric's PLR load. However, increases in electricity prices during the quarter have reversed this position. At March 31, 2004, PPL Electric had a mark-to-market exposure to PPL Energy Supply of $800 million. In accordance with the terms of one of the PLR contracts, PPL Energy Supply provided PPL Electric with performance assurance in the amount of $300 million, the maximum amount required under the contract. This is the only credit exposure for PPL Electric that has a mark-to-market element. No other counterparty accounts for more than 1% of PPL Electric's total exposure.

12. Pension and Other Postretirement Benefits

    (PPL and PPL Energy Supply)

    The components of net pension and other postretirement benefit costs (credits) were as follows:

    	Pension Benefits													Other Postretirement Benefits
    	Three Months Ended March 31,													Three Months Ended March 31,
    	2004						2003							2004			2003
    	Domestic			International			Domestic			International
    PPL
    Service cost	$	12		$	4		$	10		$	3		$		1		$	2
    Interest cost		28			36			26			31				6			7
    Expected return on plan assets		(38	)		(53	)		(36	)		(47	)			(4	)		(3	)
    Amortization of transition obligation		(1	)					(1	)						2			2
    Amortization of prior service cost		4			1			4			1							2
    Amortization of (gain)/loss		(2	)		2			(4	)						2			1
    Net periodic pension and other postretirement benefit cost/(credit)	$	3		$	(10	)	$	(1	)	$	(12	)	$		7		$	11
    PPL Energy Supply
    Service cost	$	1		$	4		$	1		$	3
    Interest cost		1			36			1			31
    Expected return on plan assets		(1	)		(53	)		(1	)		(47	)
    Amortization of prior service cost					1						1
    Amortization of loss					2
    Net periodic pension and other postretirement benefit cost/(credit)	$	1		$	(10	)	$	1		$	(12	)

    Medicare Prescription Drug, Improvement and Modernization Act of 2003 (PPL, PPL Energy Supply and PPL Electric)

    In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare and also provides for a federal subsidy to sponsors of retiree health care benefit plans that provide an actuarially equivalent level of prescription drug benefits. The subsidy would be 28% of eligible drug costs for retirees that are over age 65 and covered under PPL's other postretirement benefit plans.

    The impact of the Act on the provisions of SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," has yet to be determined by the FASB. PPL has elected to defer recognition of the potential impact of the Act, as allowed under FSP FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," which was issued by the FASB in January 2004. Thus, the measures of PPL's accumulated postretirement benefit obligations and net postretirement benefit costs in the financial statements and accompanying notes do not reflect the effects of the Act. PPL could be required to change previously reported information upon issuance of final accounting guidance related to the Act, as PPL's other postretirement benefit plans provide prescription drug coverage to retirees that may be eligible for the federal subsidy.

13. Asset Retirement Obligations

    (PPL and PPL Energy Supply)

    PPL and PPL Energy Supply adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. SFAS 143 addresses the accounting for obligations associated with the retirement of tangible long-lived assets. In connection with the adoption of SFAS 143, PPL and PPL Energy Supply recorded a cumulative effect of adoption that increased net income by $63 million.

    Amounts collected from PPL Electric's customers for decommissioning, less applicable taxes, are deposited in external trust funds for investment and can only be used for future decommissioning costs. The fair value of the nuclear decommissioning trust was $370 million as of March 31, 2004 and $357 million as of December 31, 2003.

    PPL and PPL Energy Supply's AROs are included in "Deferred Credits and Other Noncurrent Liabilities - Other" on the Balance Sheet. The changes in the carrying amounts of the AROs were as follows:

    	PPL and PPL Energy Supply
    ARO at December 31, 2003		$	242
    Accretion expense			5
    Settlement			(3	)
    ARO at March 31, 2004		$	244

14. Workforce Reduction

    (PPL, PPL Energy Supply and PPL Electric)

    In an effort to improve operational efficiency and reduce costs, PPL and its subsidiaries commenced a workforce reduction assessment in June 2002. The program was broad-based and impacted all employee groups except certain positions that are key to providing high-quality service to PPL's electricity delivery customers.

    During 2002 and 2003, PPL recorded total charges of $84 million. PPL Energy Supply recorded charges of $41 million in 2002. During 2002 and 2003, PPL Electric recorded total charges of $42 million, including the charges associated with implementation of the Automated Meter Reading project. There was no impact to earnings for the periods ended March 31, 2004 and 2003.

    As of March 31, 2004, 514 employees of PPL subsidiaries were terminated. Additional positions, which are primarily bargaining unit and are currently estimated at 97, are being evaluated for termination over the next six months, due to the timing of PPL Electric's Automated Meter Reading project and the displacement program under the bargaining unit contract. The program provides primarily for enhanced early retirement benefits and/or one-time special pension separation allowances based on an employee's age and years of service. These features of the program are paid from the PPL Retirement Plan pension trust and increased PPL's pension liabilities in 2002 and 2003 when recorded. Substantially all of the accrued non-pension benefits have been paid.

15. New Accounting Standards

    FIN 46(R) (PPL, PPL Energy Supply and PPL Electric)

    In December 2003, the FASB issued Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," which is known as FIN 46(R) and replaces FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." See Note 22 to the Financial Statements contained in each Registrants' Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a discussion of FIN 46 and the impact of its adoption for certain entities. FIN 46(R) does not change the general consolidation concepts of FIN 46. Among other things, FIN 46(R) clarifies certain provisions of FIN 46 and provides additional scope exceptions for certain types of businesses. FIN 46(R) provides that a public entity that is not a small business issuer should apply the provisions of FIN 46(R) to all entities no later than the end of the first reporting period that ends after March 15, 2004. PPL and its subsidiaries adopted FIN 46(R) for all entities effective March 31, 2004. This adoption did not have a material impact on the results of PPL and its subsidiaries.

    EITF 03-1 (PPL, PPL Energy Supply and PPL Electric)

    In March 2004, the FASB ratified certain consensus in EITF 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF 03-1 provides guidance for determining when an investment in certain debt and equity securities is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. EITF 03-1 also contains disclosure requirements related to information about impairments that have not been recognized as other than temporary as well as disclosure requirements for investments accounted for under the cost method. The recognition and measurement provisions of EITF 03-1 are required to be applied to other-than-temporary impairment evaluations in reporting periods beginning after June 15, 2004. The disclosure provisions related to cost method investments are effective for annual financial statements for fiscal years ending after June 15, 2004, while all other disclosure provisions were effective for annual financial statements for fiscal years ending after December 15, 2003. PPL and its subsidiaries are in the process of evaluating the impact of adopting the recognition and measurement provisions of EITF 03-1 effective July 1, 2004. The potential impact of adopting EITF 03-1 is not yet determinable, but could be material.

    EITF 03-6 (PPL)

    In March 2004, the FASB ratified EITF 03-6, "Participating Securities and the Two-Class Method under FASB Statement No. 128, 'Earnings per Share'." EITF 03-6 addresses a number of issues regarding the calculation of basic EPS by companies that have issued securities other than common stock that participate in dividends and earnings, which are known as participating securities. EITF 03-6 requires participating securities to be included in the calculation of basic EPS using the two-class method and provides guidance in applying the two-class method. EITF 03-6 is effective for reporting periods beginning after March 31, 2004, and it requires restatement of prior periods. PPL is in the process of evaluating the impact of adopting EITF 03-6. The potential impact of adopting EITF 03-6 is not yet determinable, but could be material.

    EITF 03-16 (PPL, PPL Energy Supply and PPL Electric)

    In March 2004, the FASB ratified EITF 03-16, "Accounting for Investments in Limited Liability Companies." EITF 03-16 provides that an investment in a limited liability company (LLC) that maintains a specific ownership account for each investor should be viewed similarly to an investment in a limited partnership for purposes of determining whether a noncontrolling interest in the LLC should be accounted for using the cost or equity method. EITF 03-16 is effective for reporting periods beginning after June 15, 2004 and is required to be applied as a change in accounting principle with a cumulative effect adjustment reflected in the period of adoption. PPL and its subsidiaries are in the process of evaluating the impact of adopting EITF 03-16 effective July 1, 2004. The potential impact of adopting EITF 03-16 is not yet determinable, but could be material.

    FSP FAS 106-1 (PPL, PPL Energy Supply and PPL Electric)

    See Note 12 for a discussion of FSP FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003."

PPL CORPORATION AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

PPL is an energy and utility holding company with headquarters in Allentown, PA. See Item 1, "Business - Background" in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for descriptions of PPL's major segments. See Exhibit 99 in Item 15 in PPL's Form 10-K for the current corporate organization structure. Through its subsidiaries, PPL is primarily engaged in the generation and marketing of electricity in two key markets - the northeastern and western U.S. - and in the delivery of electricity in Pennsylvania, the U.K. and Latin America. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for an overview of PPL's strategy and the risks and the challenges that it faces in its business.

The information provided in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL's Condensed Consolidated Financial Statements and the accompanying Notes.

Terms and abbreviations appearing herein are explained in the glossary. Dollars are in millions, except per share data, unless otherwise noted.

Results of Operations

The following discussion, which explains significant changes in principal items on the Statement of Income, compares the three months ended March 31, 2004 to the comparable period in 2003.

WPD's results, as consolidated in PPL's Statement of Income, are impacted by changes in foreign currency exchange rates. For the three months ended March 31, 2004, as compared to the same period in 2003, changes in foreign exchange rates increased WPD's portion of revenue and expense line items by about 13%.

The Statement of Income reflects the results of past operations and is not intended as any indication of future operating results. Future operating results will necessarily be affected by various and diverse factors and developments. Furthermore, because results for interim periods can be disproportionately influenced by various factors and developments and by seasonal variations, the results of operations for interim periods do not necessarily indicate results or trends for the year.

Earnings

Net income and the related EPS, were as follows:

	Three Months Ended March 31,
	2004		2003
Net income	$	177	$	239
EPS - basic	$	1.00	$	1.43
EPS - diluted	$	0.99	$	1.43

The after-tax changes in net income were primarily due to:

			Three Months Ended March 31, 2004 vs. March 31, 2003
Domestic:
	Eastern U.S. margins			$	12
	Net energy trading margins				8
	Northwestern U.S. margins				4
	Southwestern U.S. margins				1
	Operation and maintenance expenses				(19	)
	Depreciation				(4	)
	Taxes, other than income (excluding gross receipts tax)				7
	Energy related businesses				(4	)
	Interest expense and preferred distributions				(3	)
	Other				1
		Total Domestic			3
International:
	U.K.:
		Impact of changes in foreign currency exchange rates			7
		Other			2
	Latin America				1
	Other				(4	)
		Total International			6
Unusual items					(71	)
				$	(62	)

The changes in net income from period to period were, in part, attributable to two unusual items with significant earnings impacts. The after-tax impacts of these unusual items are shown below.

		Three Months Ended March 31,
		2004			2003
Accounting change:
	ARO (Note 13)				$	63
Sale of CGE (Note 7)		$	(8	)
Total		$	(8	)	$	63

The period to period changes in earnings components, including margins by region and income statement line items, are discussed in the balance of the discussion in "Results of Operations."

PPL's future earnings could be, or will be, impacted by a number of key factors, including the following:

• Due to current electricity and natural gas price levels, there is a risk that PPL may be unable to recover its investment in new gas-fired generation facilities. Under GAAP, PPL does not believe that there is an impairment charge to be recorded for these facilities at this time. PPL is unable to predict the ultimate earnings impact of this issue, based upon future energy price levels, applicable accounting rules and other factors, but such impact may be material.
• Market prices for electricity and fuel may negatively impact energy margins and earnings.
• PPL is unable to predict whether future impairments of goodwill may be required for its domestic and international investments. While no goodwill impairments were required based on the annual review performed in the fourth quarter of 2003, future impairments may occur due to determinations of carrying value exceeding the fair value of these investments.
• In March 2004, PPL Electric filed a proposal with the PUC to increase distribution rates by approximately $164 million and to pass through to customers approximately $57 million in increased transmission charges that PPL Electric pays to PJM for transmission services. The PUC's review of the distribution rate request is expected to take about nine months. Transmission services are provided under the PJM Open Access Transmission Tariff, a rate schedule filed with and approved by the FERC. Under the federal "filed rate doctrine," such FERC-approved rates may be recovered from retail customers without a review of those rates by a state agency such as the PUC. In addition, PPL Electric's PUC-approved retail tariff permits the automatic pass-through of transmission charges. PPL Electric agreed to a cap on both of these charges until December 31, 2004 as part of its 1998 settlement under the PUC Final Order. Generation charges for customers who do not select an alternative energy supplier are fixed through 2009 and are not affected by these changes. The combination of the proposed distribution rate increase and transmission charge pass-through would result in an 8.1% increase over PPL Electric's present rates effective January 1, 2005. PPL Electric cannot predict the outcome of this proceeding.
• Earnings in 2005 and beyond are expected to be negatively impacted by a rate review of the delivery business of WPD (South West) and WPD (South Wales). PPL cannot predict the ultimate outcome of the rate review. See Note 8 to the Financial Statements for additional information.
• PPL has interests in two synfuel facilities and receives tax credits pursuant to Section 29 of the Internal Revenue Code based on its sale of synfuel to unaffiliated third-party purchasers. PPL has estimated that these facilities will contribute approximately $0.13 to its EPS in 2004, approximately $0.16 to its EPS in 2005 and 2006 and approximately $0.17 to its EPS in 2007. See Note 8 to the Financial Statements for a discussion of the IRS review of synfuel production procedures.

Domestic Gross Energy Margins

The following table provides changes in income statement line items that compose domestic gross energy margins:

			Three Months Ended March 31, 2004 vs. March 31, 2003
Utility revenues				$	66
Unregulated retail electric and gas revenues					(20	)
Wholesale energy marketing revenues					(20	)
Net energy trading margins					14
Other revenue adjustments (a)					(31	)
	Total revenues				9
Fuel					6
Energy purchases					(32	)
Other cost adjustments (a)					(8	)
	Total cost of sales				(34	)
		Domestic gross energy margins		$	43

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic energy margins, in particular, revenues and energy costs related to the international operations of PPL Global and the domestic delivery operations of PPL Electric and PPL Gas Utilities. Also adjusted to include gains on sales of emission allowances, which are reflected in "Other operation and maintenance" expenses on the Statement of Income.

Changes in Gross Domestic Energy Margins By Region

Domestic energy margins are generated through PPL's normal and hedge activities (non-trading), as well as trading activities. Non-trading margins are now discussed on a geographic basis rather than on an activity basis, as previously provided. A regional perspective more closely matches the internal view of how PPL's energy business is managed.

		Three Months Ended March 31, 2004 vs. March 31, 2003
Eastern U.S.			$	21
Northwestern U.S.				7
Southwestern U.S.				1
Net energy trading				14
	Domestic gross energy margins		$	43

Eastern U.S.

Eastern U.S. non-trading margins were higher for the three months ended March 31, 2004, compared to the same period in 2003, due to higher prices and volumes, as well as a lower-cost mix of generation. Wholesale sale prices increased 5% and volumes increased 4%, primarily due to serving new competitive load obligations in Connecticut and New Jersey. Retail energy prices increased about 1% in accordance with the schedule established by the PUC's Final Order, and retail volumes increased 4% primarily due to the return of customers who previously shopped for energy in the competitive market in Pennsylvania. Finally, supply costs did not increase proportionally because increased generation from coal units displaced marginal-cost oil units. These coal units had improved performance in 2004 over 2003 because of differences in planned outage schedules and the elimination of transmission constraints.

Northwestern U.S.

Northwestern U.S. non-trading margins were higher for the three months ended March 31, 2004, compared to the same period in 2003, primarily due to higher sales prices combined with improved generation production. Sales prices rose 8% for the three months ended March 31, 2004, compared to the same period in 2003. Hydro generation production rose 12% due to more precipitation, and coal generation production rose 6% due to operational improvements.

Southwestern U.S.

Southwestern U.S. non-trading margins increased by $1 million for the three months ended March 31, 2004, compared to the same period in 2003, because of lower market prices for purchased power.

Net Energy Trading

PPL enters into certain energy contracts that meet the criteria of trading derivatives as defined by EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." These physical and financial contracts cover trading activity associated with electricity, gas and oil. The $14 million increase for the three months ended March 31, 2004, compared to the same period in 2003, was primarily due to unrealized gas derivative gains from increases in natural gas prices for the three months ended March 31, 2004, and realized and unrealized electric swap losses for the three months ended March 31, 2003. The physical volumes associated with energy trading were 994 GWh and 2.4 Bcf for the three months ended March 31, 2004, compared to 1,213 GWh and no Bcf for the three months ended March 31, 2003.

Utility Revenues

The increase (decrease) in utility revenues was attributable to the following:

			Three Months Ended March 31, 2004 vs. March 31, 2003
Domestic:
	Retail electric revenue (PPL Electric)
		PLR electric generation supply		$	30
		Other			(1	)
	Wholesale electric revenue (PPL Electric)				(5	)
	Gas revenue (PPL Gas Utilities)				4
International:
	Retail electric delivery (PPL Global)
		U.K.			26
		Chile			12
				$	66

The increase in utility revenues for the three months ended March 31, 2004, compared with the same period in 2003, was primarily due to:

• higher PLR revenues due to higher energy and capacity rates in 2004 compared with 2003, and a 4% increase in volumes, in part due to return of customers previously served by alternate suppliers;
• higher PPL Gas Utilities revenues, primarily due to the increase in natural gas prices which are a pass-through to customer rates;
• higher WPD revenues in the U.K., primarily due to the change in foreign currency exchange rates from period to period; and
• higher revenues in Chile, primarily due to higher energy prices, which are a pass-through to customer rates.

Energy Related Businesses

Energy related businesses contributed $25 million less to operating income for the three months ended March 31, 2004, compared to the same period in 2003. The decrease resulted primarily from a $15 million loss on the sale of PPL Global's minority interest in CGE (see Note 7 to the Financial Statements), a $4 million decrease in WPD net revenues due largely to contract terminations in 2003 and 2004, and a $2 million decrease in contributions from mechanical contracting and engineering subsidiaries due to the continued decline in capital spending in commercial and industrial markets and lower margins experienced in those markets.

Other Operation and Maintenance

The increase in other operation and maintenance expenses was primarily due to:

	Three Months Ended March 31, 2004 vs. March 31, 2003
Timing of outage costs associated with the planned refueling and inspection at the Susquehanna station, and of other nuclear-related expenses		$	16
Insurance settlements - property damage and environmental which were recorded in 2003			12
Increase in foreign currency exchange rates			4
Decrease in domestic and international pension income			4
Outage costs associated with planned maintenance at the Montour plant			3
Lease expense on office building and parking garage			2
Decrease in other postretirement benefit expense			(4	)
Gains on sales of emission allowances			(4	)
Other			6
		$	39

The $4 million decrease in net pension income was attributable to a reduction in the discount rate assumptions for PPL's domestic and international pension plans. Although financial markets have improved and PPL's domestic and international pension plans have experienced significant asset gains, interest rates on fixed-income obligations have continued to fall, requiring a further reduction in the discount rate assumption as of December 31, 2003. The reduction in the discount rate assumption has a significant impact on the measurement of plan obligations and net pension costs, which will result in PPL's recognition of lower levels of net pension income in 2004. See Note 12 to the Financial Statements for details of the costs of PPL's pension plans.

Depreciation

The increase in depreciation expense was primarily due to:

	Three Months Ended March 31, 2004 vs. March 31, 2003
Additions to PP&E		$	4
Foreign currency exchange rates			4
2003 purchase accounting adjustments to WPD assets			(9	)
Consolidation of the lessor of the Sundance and University Park generation facilities due to FIN 46			4
		$	3

Taxes, Other Than Income

Taxes, other than income, decreased by $8 million during the three months ended March 31, 2004, compared with the same period in 2003. In the first quarter of 2004, PPL Electric reversed $14 million of accrued 1998 and 1999 PURTA taxes that had been previously accrued based on potential exposure of third-party intervention in the proceedings regarding the Susquehanna nuclear station tax assessment. The rights of these third parties to further appeal expired in 2004. This decrease was partially offset by increases in WPD's property taxes, primarily related to the impact of changes in foreign currency exchange rates and adjustments recorded in 2003, as well as increases in domestic gross receipts tax and capital stock tax.

Other Income - net

See Note 10 to the Financial Statements for details of other income.

Financing Costs

Financing costs, which include "Interest Expense" and "Distributions on Preferred Securities," increased by $5 million during the three months ended March 31, 2004, compared with the same period in 2003, primarily due to:

• $14 million of additional long-term debt interest from WPD's additional debt issuances in March and May 2003;
• $6 million of additional interest due to the consolidation of the lessor of the Sundance and University Park generation facilities on December 31, 2003 in accordance with FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51;" and
• $2 million of additional long-term debt interest due to PPL Energy Supply's issuance of Convertible Senior Notes in May 2003; offset by
• $7 million of lower interest on short-term debt due to less commercial paper and WPD short-term debt outstanding;
• a $6 million decrease in long-term interest due to debt retirements in 2003; and
• a $3 million decrease in amortization expense.

Discontinued Operations

See "Discontinued Operations" in Note 7 to the Financial Statements for information regarding the loss of $1 million recorded in the first quarter of 2004 related to PPL Global's plan of sale of its investment in a Latin American telecommunications company.

Cumulative Effect of a Change in Accounting Principle

PPL adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. SFAS 143 addresses the accounting for obligations associated with the retirement of tangible long-lived assets. Application of the new rules resulted in a cumulative effect of adoption that increased net income by $63 million in 2003. See Note 21 to the Financial Statements in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for additional information.

Financial Condition

Liquidity

At March 31, 2004, PPL had $572 million of cash and cash equivalents and $53 million of short-term debt. At December 31, 2003, PPL had $476 million in cash and cash equivalents and $56 million of short-term debt. The increase in PPL's cash position was the net result of:

• $318 million of cash provided by operating activities;
• proceeds of $123 million from the sale of CGE;
• the issuance of $14 million of long-term debt; and
• the issuance of $12 million of common stock; offset by
• the retirement of $107 million of long-term debt;
• payment of $70 million of common and preferred dividends; and
• $192 million of capital expenditures.

Rating Agency Decisions

Standard & Poor's Ratings Services (S&P), Moody's Investors Service, Inc. (Moody's) and Fitch Ratings (Fitch) periodically review the credit ratings on the debt and preferred securities of PPL and its subsidiaries. Based on their respective reviews, the rating agencies may make certain ratings revisions.

Management does not expect these ratings decisions to limit PPL's or its subsidiaries' ability to fund their short-term liquidity needs through the issuance of commercial paper or borrowing under the subsidiaries' revolving credit facilities. In addition, management does not expect these ratings decisions to impact PPL's or its subsidiaries' ability to raise new long-term debt. These ratings decisions will have an immaterial impact on the cost for PPL's subsidiaries to maintain their credit facilities, as well as on the cost of any new long-term debt.

The ratings of S&P, Moody's and Fitch are not a recommendation to buy, sell or hold any securities of PPL or its subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

In September 2003, Moody's announced that it was placing PPL Montana's 8.903% Pass-Through Certificates due 2020 under review for possible downgrade. During the first quarter of 2004, Moody's affirmed its stable outlook on these securities which are currently rated 'Baa3'.

For additional information on PPL's Liquidity, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Commodity Price Risk (Non-trading)

PPL's commodity derivative contracts that qualify for hedge accounting treatment mature at various times through 2010. The following chart sets forth PPL's net fair market value of these contracts:

	Three Months Ended March 31,
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	86		$	63
Contracts realized or otherwise settled during the period		(24	)		(7	)
Fair value of new contracts at inception
Other changes in fair values		23			77
Fair value of contracts outstanding at the end of the period	$	85		$	133

During the three months ended March 31, 2004 and 2003, PPL realized or otherwise settled net gains of approximately $24 million and $7 million related to contracts entered into prior to January 1 of the previous year. These amounts do not reflect intra-quarter contracts that were entered into and settled during the periods.

"Other changes in fair values," a gain of approximately $23 million and $77 million, represents changes in the market value that occurred during the three months ended March 31, 2004 and 2003 for contracts that were outstanding at the end of each period.

The following chart segregates estimated fair values of PPL's commodity derivative contracts that qualify for hedge accounting treatment at March 31, 2004 based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains/(Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years		Maturity 4-5 Years			Maturity in Excess of 5 Years			Total Fair Value
Source of Fair Value
Prices actively quoted	$	9									$	9
Prices provided by other external sources		51	$	31	$	(5	)	$	(1	)		76
Prices based on models and other valuation methods
Fair value of contracts outstanding at the end of the period	$	60	$	31	$	(5	)	$	(1	)	$	85

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the New York Mercantile Exchange (NYMEX). The NYMEX has currently quoted prices through 2010.

The "Prices provided by other external sources" category includes PPL's forward positions and options in natural gas and power and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available. The fair value of electricity positions recorded above use the midpoint of the bid/ask spreads obtained through OTC brokers. On average, OTC quotes for forwards and swaps of natural gas and power extend one and two years into the future.

The "Prices based on models and other valuation methods" category includes the value of transactions for which an internally developed price curve was constructed as a result of the long-dated nature of the transaction or the illiquidity of the market point, or the value of options not quoted by an exchange or OTC broker. Additionally, this category includes "strip" transactions whose prices are obtained from external sources and then modeled to monthly prices as appropriate.

As of March 31, 2004, PPL estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its non-trading portfolio by approximately $170 million, compared to a decrease of $196 million at March 31, 2003. However, the change in the value of the non-trading portfolio would have been substantially offset by an increase in the value of the underlying commodity, the electricity generated, because these contracts serve to reduce the market risk inherent in the generation of electricity. Additionally, the value of PPL's unsold generation would be improved. Because PPL's electricity portfolio is generally in a net sales position, the adverse movement in prices is usually an increase in prices. Conversely, because PPL's commodity fuels portfolio is generally in a net purchase position, the adverse movement in prices is usually a decrease in prices. If both of these scenarios happened, the implied margins for the unsold generation would increase.

In accordance with its marketing strategy, PPL does not completely hedge its generation output or fuel requirements. PPL estimates that for its entire portfolio, including all generation and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods would decrease expected 2004 gross margins by about $6 million. Similarly, a 10% adverse movement in all fossil fuel prices would decrease 2004 gross margins by $4 million.

Commodity Price Risk (Trading)

PPL's trading contracts mature at various times through 2006. The following chart sets forth PPL's net fair market value of trading contracts:

	Three Months Ended March 31,
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	3		$	(6	)
Contracts realized or otherwise settled during the period		(3	)		(1	)
Fair value of new contracts at inception		4
Other changes in fair values		7			(9	)
Fair value of contracts outstanding at the end of the period	$	11		$	(16	)

During the three months ended March 31, 2004 and 2003, PPL realized or otherwise settled net gains of approximately $3 million and $1 million related to trading contracts entered into prior to January 1 of the previous year. These amounts do not reflect intra-year contracts that were entered into and settled during the periods.

The fair value of new contracts at inception is usually zero, because they are entered into at current market prices. However, when PPL enters into an option contract, a premium is paid or received. PPL paid a net of $4 million during the three months ended March 31, 2004 for these option contracts.

"Other changes in fair values," a gain/(loss) of approximately $7 million and $(9) million, represents changes in the market value that occurred during the three months ended March 31, 2004 and 2003 for contracts that were outstanding at the end of each period.

As of March 31, 2004, the net loss on PPL's trading activities expected to be recognized in earnings during the next three months is approximately $2 million.

The following chart segregates estimated fair values of PPL's trading portfolio at March 31, 2004 based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains/(Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years		Maturity 4-5 Years	Maturity in Excess of 5 Years	Total Fair Value
Source of Fair Value
Prices actively quoted	$	1					$	1
Prices provided by other external sources			$	4				4
Prices based on models and other valuation methods		4		2				6
Fair value of contracts outstanding at the end of the period	$	5	$	6			$	11

As of March 31, 2004, PPL estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its trading portfolio by $10 million, compared to a decrease of $6 million at March 31, 2003.

Interest Rate Risk

PPL and its subsidiaries have issued debt to finance their operations. PPL utilizes various financial derivative products to adjust the mix of fixed and floating interest rates in its debt portfolio, adjust the duration of its debt portfolio and lock in U.S. Treasury rates (and interest rate spreads over treasuries) in anticipation of future financing, when appropriate. Risk limits under the risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of PPL's debt portfolio due to changes in the absolute level of interest rates.

At March 31, 2004, PPL's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was estimated at $3 million.

PPL is also exposed to changes in the fair value of its U.S. and international debt portfolios. At March 31, 2004, PPL estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was $160 million.

PPL utilizes various risk management instruments to reduce its exposure to adverse interest rate movements for future anticipated financing. While PPL is exposed to changes in the fair value of these instruments, they are designed such that an economic loss in value should generally be offset by interest rate savings at the time the future anticipated financing is completed. At March 31, 2004, PPL estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was approximately $3 million.

Foreign Currency Risk

PPL is exposed to foreign currency risk, primarily through investments in affiliates in Latin America and Europe. In addition, PPL may make purchases of equipment in currencies other than U.S. dollars.

PPL has adopted a foreign currency risk management program designed to hedge certain foreign currency exposures, including firm commitments, recognized assets or liabilities and net investments. In addition, PPL enters into financial instruments to protect against foreign currency translation risk.

PPL executed forward sale transactions for £21.4 million to hedge a portion of its net investment in WPDH Limited. The estimated value of these agreements as of March 31, 2004 was $5 million, being the amount PPL would pay to terminate the transactions.

PPL executed forward sale transactions for 79.6 billion Chilean pesos to hedge a portion of its net investment in its subsidiary that owned the investment in CGE. The estimated value of these agreements as of March 31, 2004, being the amount PPL would receive to terminate the transactions, was $2 million.

To protect expected income in British pounds sterling, PPL entered into average rate options for £44 million. At March 31, 2004, the market value of these positions, representing the amount PPL would pay to terminate them, was insignificant.

To protect expected income in Chilean pesos, PPL entered into average rate options for 4.1 billion Chilean pesos. At March 31, 2004, the market value of these positions, representing the amount PPL would pay to terminate them, was insignificant.

WPDH Limited executed cross-currency swaps totaling $1.5 billion to hedge the interest payments and value of its U.S. dollar-denominated bonds. The estimated value of this position on March 31, 2004, being the amount PPL would pay to terminate them, including accrued interest, was $204 million.

On the Statement of Income, gains and losses associated with hedges of interest payments denominated in foreign currencies are reflected in "Interest Expense." Gains and losses associated with the purchase of equipment are reflected in "Depreciation." Gains and losses associated with net investment hedges remain in "Accumulated other comprehensive loss" on the Balance Sheet until the investment is disposed.

Nuclear Decommissioning Fund - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna station. As of March 31, 2004, these funds were invested primarily in domestic equity securities and fixed-rate, fixed-income securities and are reflected at fair value on PPL's Balance Sheet. The mix of securities is designed to provide returns to be used to fund Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs. However, the equity securities included in the trusts are exposed to price fluctuation in equity markets, and the values of fixed-rate, fixed-income securities are exposed to changes in interest rates. PPL Susquehanna actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At March 31, 2004, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $26 million reduction in the fair value of the trust assets.

PPL Electric's 1998 restructuring settlement agreement provides for the collection of authorized nuclear decommissioning costs through the CTC. Additionally, PPL Electric is permitted to seek recovery from customers of up to 96% of certain increases in these costs. Under the power supply agreements between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues are used to fund the trusts.

Credit Risk

Credit risk relates to the risk of loss that PPL would incur as a result of non-performance by counterparties of their contractual obligations. PPL maintains credit policies and procedures with respect to counterparties (including requirements that counterparties maintain certain credit ratings criteria) and requires other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, PPL has concentrations of suppliers and customers among electric utilities, natural gas distribution companies and other energy marketing and trading companies. These concentrations of counterparties may impact PPL's overall exposure to credit risk, either positively or negatively, in that counterparties may be similarly affected by changes in economic, regulatory or other conditions. PPL records certain non-performance reserves to reflect the probability that a counterparty with contracts that are out of the money (from the counterparty's standpoint) will default in its performance, in which case PPL would have to sell into a lower-priced market or purchase from a higher-priced market. These reserves are reflected in the fair value of assets recorded in "Price risk management assets" on the Balance Sheet. PPL also records reserves to reflect the probability that a counterparty will not make payments for deliveries PPL has made but not yet billed. These reserves are reflected in "Unbilled revenues" on the Balance Sheet. PPL has also established a reserve with respect to certain sales to the California ISO for which PPL has not yet been paid, as well as a reserve related to PPL's exposure as a result of the Enron bankruptcy, which are reflected in "Accounts receivable" on the Balance Sheet. See Note 8 to the Financial Statements for additional information on the sales to the California ISO.

Related Party Transactions

PPL is not aware of any material ownership interests or operating responsibility by senior management of PPL, PPL Energy Supply or PPL Electric in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL.

Acquisitions, Development and Divestitures

From time to time, PPL and its subsidiaries are involved in negotiations with third parties regarding acquisitions, joint ventures and other arrangements which may or may not result in definitive agreements. See Note 7 to the Financial Statements for information regarding recent acquisitions and development activities.

At March 31, 2004, PPL had domestic generation projects under development which will provide 863 MW of additional generation. In April 2004, the turbine upgrade for PPL Susquehanna Unit 1 was completed. This project provides a nominal power increase of 50 MW of generation capacity, of which PPL Susquehanna has a 90% undivided interest.

PPL is continuously reexamining development projects based on market conditions and other factors to determine whether to proceed with these projects, sell them, cancel them, expand them, execute tolling agreements or pursue other opportunities.

Environmental Matters

See Note 8 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 15 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL, and require estimates or other judgments of matters inherently uncertain: price risk management, pension and other postretirement benefits, asset impairment, leasing, loss contingencies and asset retirement obligations.

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a discussion of each critical accounting policy. PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management reviewed the Form 10-K disclosures regarding the application of these critical accounting policies with the Audit Committee.

PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

PPL Energy Supply is an energy company with headquarters in Allentown, PA. See Item 1, "Business - Background" in PPL Energy Supply's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a description of PPL Energy Supply's domestic and international businesses. See Exhibit 99 in Item 15 in PPL Energy Supply's Form 10-K for a listing of its principal subsidiaries. Through its subsidiaries, PPL Energy Supply is primarily engaged in the generation and marketing of electricity in two key markets - the northeastern and western U.S. - and in the delivery of electricity in the U.K. and Latin America. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Energy Supply's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for an overview of PPL Energy Supply's strategy and the risks and the challenges that it faces in its business.

The information provided in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL Energy Supply's Condensed Consolidated Financial Statements and the accompanying Notes.

Terms and abbreviations appearing herein are explained in the glossary. Dollars are in millions unless otherwise noted.

Results of Operations

The following discussion, which explains significant changes in principal items on the Statement of Income, compares the three months ended March 31, 2004 to the comparable period in 2003.

WPD's results, as consolidated in PPL Energy Supply's Statement of Income, are impacted by changes in foreign currency exchange rates. For the three months ended March 31, 2004, as compared to the same period in 2003, changes in foreign exchange rates increased WPD's portion of revenue and expense line items by about 13%.

The Statement of Income reflects the results of past operations and is not intended as any indication of future operating results. Future operating results will necessarily be affected by various and diverse factors and developments. Furthermore, because results for interim periods can be disproportionately influenced by various factors and developments and by seasonal variations, the results of operations for interim periods do not necessarily indicate results or trends for the year.

Earnings

Net income was as follows:

Three Months Ended March 31,
2004		2003
$	146	$	216

The after-tax changes in net income were primarily due to:

			Three Months Ended March 31, 2004 vs. March 31, 2003
Domestic:
	Eastern U.S. margins			$	12
	Net energy trading margins				8
	Northwestern U.S. margins				4
	Southwestern U.S. margins				1
	Depreciation				(2	)
	Interest expense				(5	)
	Operation and maintenance expenses				(12	)
	Other income - affiliated interest				(4	)
	Energy related businesses				(4	)
	Other				(3	)
		Total Domestic			(5	)
International:
	U.K.:
		Impact of changes in foreign currency exchange rates			7
		Other			2
	Latin America				1
	Other				(4	)
		Total International			6
Unusual items					(71	)
				$	(70	)

The changes in net income from period to period were, in part, attributable to two unusual items with significant earnings impacts. The after-tax impacts of these unusual items are shown below.

		Three Months Ended March 31,
		2004			2003
Accounting change:
	ARO (Note 13)				$	63
Sale of CGE (Note 7)		$	(8	)
Total		$	(8	)	$	63

The period to period changes in earnings components, including margins by region and income statement line items, are discussed in the balance of the discussion in "Results of Operations."

PPL Energy Supply's future earnings could be, or will be, impacted by a number of key factors, including the following:

• Due to current electricity and natural gas price levels, there is a risk that PPL Energy Supply may be unable to recover its investment in new gas-fired generation facilities. Under GAAP, PPL Energy Supply does not believe that there is an impairment charge to be recorded for these facilities at this time. PPL Energy Supply is unable to predict the ultimate earnings impact of this issue, based upon future energy price levels, applicable accounting rules and other factors, but such impact may be material.
• Market prices for electricity and fuel may negatively impact energy margins and earnings.
• PPL Energy Supply is unable to predict whether future impairments of goodwill may be required for its domestic and international investments. While no goodwill impairments were required based on the annual review performed in the fourth quarter of 2003, future impairments may occur due to determinations of carrying value exceeding the fair value of these investments.
• Earnings in 2005 and beyond are expected to be negatively impacted by a rate review of the delivery business of WPD (South West) and WPD (South Wales). PPL Energy Supply cannot predict the ultimate outcome of the rate review. See Note 8 to the Financial Statements for additional information.
• PPL Energy Supply has interests in two synfuel facilities and receives tax credits pursuant to Section 29 of the Internal Revenue Code based on its sale of synfuel to unaffiliated third-party purchasers. PPL Energy Supply has estimated that these facilities will contribute approximately $23 million to earnings in 2004, approximately $30 million to earnings in 2005 and 2006 and approximately $32 million to earnings in 2007. See Note 8 to the Financial Statements for a discussion of the IRS review of synfuel production procedures.

Domestic Gross Energy Margins

The following table provides changes in income statement line items that comprise domestic gross energy margins:

			Three Months Ended March 31, 2004 vs. March 31, 2003
Wholesale energy marketing revenues				$	(20	)
Wholesale energy marketing to affiliates					21
Unregulated retail electric and gas revenues					(20	)
Net energy trading margins					14
Other revenue adjustments (a)					14
	Total revenues				9
Fuel					5
Energy purchases					(34	)
Energy purchases from affiliates					(7	)
Other cost adjustments (a)					2
	Total cost of sales				(34	)
		Domestic gross energy margins		$	43

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic energy margins, in particular, revenues and energy costs related to the international operations of PPL Global. Also adjusted to include gains on sales of emission allowances, which are reflected in "Other operation and maintenance" expenses on the Statement of Income.

Changes in Gross Domestic Energy Margins By Region

Domestic energy margins are generated through PPL's normal and hedge activities (non-trading), as well as trading activities. Non-trading margins are now discussed on a geographic basis rather than on an activity basis, as previously provided. A regional perspective more closely matches the internal view of how PPL's energy business is managed.

		Three Months Ended March 31, 2004 vs. March 31, 2003
Eastern U.S.			$	21
Northwestern U.S.				7
Southwestern U.S.				1
Net energy trading				14
	Domestic gross energy margins		$	43

Eastern U.S.

Eastern U.S. non-trading margins were higher for the three months ended March 31, 2004, compared to the same period in 2003, due to higher prices and volumes, as well as a lower-cost mix of generation. Wholesale sale prices increased 5% and volumes increased 4%, primarily due to serving new competitive load obligations in Connecticut and New Jersey. Retail energy prices increased about 1% in accordance with the schedule established by the PUC's Final Order, and retail volumes increased 4% primarily due to the return of customers who previously shopped for energy in the competitive market in Pennsylvania. Finally, supply costs did not increase proportionally because increased generation from coal units displaced marginal-cost oil units. These coal units had improved performance in 2004 over 2003 because of differences in planned outage schedules and the elimination of transmission constraints.

Northwestern U.S.

Northwestern U.S. non-trading margins were higher for the three months ended March 31, 2004, compared to the same period in 2003, primarily due to higher sales prices combined with improved generation production. Sales prices rose 8% for the three months ended March 31, 2004, compared to the same period in 2003. Hydro generation production rose 12% due to more precipitation, and coal generation production rose 6% due to operational improvements.

Southwestern U.S.

Southwestern U.S. non-trading margins increased by $1 million for the three months ended March 31, 2004, compared to the same period in 2003, because of lower market prices for purchased power.

Net Energy Trading

PPL enters into certain energy contracts that meet the criteria of trading derivatives as defined by EITF 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities." These physical and financial contracts cover trading activity associated with electricity, gas and oil. The $14 million increase for the three months ended March 31, 2004, compared to the same period in 2003, was primarily due to unrealized gas derivative gains from increases in natural gas prices for the three months ended March 31, 2004, and realized and unrealized electric swap losses for the three months ended March 31, 2003. The physical volumes associated with energy trading were 994 GWh and 2.4 Bcf for the three months ended March 31, 2004, compared to 1,213 GWh and no Bcf for the three months ended March 31, 2003.

Utility Revenues

The increase in utility revenues was attributable to the following:

		Three Months Ended March 31, 2004 vs. March 31, 2003
International:
Retail electric delivery (PPL Global)
	U.K.		$	26
	Chile			12
			$	38

The increase in utility revenues for the three months ended March 31, 2004, compared with the same period in 2003, was primarily due to:

• higher WPD revenues in the U.K., primarily due to the change in foreign currency exchange rates from period to period; and
• higher revenues in Chile primarily due to higher energy prices, which are a pass-through to customer rates.

Energy Related Businesses

Energy related businesses contributed $23 million less to operating income for the three months ended March 31, 2004, compared to the same period in 2003. The decrease resulted primarily from a $15 million loss on the sale of PPL Global's minority interest in CGE (see Note 7 to the Financial Statements), a $4 million decrease in WPD net revenues due largely to contract terminations in 2003 and 2004, and a $2 million decrease in contributions from mechanical contracting and engineering subsidiaries due to the continued decline in capital spending in commercial and industrial markets and lower margins experienced in those markets.

Other Operation and Maintenance

The increase in other operation and maintenance expenses was primarily due to:

	Three Months Ended March 31, 2004 vs. March 31, 2003
Timing of outage costs associated with the planned refueling and inspection at the Susquehanna station, and of other nuclear-related expenses		$	16
Insurance settlements - property damage and environmental which were recorded in 2003			12
Increase in foreign currency exchange rates			4
Outage costs associated with planned maintenance at the Montour plant			3
Decrease in domestic and international pension income			2
Gains on sales of emission allowances			(4	)
Lower trademark license fees from a PPL subsidiary (see Note 9)			(3	)
Decrease in other postretirement benefit expense			(1	)
Other			(1	)
		$	28

The $2 million decrease in net pension income was attributable to a reduction in the discount rate assumptions for PPL Energy Supply's domestic and international pension plans. Although financial markets have improved and PPL Energy Supply's domestic and international pension plans have experienced significant asset gains, interest rates on fixed-income obligations have continued to fall, requiring a further reduction in the discount rate assumption as of December 31, 2003. The reduction in the discount rate assumption has a significant impact on the measurement of plan obligations and net pension costs, which will result in PPL Energy Supply's recognition of lower levels of net pension income in 2004. See Note 12 to the Financial Statements for details of the costs of PPL Energy Supply's pension plans.

Depreciation

Depreciation expense was impacted by the following offsetting items:

	Three Months Ended March 31, 2004 vs. March 31, 2003
Additions to PP&E		$	1
Foreign currency exchange rates			4
2003 purchase accounting adjustments to WPD assets			(9	)
Consolidation of the lessor of the Sundance and University Park generation facilities due to FIN 46			4
		$

Taxes, Other Than Income

Taxes, other than income, increased by $5 million during the three months ended March 31, 2004, compared with the same period in 2003, primarily due to an increase in capital stock taxes of $2 million and increases in WPD's property taxes of $3 million. The increase in property taxes was primarily related to the impact of changes of foreign currency exchange rates and adjustments recorded in 2003.

Other Income - net

See Note 10 to the Financial Statements for details of other income.

Financing Costs

Financing costs, including "Interest Expense" and "Distributions on Preferred Securities," increased by $12 million during the three months ended March 31, 2004, compared with the same period in 2003, primarily due to:

• $14 million of additional long-term debt interest from WPD's additional debt issuances in March and May 2003;
• $6 million of additional interest due to the consolidation of the lessor of the Sundance and University Park generation facilities on December 31, 2003 in accordance with FIN 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51;" and
• $2 million of additional long-term debt interest due to the issuance of Convertible Senior Notes in May 2003; offset by
• $7 million of lower interest on short-term debt due to less commercial paper and WPD short-term debt outstanding; and
• a $4 million decrease in amortization expense.

Discontinued Operations

See "Discontinued Operations" in Note 7 to the Financial Statements for information regarding the loss of $1 million recorded in the first quarter of 2004 related to PPL Global's plan of sale of its investment in a Latin American telecommunications company.

Cumulative Effect of a Change in Accounting Principle

PPL Energy Supply adopted SFAS 143, "Accounting for Asset Retirement Obligations," effective January 1, 2003. SFAS 143 addresses the accounting for obligations associated with the retirement of tangible long-lived assets. Application of the new rules resulted in a cumulative effect of adoption that increased net income by $63 million in 2003. See Note 21 to the Financial Statements in PPL Energy Supply's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for additional information.

Financial Condition

Liquidity

At March 31, 2004, PPL Energy Supply had $394 million of cash and cash equivalents and $8 million of short-term debt. At December 31, 2003, PPL Energy Supply had $227 million in cash and cash equivalents and $56 million of short-term debt. The increase in PPL Energy Supply's cash position was the net result of:

• $272 million of cash provided by operating activities;
• proceeds of $123 million from the sale of CGE; and
• the issuance of $14 million of long-term debt; offset by
• the distribution to Member of $63 million;
• a decrease of $51 million in short-term debt; and
• $132 million of capital expenditures.

Rating Agency Decisions

Standard & Poor's Ratings Services (S&P), Moody's Investors Service, Inc. (Moody's) and Fitch Ratings (Fitch) periodically review the credit ratings on the debt and preferred securities of PPL Energy Supply and its subsidiaries. Based on their respective reviews, the rating agencies may make certain ratings revisions.

Management does not expect these ratings decisions to limit PPL Energy Supply's or its subsidiaries' ability to fund their short-term liquidity needs through the issuance of commercial paper or borrowing under their revolving credit facilities. In addition, management does not expect these ratings decisions to impact PPL Energy Supply's or its subsidiaries' ability to raise new long-term debt. These ratings decisions will have an immaterial impact on the cost for PPL Energy Supply or its subsidiaries to maintain their credit facilities, as well as on the cost of any new long-term debt.

The ratings of S&P, Moody's and Fitch are not a recommendation to buy, sell or hold any securities of PPL Energy Supply or its subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

In September 2003, Moody's announced that it was placing PPL Montana's 8.903% Pass-Through Certificates due 2020 under review for possible downgrade. During the first quarter 2004, Moody's affirmed its stable outlook on these securities which are currently rated 'Baa3'.

For additional information on PPL Energy Supply's Liquidity, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Energy Supply's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Commodity Price Risk (Non-trading)

PPL Energy Supply's commodity derivative contracts that qualify for hedge accounting treatment mature at various times through 2010. The following chart sets forth PPL Energy Supply's net fair market value of these contracts:

	Three Months Ended March 31,
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	86		$	58
Contracts realized or otherwise settled during the period		(24	)		(5	)
Fair value of new contracts at inception
Other changes in fair values		22			76
Fair value of contracts outstanding at the end of the period	$	84		$	129

During the three months ended March 31, 2004 and 2003, PPL Energy Supply realized or otherwise settled net gains of approximately $24 million and $5 million related to contracts entered into prior to January 1 of the previous year. These amounts do not reflect intra-quarter contracts that were entered into and settled during the periods.

"Other changes in fair values," a gain of approximately $22 million and $76 million, represents changes in the market value that occurred during the three months ended March 31, 2004 and 2003 for contracts that were outstanding at the end of each period.

The following chart segregates estimated fair values of PPL Energy Supply's commodity derivative contracts that qualify for hedge accounting treatment at March 31, 2004 based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains/(Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years		Maturity 4-5 Years			Maturity in Excess of 5 Years			Total Fair Value
Source of Fair Value
Prices actively quoted	$	9									$	9
Prices provided by other external sources		50	$	31	$	(5	)	$	(1	)		75
Prices based on models and other valuation methods
Fair value of contracts outstanding at the end of the period	$	59	$	31	$	(5	)	$	(1	)	$	84

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the New York Mercantile Exchange (NYMEX). The NYMEX has currently quoted prices through 2010.

The "Prices provided by other external sources" category includes PPL Energy Supply's forward positions and options in natural gas and power and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available. The fair value of electricity positions recorded above use the midpoint of the bid/ask spreads obtained through OTC brokers. On average, OTC quotes for forwards and swaps of natural gas and power extend one and two years into the future.

The "Prices based on models and other valuation methods" category includes the value of transactions for which an internally developed price curve was constructed as a result of the long-dated nature of the transaction or the illiquidity of the market point, or the value of options not quoted by an exchange or OTC broker. Additionally, this category includes "strip" transactions whose prices are obtained from external sources and then modeled to monthly prices as appropriate.

As of March 31, 2004, PPL Energy Supply estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its non-trading portfolio by approximately $170 million, compared to a decrease of $196 million at March 31, 2003. However, the change in the value of the non-trading portfolio would have been substantially offset by an increase in the value of the underlying commodity, the electricity generated, because these contracts serve to reduce the market risk inherent in the generation of electricity. Additionally, the value of PPL Energy Supply's unsold generation would be improved. Because PPL Energy Supply's electricity portfolio is generally in a net sales position, the adverse movement in prices is usually an increase in prices. Conversely, because PPL Energy Supply's commodity fuels portfolio is generally in a net purchase position, the adverse movement in prices is usually a decrease in prices. If both of these scenarios happened, the implied margins for the unsold generation would increase.

In accordance with its marketing strategy, PPL Energy Supply does not completely hedge its generation output or fuel requirements. PPL Energy Supply estimates that for its entire portfolio, including all generation and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods would decrease expected 2004 gross margins by about $6 million. Similarly, a 10% adverse movement in all fossil fuel prices would decrease 2004 gross margins by $4 million.

Commodity Price Risk (Trading)

PPL Energy Supply's trading contracts mature at various times through 2006. The following chart sets forth PPL Energy Supply's net fair market value of trading contracts:

	Three Months Ended March 31,
	2004			2003
Fair value of contracts outstanding at the beginning of the period	$	3		$	(6	)
Contracts realized or otherwise settled during the period		(3	)		(1	)
Fair value of new contracts at inception		4
Other changes in fair values		7			(9	)
Fair value of contracts outstanding at the end of the period	$	11		$	(16	)

During the three months ended March 31, 2004 and 2003, PPL Energy Supply realized or otherwise settled net gains of approximately $3 million and $1 million related to trading contracts entered into prior to January 1 of the previous year. These amounts do not reflect intra-year contracts that were entered into and settled during the periods.

The fair value of new contracts at inception is usually zero, because they are entered into at current market prices. However, when PPL Energy Supply enters into an option contract, a premium is paid or received. PPL Energy Supply paid a net of $4 million during the three months ended March 31, 2004 for these option contracts.

"Other changes in fair values," a gain/(loss) of approximately $7 million and $(9) million, represents changes in the market value that occurred during the three months ended March 31, 2004 and 2003 for contracts that were outstanding at the end of each period.

As of March 31, 2004, the net loss on PPL Energy Supply's trading activities expected to be recognized in earnings during the next three months is approximately $2 million.

The following chart segregates estimated fair values of PPL Energy Supply's trading portfolio at March 31, 2004 based on whether the fair values are determined by quoted market prices or other more subjective means.

	Fair Value of Contracts at Period-End Gains/(Losses)
	Maturity Less Than 1 Year		Maturity 1-3 Years		Maturity 4-5 Years	Maturity in Excess of 5 Years	Total Fair Value
Source of Fair Value
Prices actively quoted	$	1					$	1
Prices provided by other external sources			$	4				4
Prices based on models and other valuation methods		4		2				6
Fair value of contracts outstanding at the end of the period	$	5	$	6			$	11

As of March 31, 2004, PPL Energy Supply estimated that a 10% adverse movement in market prices across all geographic areas and time periods would have decreased the value of the commodity contracts in its trading portfolio by $10 million, compared to a decrease of $6 million at March 31, 2003.

Interest Rate Risk

PPL Energy Supply and its subsidiaries have issued debt to finance their operations. PPL manages interest rate risk for PPL Energy Supply by using financial derivative products to adjust the mix of fixed and floating interest rates in its debt portfolio, adjusting the duration of its debt portfolio and locking in U.S. Treasury rates (and interest rate spreads over treasuries) in anticipation of future financing, when appropriate. Risk limits under the risk management program are designed to balance risk exposure to volatility in interest expense and changes in the fair value of PPL Energy Supply's debt portfolio due to changes in the absolute level of interest rates.

At March 31, 2004, PPL Energy Supply's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was insignificant.

PPL Energy Supply is also exposed to changes in the fair value of its U.S. and international debt portfolio. At March 31, 2004, PPL Energy Supply estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was $109 million.

PPL and PPL Energy Supply utilize various risk management instruments to reduce PPL Energy Supply's exposure to adverse interest rate movements for future anticipated financings. While PPL Energy Supply is exposed to changes in the fair value of these instruments, they are designed such that any economic loss in value should be offset by interest rate savings at the time the future anticipated financing is completed. At March 31, 2004, PPL Energy Supply estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was $1 million.

Foreign Currency Risk

PPL Energy Supply is exposed to foreign currency risk, primarily through investments in affiliates in Latin America and Europe. In addition, PPL Energy Supply may make purchases of equipment in currencies other than U.S. dollars.

PPL has adopted a foreign currency risk management program designed to hedge certain foreign currency exposures, including firm commitments, recognized assets or liabilities and net investments. In addition, PPL enters into financial instruments to protect against foreign currency translation risk.

PPL executed forward sale transactions for £21.4 million to hedge a portion of its net investment in WPDH Limited. The estimated value of these agreements as of March 31, 2004 was $5 million, being the amount PPL would pay to terminate the transactions.

PPL executed forward sale transactions for 79.6 billion Chilean pesos to hedge a portion of its net investment in its subsidiary that owned the investment in CGE. The estimated value of these agreements as of March 31, 2004, being the amount PPL would receive to terminate the transactions, was $2 million.

To protect expected income in British pounds sterling, PPL entered into average rate options for £44 million. At March 31, 2004, the market value of these positions, representing the amount PPL would pay to terminate them, was insignificant.

To protect expected income in Chilean pesos, PPL entered into average rate options for 4.1 billion Chilean pesos. At March 31, 2004, the market value of these positions, representing the amount PPL would pay to terminate them, was insignificant.

WPDH Limited executed cross-currency swaps totaling $1.5 billion to hedge the interest payments and value of its U.S. dollar-denominated bonds. The estimated value of this position on March 31, 2004, being the amount PPL would pay to terminate them, including accrued interest, was $204 million.

On the Statement of Income, gains and losses associated with hedges of interest payments denominated in foreign currencies are reflected in "Interest Expense." Gains and losses associated with the purchase of equipment are reflected in "Depreciation." Gains and losses associated with net investment hedges remain in accumulated other comprehensive loss on the Balance Sheet until the investment is disposed.

Nuclear Decommissioning Fund - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna station. As of March 31, 2004, these funds were invested primarily in domestic equity securities and fixed-rate, fixed-income securities and are reflected at fair value on PPL Energy Supply's Balance Sheet. The mix of securities is designed to provide returns to be used to fund Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs. However, the equity securities included in the trusts are exposed to price fluctuation in equity markets, and the values of fixed-rate, fixed-income securities are exposed to changes in interest rates. PPL Susquehanna actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At March 31, 2004, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $26 million reduction in the fair value of the trust assets.

PPL Electric's 1998 restructuring settlement agreement provides for the collection of authorized nuclear decommissioning costs through the CTC. Additionally, PPL Electric is permitted to seek recovery from customers of up to 96% of certain increases in these costs. Under the power supply agreements between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues are used to fund the trusts.

Credit Risk

Credit risk relates to the risk of loss that PPL Energy Supply would incur as a result of non-performance by counterparties of their contractual obligations. PPL Energy Supply maintains credit policies and procedures with respect to counterparties (including requirements that counterparties maintain certain credit ratings criteria) and requires other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, PPL Energy Supply has concentrations of suppliers and customers among electric utilities, natural gas distribution companies and other energy marketing and trading companies. These concentrations of counterparties may impact PPL Energy Supply's overall exposure to credit risk, either positively or negatively, in that counterparties may be similarly affected by changes in economic, regulatory or other conditions. PPL Energy Supply records certain non-performance reserves to reflect the probability that a counterparty with contracts that are out of the money (from the counterparty's standpoint) will default in its performance, in which case PPL Energy Supply would have to sell into a lower-priced market or purchase from a higher-priced market. These reserves are reflected in the fair value of assets recorded in "Price risk management assets" on the Balance Sheet. PPL Energy Supply also records reserves to reflect the probability that a counterparty will not make payments for deliveries PPL Energy Supply has made but not yet billed. These reserves are reflected in "Unbilled revenues" on the Balance Sheet. PPL Energy Supply has also established a reserve with respect to certain sales to the California ISO for which PPL Energy Supply has not yet been paid, as well as a reserve related to PPL Energy Supply's exposure as a result of the Enron bankruptcy, which are reflected in "Accounts receivable" on the Balance Sheet. See Note 8 to the Financial Statements for additional information on the sales to the California ISO.

Related Party Transactions

PPL Energy Supply is not aware of any material ownership interests or operating responsibility by senior management of PPL Energy Supply in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL Energy Supply.

For additional information on related party transactions, see Note 9 to the Financial Statements.

Acquisitions, Development and Divestitures

From time to time, PPL Energy Supply and its subsidiaries are involved in negotiations with third parties regarding acquisitions, joint ventures and other arrangements which may or may not result in definitive agreements. See Note 7 to the Financial Statements for information regarding recent acquisitions and development activities.

At March 31, 2004, PPL Energy Supply had domestic generation projects under development which will provide 863 MW of additional generation. In April 2004, the turbine upgrade for PPL Susquehanna Unit 1 was completed. This project provides a nominal power increase of 50 MW of generation capacity, of which PPL Susquehanna has a 90% undivided interest.

PPL Energy Supply is continuously reexamining development projects based on market conditions and other factors to determine whether to proceed with these projects, sell them, cancel them, expand them, execute tolling agreements or pursue other opportunities.

Environmental Matters

See Note 8 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 15 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL Energy Supply's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL Energy Supply, and require estimates or other judgments of matters inherently uncertain: price risk management, pension and other postretirement benefits, asset impairment, leasing, loss contingencies and asset retirement obligations.

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Energy Supply's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a discussion of each critical accounting policy. PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management reviewed the Form 10-K disclosures regarding the application of these critical accounting policies with the Audit Committee.

PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

PPL Electric provides electricity delivery service in eastern and central Pennsylvania. Its headquarters are in Allentown, Pennsylvania. See Item 1, "Business - Background" in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a description of PPL Electric's business. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for an overview of PPL Electric's strategy and the risks and the challenges that it faces in its business.

The information provided in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with PPL Electric's Condensed Consolidated Financial Statements and the accompanying Notes.

Terms and abbreviations appearing herein are explained in the glossary. Dollars are in millions unless otherwise noted.

Results of Operations

The following discussion, which explains significant changes in principal items on the Statement of Income, compares the three months ended March 31, 2004 to the comparable period in 2003.

The Statement of Income reflects the results of past operations and is not intended as any indication of future operating results. Future operating results will necessarily be affected by various and diverse factors and developments. Furthermore, because results for interim periods can be disproportionately influenced by various factors and developments and by seasonal variations, the results of operations for interim periods do not necessarily indicate results or trends for the year.

Earnings

Income available to PPL was:

Three Months Ended March 31,
2004		2003
$	33	$	29

The after-tax changes in income available to PPL were primarily due to:

	Three Months Ended March 31, 2004 vs. March 31, 2003
Taxes, other than income		$	8
Wholesale electric revenues			(2	)
Operation and maintenance expenses			(2	)
Depreciation			(1	)
Financing costs (excluding transition bond interest expense)			1
		$	4

The period to period changes in earnings components are discussed in the balance of "Results of Operations."

In March 2004, PPL Electric filed a proposal with the PUC to increase distribution rates by approximately $164 million and to pass through to customers approximately $57 million in increased transmission charges that PPL Electric pays to PJM for transmission services. The PUC's review of the distribution rate request is expected to take about nine months. Transmission services are provided under the PJM Open Access Transmission Tariff, a rate schedule filed with and approved by the FERC. Under the federal "filed rate doctrine," such FERC-approved rates may be recovered from retail customers without a review of those rates by a state agency such as the PUC. In addition, PPL Electric's PUC-approved retail tariff permits the automatic pass-through of transmission charges. PPL Electric agreed to a cap on both of these charges until December 31, 2004 as part of its 1998 settlement under the PUC Final Order. Generation charges for customers who do not select an alternative energy supplier are fixed through 2009 and are not affected by these changes. The combination of the proposed distribution rate increase and transmission charge pass-through would result in an 8.1% increase over PPL Electric's present rates effective January 1, 2005. PPL Electric cannot predict the outcome of this proceeding.

Operating Revenues

Retail Electric

The increase (decrease) in revenues from retail electric operations was attributable to the following:

	Three Months Ended March 31, 2004 vs. March 31, 2003
PLR electric generation supply		$	30
Delivery and PLR Supply to PPL Generation			(3	)
Other			(1	)
		$	26

The increase in operating revenues from retail electric operations for the three months ended March 31, 2004, compared with the same period in 2003, was primarily due to:

• higher PLR revenues due to higher energy and capacity rates in 2004 compared with 2003, and a 4% increase in volumes, in part due to the return of customers previously served by alternate suppliers; partially offset by
• lower delivery revenues resulting from a .8% decrease in delivery sales, in part due to colder than normal weather during the first quarter of 2003; and
• lower sales to PPL Generation. PPL Generation's power plants began self-supplying their station use in April 2003, rather than taking delivery from PPL Electric.

Wholesale Electric

PPL Electric wholesale revenues were primarily derived from sales to municipalities. The $4 million decrease in wholesale revenues for the three months ended March 31, 2004, compared with the same period in 2003, was due to the expiration of all municipal purchase power agreements at the end of January 2004.

Energy Purchases from Affiliate

Energy purchases from affiliate increased by $23 million for the three months ended March 31, 2004, compared with the same period in 2003. This increase reflects higher prices for energy purchased under the power supply contracts with PPL EnergyPlus needed to support PLR load, coupled with an increase in PLR load.

Depreciation

Depreciation increased by $2 million for the three months ended March 31, 2004, compared with the same period in 2003, primarily due to plant and software additions, including the Automated Meter Reading project.

Taxes, Other Than Income

In the first quarter of 2004, PPL Electric reversed $14 million of accrued 1998 and 1999 PURTA taxes that had been previously accrued based on potential exposure of third-party intervention in the proceedings regarding the Susquehanna nuclear station tax assessment. The rights of these third parties to further appeal expired in 2004. This is the primary reason for the $13 million decrease in taxes, other than income, for the three months ended March 31, 2004, compared with the same period in 2003.

Interest Expense

Interest expense decreased by $7 million for the three months ended March 31, 2004, compared to the same period in 2003. This decrease was the net impact of retirements in 2003 of First Mortgage Bonds, Pollution Control Bonds and Transition Bonds, partially offset by the issuance in 2003 of $100 million of Senior Secured Bonds and $90 million of Pollution Control Bonds.

Income Taxes

Income taxes increased by $4 million for the three months ended March 31, 2004, compared with the same period in 2003, as a result of higher pre-tax book income.

Financial Condition

Liquidity

At March 31, 2004, PPL Electric had $96 million of cash and cash equivalents and $45 million of short-term debt. At December 31, 2003, PPL Electric had $162 million in cash and cash equivalents and no short-term debt. The decrease in cash and cash equivalents was the net result of:

• the retirement of $102 million of long-term debt; and
• $54 million of capital expenditures; partially offset by
• $44 million of cash provided by operating activities; and
• an increase of $45 million in short-term debt.

For additional information on PPL Electric's Liquidity, See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003.

Risk Management

Market Risk

Commodity Price Risk - PLR Contracts

PPL Electric and PPL EnergyPlus have power supply agreements under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through 2009. As a result, PPL Electric has shifted any electric price risk relating to its PLR obligation to PPL EnergyPlus for 2002 through 2009. See Note 9 to the Financial Statements for information on the PLR contracts.

Interest Rate Risk

PPL Electric has issued debt to finance its operations, which increases its interest rate risk. At March 31, 2004, PPL Electric's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was insignificant.

PPL Electric is also exposed to changes in the fair value of its debt portfolio. At March 31, 2004, PPL Electric estimated that its potential exposure to a change in the fair value of its debt portfolio, through a 10% adverse movement in interest rates, was approximately $20 million.

Related Party Transactions

PPL Electric is not aware of any material ownership interests or operating responsibility by senior management of PPL Electric in outside partnerships, including leasing transactions with variable interest entities, or other entities doing business with PPL Electric.

For additional information on related party transactions, see Note 9 to the Financial Statements.

Environmental Matters

See Note 8 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 15 to the Financial Statements for information on new accounting standards adopted in 2004 or pending adoption.

Application of Critical Accounting Policies

PPL Electric's financial condition and results of operations are impacted by the methods, assumptions and estimates used in the application of critical accounting policies. The following accounting policies are particularly important to the financial condition or results of operations of PPL Electric, and require estimates or other judgments of matters inherently uncertain: pension and other postretirement benefits and loss contingencies.

See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003 for a discussion of each critical accounting policy. PPL's senior management has reviewed these critical accounting policies, and the estimates and assumptions regarding them, with its Audit Committee. In addition, PPL's senior management reviewed the Form 10-K disclosures regarding the application of these critical accounting policies with the Audit Committee.

PPL CORPORATION
PPL ENERGY SUPPLY, LLC AND
PPL ELECTRIC UTILITIES CORPORATION
AND SUBSIDIARIES

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Reference is made to "Risk Management - Energy Marketing & Trading and Other" in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 4. Controls and Procedures
(a)	Evaluation of disclosure controls and procedures.
	The registrants' principal executive officers and principal financial officers, based on their evaluation of the registrants' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) have concluded that, as of March 31, 2004, the registrants' disclosure controls and procedures are adequate and effective to ensure that material information relating to the registrants and their consolidated subsidiaries is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms, particularly during the period for which this quarterly report has been prepared.
(b)	Change in internal controls over financial reporting.
	The registrants' principal executive officers and principal financial officers have concluded that there were no changes in the registrants' internal controls over financial reporting during the registrants' first fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrants' internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
For additional information regarding various pending administrative and judicial proceedings involving regulatory, environmental and other matters, which information is incorporated by reference into this Part II, see:
	•	Item 3 "Legal Proceedings" in PPL's, PPL Energy Supply's and PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December 31, 2003; and
	•	Note 8 of the registrants' "Combined Notes to Condensed Consolidated Financial Statements" in Part I of this report.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Issuer Purchases Of Equity Securities:

	(a)	(b)	(c)	(d)
Period	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2)
January 1 to January 31, 2004	5,751	$45.23
February 1 to February 29, 2004	1,703	$45.11
March 1 to March 31, 2004	37	$46.44
Total	7,491

(1)	Represents shares of common stock withheld by PPL at the request of its executive officers to pay taxes upon the vesting of the officers' restricted stock awards, as permitted under the terms of PPL's Incentive Compensation Plan and Incentive Compensation Plan for Key Employees.
(2)	Not applicable. PPL does not currently have in place any publicly announced plans or programs to purchase equity securities.

Item 6. Exhibits and Reports on Form 8-K
(a)	Exhibits
	4(a) -	Supplement, dated as of January 21, 2004, to Indenture dated November 1, 1997, among PPL Corporation, PPL Capital Funding, Inc. and JPMorgan Chase Bank (formerly known as Chase Manhattan Bank), as Trustee
	4(b) -	Indenture, dated as of February 26, 2004, among PPL Corporation, PPL Capital Funding, Inc. and JPMorgan Chase Bank, as Trustee
	4(c) -	Registration Rights Agreement, dated as of February 26, 2004, among PPL Corporation, PPL Capital Funding, Inc. and the Representatives of the Initial Purchasers
	12(a) -	PPL Corporation and Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
	12(b)-	PPL Energy Supply, LLC and Subsidiaries Computation of Ratio of Earnings to Fixed Charges
	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the quarterly period ended March 31, 2004, filed by the following officers for the following companies:
	31(a) -	William F. Hecht for PPL Corporation
	31(b) -	John R. Biggar for PPL Corporation
	31(c) -	William F. Hecht for PPL Energy Supply, LLC
	31(d) -	James E. Abel for PPL Energy Supply, LLC
	31(e) -	John F. Sipics for PPL Electric Utilities Corporation
	31(f) -	James E. Abel for PPL Electric Utilities Corporation
	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the quarterly period ended March 31, 2004, furnished by the following officers for the following companies:
	32(a) -	William F. Hecht for PPL Corporation
	32(b) -	John R. Biggar for PPL Corporation
	32(c) -	William F. Hecht for PPL Energy Supply, LLC
	32(d) -	James E. Abel for PPL Energy Supply, LLC
	32(e) -	John F. Sipics for PPL Electric Utilities Corporation
	32(f) -	James E. Abel for PPL Electric Utilities Corporation
(b)	Reports on Form 8-K
	The following Reports on Form 8-K were filed (*) or furnished (**), as indicated, during the three months ended March 31, 2004:
**	Report dated January 28, 2004 - PPL
	Item 12.		Disclosure of Results of Operations and Financial Condition
			Reported results for the year ended 2003 and the earnings forecast for 2004.
	Item 7.		Financial Statements and Exhibits
			Press release regarding PPL's results for the year ended 2003 and earnings forecast for 2004.
*	Report dated March 29, 2004 - PPL and PPL Electric
	Item 5.		Other Events
			Announced the filing of a request with the PUC for an overall annual net increase in distribution revenues of approximately $164 million effective January 1, 2005. In addition to the distribution rate increase request, PPL Electric also informed the PUC that transmission service charges reflected in retail rates are expected to increase by approximately $57 million, effective January 1, 2005.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company or its subsidiaries.

	PPL Corporation
	(Registrant)
	PPL Energy Supply, LLC
	(Registrant)
	PPL Electric Utilities Corporation
	(Registrant)
Date: May 7, 2004	/s/  John R. Biggar
	John R. Biggar
	Executive Vice President and
	Chief Financial Officer
	(PPL Corporation)
	(principal financial officer)
	/s/  James E. Abel
	James E. Abel
	Treasurer
	(PPL Energy Supply, LLC)
	(principal financial officer)
	/s/  Mark D. Woods
	Mark D. Woods
	Controller
	(PPL Electric Utilities Corporation)
	(principal accounting officer)

EX-4 2 ppl10q_3-04ex4a.htm SUPPLEMENT, DATED AS OF JANUARY 21, 2004

Exhibit 4(a)

PPL CAPITAL FUNDING, INC.,
Issuer

and

PPL CORPORATION,
Guarantor

to

JPMORGAN CHASE BANK,
Trustee

_______________

SUPPLEMENTAL INDENTURE NUMBER 5

Dated as of January 21, 2004

Supplemental to the Indenture
dated as of November 1, 1997
_______________

Notes due May 18, 2006

_______________

TABLE OF CONTENTS¹

		Page
ARTICLE ONE   NOTES DUE MAY 18, 2006		1
	Section 1.01   Establishment	1
	Section 1.02   Definitions	2
	Section 1.03   Ranking of the Notes	6
	Section 1.04   Stated Maturity; Payment of Principal and Interest	7
	Section 1.05   Form; Denominations	8
	Section 1.06   Global Notes	9
	Section 1.07   Paying Agents; Transfer Agents; Place of Payment	9
	Section 1.08   Trust Indenture Act	10
ARTICLE TWO   SUBORDINATION OF NOTES		10
	Section 2.01   Notes Subordinate to Senior Indebtedness of the Corporation.	10
	Section 2.02   Payment Over of Proceeds of Notes.	10
	Section 2.03   Disputes with Holders of Certain Senior Indebtedness of the Corporation.	12
	Section 2.04   Subrogation.	12
	Section 2.05   Obligation of the Corporation Unconditional.	13
	Section 2.06   Priority of Senior Indebtedness of the Corporation Upon Maturity.	13
	Section 2.07   Trustee as Holder of Senior Indebtedness of the Corporation.	14
	Section 2.08   Notice to Trustee to Effectuate Subordination.	14
	Section 2.09   Modification, Extension, etc. of Senior Indebtedness of the Corporation.	14
	Section 2.10   Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness of the Corporation.	15
	Section 2.11   Paying Agents Other Than the Trustee.	15
	Section 2.12   Rights of Holders of Senior Indebtedness of the Corporation Not Impaired.	15
	Section 2.13   Effect of Subordination Provisions; Termination.	15
ARTICLE THREE   FORM OF GUARANTEE		16
ARTICLE FOUR   REMARKETING		23
	Section 4.01   Remarketing; Payment of Purchase Price	23
	Section 4.02   Failed Final Remarketing.	25
ARTICLE FIVE   MISCELLANEOUS PROVISIONS		26
	Section 5.01   Recitals by Corporation	26
	Section 5.02   Ratification and Incorporation of Original Indenture	27
	Section 5.03   Executed in Counterparts	27
ARTICLE SIX   TAX TREATMENT; ERISA		27
	Section 6.01   Tax Agreements	27
	Section 6.02   ERISA Agreements	27
___________________________________
1	This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

THIS SUPPLEMENTAL INDENTURE NUMBER 5 (the "Supplemental Indenture") is made as of January 21, 2004, by and between PPL CAPITAL FUNDING, INC. (formerly known as PP&L Capital Funding, Inc.) a corporation duly organized and existing under the laws of the state of Delaware, having its principal office at Two North Ninth Street Allentown, Pennsylvania, 18101 (herein called the "Corporation"), PPL CORPORATION (formerly known as PP&L Resources, Inc.), a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania (herein called the "Guarantor"), and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan Bank), a New York banking corporation, as Trustee (herein called the "Trustee").

W I T N E S S E T H :

WHEREAS, the Corporation has heretofore entered into an Indenture, dated as of November 1, 1997 (the "Original Indenture") with The Chase Manhattan Bank, as Trustee;

WHEREAS, the Original Indenture is incorporated herein by this reference and the Indenture, as amended and supplemented to the date hereof, including by this Supplemental Indenture Number 5, is herein called the "Indenture;"

WHEREAS, under the Indenture, a new series of Securities may at any time be established in accordance with the provisions of the Indenture and the terms of such series may be described by a supplemental indenture executed by the Corporation, the Guarantor and the Trustee;

WHEREAS, the Corporation proposes to create under the Indenture a new series of Securities;

WHEREAS, additional Securities of other series hereafter established, except as may be limited in the Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Corporation and the Guarantor have been done or performed.

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

NOTES DUE MAY 18, 2006

Section 1.01 Establishment

There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Corporation's Notes due May 18, 2006 (the "Notes").

There are to be authenticated and delivered an aggregate principal amount equal to $99,379,000.00 of Notes and no further Notes shall be authenticated and delivered except as provided by Section 304, 305, 306 or 1206 of the Original Indenture. The Notes may be issued pursuant to a Company Order delivered to the Trustee for the authentication and delivery of Notes pursuant to Section 303 of the Original Indenture. The Notes shall be issued in fully registered form without coupons.

The Notes shall be in substantially the form set out in Exhibit A hereto, and the form of the Trustee's Certificate of Authentication for the Notes shall be in substantially the form set forth in Exhibit B hereto.

Each Note shall be dated the date of authentication thereof and shall bear interest from November 18, 2003 or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

Section 1.02 Definitions

The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

(a)   The following terms have the meanings given to them in the Purchase Contract Agreement:

      (i)   Cash Settlement; (ii) Collateral Account; (iii) New PEPS Units; (iv) Purchase Price; (v) Securities Intermediary; and (vi) Treasury Units.

(b)   The following terms have the meanings given to them in this Section 1.02(b):

"3-month LIBOR" means the rate determined in accordance with the following provisions:

      (a)   the rate for deposits in United States dollars having a maturity of three months, commencing on the applicable Interest Reset Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on the preceding Interest Determination Date. If no such rate so appears, 3-month LIBOR on such Interest Determination Date will be determined in accordance with the provisions described in clause (b) below.

      (b)   With respect to an Interest Determination Date on which no such rate appears on the Designated LIBOR Page as specified in clause (a) above, the Calculation Agent will request the principal London offices of each of four major reference banks (which may include the Remarketing Agent or affiliates of the Remarketing Agent, the Trustee or the Calculation Agent) in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of three months, commencing on the applicable Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such Interest Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are so provided, then 3-month LIBOR on such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, then 3-month LIBOR on such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such Interest Determination Date by three major banks (which may include the Remarketing Agent or affiliates of the Remarketing Agent, the Trustee or the Calculation Agent) in The City of New York selected by the Calculation Agent for loans in United States dollars to leading European banks, having a three month maturity and in a principal amount that is representative for a single transaction in United States dollars in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, 3-month LIBOR determined as of such Interest Determination Date will be 3-month LIBOR in effect on such Interest Determination Date, or if no such 3-month LIBOR is then in effect, the interest rate on the Notes will be the rate in effect on such Interest Determination Date.

"Bankruptcy Code" means title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws.

"Business Day" means any day other than a Saturday or Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the Trustee is closed for business.

"Calculation Agent" means JPMorgan Chase Bank, or any successor Calculation Agent appointed by the Corporation; provided, however, that for the initial interest rate reset on May 18, 2004, the Calculation Agent shall be the Remarketing Agent.

"Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act that is acting as a Depositary with respect to the Notes and in whose name, or in the name of a nominee of that organization, shall be registered a Global Note and which shall undertake to effect book entry transfers and pledges of the Notes.

"Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency.

"Code" means the Internal Revenue Code of 1986, as amended.

"Coupon Rate" shall have the meaning set forth in Section 1.04.

"Custodial Agent" shall have the meaning set forth in the Pledge Agreement.

"Depositary" means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the Notes as contemplated by Sections 1.05 and 1.06.

"Designated LIBOR Page" means the display designated as "Page 3750" on Moneyline Telerate, Inc., or such other page as may replace Page 3750 on such service or any successor service or services as may be nominated by the British Bankers' Association for the purpose of displaying the London interbank rates of major banks for United States dollars.

"DTC" means The Depository Trust Company.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Failed Final Remarketing" shall have the meaning set forth in Section 4.02.

"Global Notes" shall have the meaning set forth in Section 1.06.

"Guarantor" means the Person named as "Guarantor" in the first paragraph of this Supplemental Indenture until a successor Person shall have become such pursuant to the applicable provisions of the Original Indenture, and thereafter Guarantor shall include such successor Person.

"Indenture" shall have the meaning set forth in the Recitals.

"Interest Determination Date" means the second London Business Day immediately preceding the applicable Interest Reset Date; provided, however, that for the initial interest rate reset on May 18, 2004, the Interest Determination Date means the second London Business Day immediately preceding each date of Remarketing if there is a Successful Remarketing on such date.

"Interest Payment Date" shall have the meaning set forth in Section 1.04(b).

"Interest Reset Date" shall have the meaning set forth in Section 1.04(e).

"London Business Day" means any Business Day on which dealings in deposits in United States dollars are transacted in the London interbank market.

"Notes" shall have the meaning specified in Section 1.01.

"Original Indenture" shall have the meaning set forth in the Recitals.

"Original Issue Date" means January 21, 2004.

"Plan" means any employee benefit plan that is subject to Title I of ERISA, plan, individual retirement account or other arrangement that is subject to Section 4975 of the Code or any Similar Law, and any entity whose underlying assets are considered to include "plan assets" of any such plan, account or arrangement.

"Pledge Agreement" means the Pledge Agreement dated as of January 21, 2004 among PPL Corporation and JPMorgan Chase Bank, as collateral agent (the "Collateral Agent"), custodial agent, securities intermediary, purchase contract agent and attorney-in-fact.

"Pledged Notes" shall have the meaning set forth in the Pledge Agreement.

"Purchase Contract" shall have the meaning set forth in the Purchase Contract Agreement.

"Purchase Contract Agent" means the "Agent" under the Purchase Contract Agreement.

"Purchase Contract Agreement" means the Purchase Contract Agreement dated as of January 21, 2004. between PPL Corporation and JPMorgan Chase Bank, as purchase contract agent, collateral agent and custodial agent.

"Purchase Contract Settlement Date" means May 18, 2004.

"Regular Record Date" means, (1) with respect to any Interest Payment Date for the Notes when represented by a Global Note, the Business Day immediately preceding such Interest Payment Date and (2) with respect to any Interest Payment Date for the Notes when held in certificated form, the 15^th day (whether or not a Business Day) prior to such Interest Payment Date.

"Remarketed Notes" means the Notes, as the Purchase Contract Agent and the Custodial Agent shall have notified the Remarketing Agent prior to noon, New York City time, on the sixth Business Day immediately preceding the Purchase Contract Settlement Date (i) of the holders electing to have their Notes remarketed, and (ii) of the holders of New PEPS Units who have not settled early the related Purchase Contracts and have failed to notify the Purchase Contract Agent, on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, of their intention to settle the related Purchase Contracts through Cash Settlement, or have so notified the Purchase Contract Agent, but failed to deliver sufficient cash to the Purchase Contract Agent on or prior to the sixth Business Day preceding the Purchase Contract Settlement Date.

"Remarketing" shall have the meaning set forth in Section 4.01(b).

"Remarketing Agent" means Morgan Stanley & Co. Incorporated, as remarketing agent under the Remarketing Agreement, or any successor remarketing agent appointed in accordance therewith.

"Remarketing Agreement" means the Remarketing Agreement dated as of January 21, 2004, among the Guarantor, the Corporation, Morgan Stanley & Co. Incorporated, in its capacity as Remarketing Agent, and JPMorgan Chase Bank, as purchase contract agent and attorney-in-fact, which term shall include any supplemental remarketing agreement among such parties entered into in connection therewith, or any replacement remarketing agreement entered into in accordance with such Remarketing Agreement.

"Reset Rate" means 3-month LIBOR plus the Spread; provided, however, that the Reset Rate shall not exceed the maximum rate permitted by applicable law. For the avoidance of doubt, the Spread will be fixed once determined by the Remarketing Agent in a Successful Remarketing.

"Senior Indebtedness," when used with respect to the Corporation or the Guarantor for purposes of the Indenture prior to May 18, 2004, means all obligations (other than non-recourse obligations) of, or guaranteed or assumed by, the Corporation or the Guarantor, as the case may be, for borrowed money, including both senior and subordinated indebtedness for borrowed money (other than the Notes prior to May 18, 2004 and other than securities issued under the Subordinated Indenture dated as of May 9, 2001 (the "Subordinated Indenture"), among the Corporation, the Guarantor and the Trustee and the Guarantor's guarantee thereof), or for the payment of money relating to any lease which is capitalized on the consolidated balance sheet of the Corporation or the Guarantor, as the case may be, and its subsidiaries in accordance with generally accepted accounting principles as in effect from time to time, or evidenced by bonds, debentures, notes or other similar instruments, and in each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date of the Indenture or subsequently incurred by the Corporation or the Guarantor, as the case may be, unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Notes prior to May 18, 2004 or the Guarantee prior to May 18, 2004, as the case may be; provided that the Guarantor's obligations under the trust preferred securities guarantee shall not be deemed to be Senior Indebtedness of the Guarantor (as specified in the documents governing such trust preferred securities), and provided further that Senior Indebtedness shall not include (i) any obligation of the Corporation to any of its subsidiaries or (ii) trade accounts payable or accrued liabilities arising in the ordinary course of business or (iii) any obligations to an employee.

"Similar Law" means any federal, state, local, non-U.S. or other law or regulation that is similar to any of the provisions contained in Title I of ERISA or Section 4975 of the Code.

"Spread" means the number of basis points (one one-hundredth of a percentage point) to be added to 3-month LIBOR that the Remarketing Agent determines is required for a Successful Remarketing.

"Stated Maturity" shall have the meaning set forth in Section 1.04(a).

"Successful Remarketing" shall have the meaning set forth in Section 4.01(b).

Section 1.03   Ranking of the Notes

From the Original Issue Date until May 18, 2004, the Notes will be the Corporation's direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation's existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of the Corporation's Senior Indebtedness.

On and after May 18, 2004, the Notes will become the Corporation's direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation's existing and future unsecured and unsubordinated indebtedness (including ranking equally with all prior unsubordinated Securities issued pursuant to the Original Indenture), senior in right of payment to all of the Corporation's subordinated indebtedness.

Section 1.04   Stated Maturity; Payment of Principal and Interest

(a)   The date upon which the principal of the Notes shall become due and payable at final maturity, together with any accrued and unpaid interest, is May 18, 2006 (the "Stated Maturity").

(b)   Each Note will bear interest (i) at the rate of 7.29% per year (the "Coupon Rate") from November 18, 2003 through and including the day immediately preceding May 18, 2004 and (ii)(A) in the case of a Successful Remarketing, at the Reset Rate on and after the Purchase Contract Settlement Date and (B) in the case of a Failed Final Remarketing, at the Coupon Rate on and after the Purchase Contract Settlement Date, until the principal thereof is paid or duly made available for payment. Interest will be payable, initially, quarterly in arrears on February 18, 2004 and May 18, 2004 (each, an "Interest Payment Date") to the Person in whose name such Note, or any Predecessor Security, is registered at the close of business on the Regular Record Date for such interest installment; provided, however, that following the Purchase Contract Settlement Date, interest will be payable following a Successful Remarketing, quarterly in arrears on February 18, May 18, August 18 and November 18 of each year, or if there is no Successful Remarketing, semi-annually in arrears on May 18 and November 18 of each year commencing November 18, 2004, and such dates shall then be the "Interest Payment Dates."

(c)   The amount of interest payable on the Notes for any period will be computed (1) for any full quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month; provided that, following a Successful Remarketing, the amount of interest for each day the Notes are Outstanding will be calculated by dividing the interest rate in effect for that day by 360 and multiplying the result by the principal amount of the Notes. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on that date will be made on the next day that is a Business Day (and without any interest or other payment in respect of any such delay); provided, that after a Successful Remarketing, if an Interest Payment Date (other than at Stated Maturity) would fall on a day that is not a Business Day, such Interest Payment Date shall be the following day that is a Business Day, except that if such next day is in a different month, then that Interest Payment Date will be the immediately preceding day that is a Business Day; provided, further, that if the Stated Maturity shall fall on a day that is not a Business Day, the interest due on such day shall be paid on the following day that is a Business Day (and without any interest or other payment in respect of such delay).

(d)   Payment of principal and interest on the Notes shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Principal and interest on the Notes will be payable, at the office or agency of the Corporation maintained for such purpose as described in Section 1.07 below; provided, however, that payment of interest may be made at the option of the Corporation (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 16 days prior to the date for payment by the Person entitled thereto. Payments of principal of and interest on Global Notes shall be made by wire transfer of immediately available funds to the Holder of such Global Notes; provided, that, in the case of payments of principal, such Global Notes are first surrendered to the Paying Agent.

(e)   Following a Successful Remarketing and commencing on August 18, 2004, the Reset Rate, as determined by the Calculation Agent on the applicable Interest Determination Date, shall be reset quarterly on February 18, May 18, August 18 and November 18 of each year (each, an "Interest Reset Date"). Following a Successful Remarketing and upon request of any Holder, the Calculation Agent will disclose to such Holder the Reset Rate then in effect and, if determined, the Reset Rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date. The Calculation Agent shall determine each applicable Reset Rate in accordance with the definition of the term "3-month LIBOR". The Calculation Agent's determination of any Reset Rate will be conclusive and binding in the absence of any manifest error. The interest rate on the Notes in effect for the period from and including May 18, 2004 to and excluding August 18, 2004 shall be determined by the Calculation Agent on the applicable Interest Determination Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding day that is a Business Day, except that if such next day is in a different month, then that Interest Reset Date will be the immediately preceding day that is a Business Day. After a Successful Remarketing, the interest rate in effect on May 18, 2004 or on any Interest Reset Date will be the applicable Reset Rate as reset on May 18, 2004 or on such Interest Reset Date, as the case may be, and the interest rate applicable to any other day is the interest rate in effect on May 18, 2004 or the immediately preceding Interest Reset Date, as the case may be.

Section 1.05   Form; Denominations

Except as provided in Section 1.06, the Notes shall be issued in fully registered definitive form without interest coupons, bearing identical terms.

The Notes may be issued, in whole or in part, in global form and, if issued in global form, the Depositary shall be The Depository Trust Company or such other Depositary as the Corporation may from time to time designate.

The Notes shall be issuable in denominations of $1,000 and any integral multiples thereof except that an interest in a Note held as part of one New PEPS Unit represents a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount of a Note; provided, however, that upon release by the Collateral Agent of Notes underlying the beneficial ownership interest in the Notes pledged to secure the New PEPS Units holders' obligations under the related Purchase Contracts (other than any release of the Notes in connection with the creation of Treasury Units, an early settlement with separate cash, an early settlement upon a cash merger, a notice to settle with cash or a remarketing, as described in Sections 3.13, 5.08, 5.05(b)(2), 5.03(b) and 5.03(c), respectively, of the Purchase Contract Agreement) the Notes will be issuable in denominations of $25 principal amount and integral multiples thereof.

Section 1.06   Global Notes

Any Notes that are no longer part of New PEPS Units will be issued initially in the form of one or more Global Notes (the "Global Notes") registered in the name of the Depositary or its nominee. Unless and until they are exchanged for Notes in definitive registered form, such Global Notes may be transferred, in whole but not in part, only to the Clearing Agency or a nominee of the Clearing Agency, or to a successor Clearing Agency selected or approved by the Corporation or to a nominee of such successor Clearing Agency.

If at any time (i) the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary for the Global Notes and no successor Depositary has been appointed within 90 days after this notice, (ii) the Depositary at any time ceases to be a Clearing Agency registered under the Exchange Act when the Depositary is required to be so registered to act as the Depositary and no successor Depositary has been appointed within 90 days after the Corporation learns that the Depositary has ceased to be so registered, or (iii) the Corporation, in its sole discretion, determines that it will no longer have the Notes represented by Global Notes, the Corporation will execute, and subject to Article Three of the Original Indenture, the Trustee, upon receipt of a Company Order therefor, will authenticate and deliver the Notes in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Note or Notes in exchange for such Global Senior or Notes. Upon exchange of the Global Note or Notes for such Notes in definitive registered form without coupons, in authorized denominations, the Global Note or Notes shall be cancelled by the Trustee. Such Notes in definitive registered form issued in exchange for the Global Note or Notes shall be registered in such names and in such authorized denominations as the Clearing Agency, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Clearing Agency for delivery to the Persons in whose names such Securities are so registered.

None of the Corporation, the Guarantor, the Trustee or any agent of the Corporation, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interest.

Section 1.07   Paying Agents; Transfer Agents; Place of Payment

The Paying Agent for the Notes shall initially be the Trustee, and the Place of Payment for the Notes shall initially be the Corporate Trust Office, which as of the date hereof for such purpose is located at 4 New York Plaza, New York, New York 10004. The Trustee shall also serve as Security Registrar for the purpose of registering Notes and transfers or exchanges of Notes. The Corporation may from time to time designate one or more additional offices or agencies where Notes may be presented or surrendered for payment or may be surrendered for registration of transfer or exchange in accordance with Section 602 of the Original Indenture; provided, that the Corporation shall at all times maintain a Paying Agent and an office or agency where Notes may be surrendered for registration of transfer or exchange, in each case in the Borough of Manhattan, The City of New York.

Section 1.08   Trust Indenture Act

The Subordinated Indenture is hereby excluded from the operation of the proviso to Section 310(b)(i) of the Trust Indenture Act.

ARTICLE TWO

SUBORDINATION OF NOTES

From the Original Issue Date to, but excluding, May 18, 2004, the following provisions shall apply:

Section 2.01   Notes Subordinate to Senior Indebtedness of the Corporation.

The Corporation, for itself, its successors and assigns, covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that the payment of the principal and interest, if any, on each and all of the Notes is hereby expressly subordinated and subject to the extent and in the manner set forth in this Article, in right of payment to the prior payment in full of all Senior Indebtedness of the Corporation.

Each Holder of the Notes, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article, and appoints the Trustee its attorney-in-fact for any and all such purposes.

The Notes are not superior in right of payment to, and rank pari passu with, the securities issued under the Subordinated Indenture.

Section 2.02   Payment Over of Proceeds of Notes.

In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of the Corporation or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Corporation, whether or not involving insolvency or bankruptcy, or (b) subject to the provisions of Section 2.03, that (i) a default shall have occurred with respect to the payment of principal of or interest on or other monetary amounts due and payable on any Senior Indebtedness of the Corporation, or (ii) there shall have occurred a default (other than a default in the payment of principal or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness of the Corporation, as defined therein or in the instrument under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist, or (c) that the principal of and accrued interest on the Notes shall have been declared due and payable pursuant to Section 801 of the Original Indenture and such declaration shall not have been rescinded and annulled as provided in Section 802 of the Original Indenture, then:

(1)   the holders of all Senior Indebtedness of the Corporation shall first be entitled to receive payment of the full amount due thereon, or provision shall be made for such payment in money or money's worth, before the Holders of any of the Notes are entitled to receive a payment on account of the principal or interest on the indebtedness evidenced by the Securities, including, without limitation, any payments made pursuant to Articles Four and Five of the Original Indenture;

(2)   any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, to which any Holder or the Trustee would be entitled except for the provisions of this Article, shall be paid or delivered by the Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness of the Corporation or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Corporation may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness of the Corporation held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness of the Corporation remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Corporation, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Notes or to the Trustee under the Indenture; and

(3)   in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, in respect of principal or interest on the Notes or in connection with any repurchase by the Corporation of the Notes, shall be received by the Trustee or any Holder before all Senior Indebtedness of the Corporation is paid in full, or provision is made for such payment in money or money's worth, such payment or distribution in respect of principal or interest on the Notes or in connection with any repurchase by the Corporation of the Notes shall be paid over to the holders of such Senior Indebtedness of the Corporation or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness of the Corporation remaining unpaid until all such Senior Indebtedness of the Corporation shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Corporation.

Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit of cash or Eligible Obligations pursuant to Section 701 or 702 of the Original Indenture (provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon will not be subject to any rights of holders of Senior Indebtedness of the Corporation including, without limitation, those arising under this Article; provided that no event described in clauses (e) and (f) of Section 801 of the Original Indenture with respect to the Corporation has occurred during such 123-day period.

For purposes of this Article only, the words "cash, property or securities" shall not be deemed to include shares of stock of the Corporation as reorganized or readjusted, or securities of the Corporation or any other corporation provided for by a plan or reorganization or readjustment which are subordinate in right of payment to all Senior Indebtedness of the Corporation which may at the time be outstanding to the same extent as, or to a greater extent than, the Notes are so subordinated as provided in this Article. The consolidation of the Corporation with, or the merger of the Corporation into, another corporation or the liquidation or dissolution of the Corporation following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Eleven of the Original Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 2.02 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eleven of the Original Indenture. Nothing in Section 2.01 or in this Section 2.02 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 907 of the Original Indenture.

Section 2.03   Disputes with Holders of Certain Senior Indebtedness of the Corporation.

Any failure by the Corporation to make any payment on or perform any other obligation in respect of Senior Indebtedness of the Corporation, other than any indebtedness incurred by the Corporation or assumed or guaranteed, directly or indirectly, by the Corporation for money borrowed (or any deferral, renewal, extension or refunding thereof) or any other obligation as to which the provisions of this Section shall have been waived by the Corporation in the instrument or instruments by which the Corporation incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default under clause (b) of Section 2.02 if (i) the Corporation shall be disputing its obligation to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Corporation which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within which a party may seek further appeal or review, or (B) in the event that a judgment that is subject to further review or appeal has been issued, the Corporation shall in good faith be prosecuting an appeal or other proceeding for review and a stay or execution shall have been obtained pending such appeal or review.

Section 2.04   Subrogation.

Senior Indebtedness of the Corporation shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory to such holders) in full payment of such Senior Indebtedness of the Corporation then outstanding. Upon the payment in full of all Senior Indebtedness of the Corporation, the rights of the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness of the Corporation to receive any further payments or distributions of cash, property or securities of the Corporation applicable to the holders of the Senior Indebtedness of the Corporation until all amounts owing on the Notes shall be paid in full; and such payments or distributions of cash, property or securities received by the Holders of the Notes, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior Indebtedness of the Corporation shall, as between the Corporation, its creditors other than the holders of Senior Indebtedness of the Corporation, and the Holders, be deemed to be a payment by the Corporation to or on account of Senior Indebtedness of the Corporation, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness of the Corporation, on the other hand.

Section 2.05   Obligation of the Corporation Unconditional.

Nothing contained in this Article or elsewhere in the Indenture or in the Notes is intended to or shall impair, as among the Corporation, its creditors other than the holders of Senior Indebtedness of the Corporation and the Holders, the obligation of the Corporation, which is absolute and unconditional, to pay to the Holders the principal and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Corporation other than the holders of Senior Indebtedness of the Corporation, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness of the Corporation in respect of cash, property or securities of the Corporation received upon the exercise of any such remedy.

Upon any payment or distribution of assets or securities of the Corporation referred to in this Article, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Corporation and other indebtedness of the Corporation, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article.

The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Corporation (or a representative of such holder or a trustee under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued) to establish that such notice has been given by a holder of such Senior Indebtedness of the Corporation or such representative or trustee on behalf of such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Corporation to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of the Corporation held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the right of such Person under this Article, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment or distribution.

Section 2.06   Priority of Senior Indebtedness of the Corporation Upon Maturity.

Upon the maturity of the principal of any Senior Indebtedness of the Corporation by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness of the Corporation and interest and premium, if any, thereon shall first be paid in full before any payment of principal or interest, if any, is made upon the Notes or before any Notes can be acquired by the Corporation.

Section 2.07   Trustee as Holder of Senior Indebtedness of the Corporation.

The Trustee shall be entitled to all rights set forth in this Article with respect to any Senior Indebtedness of the Corporation at any time held by it, to the same extent as any other holder of Senior Indebtedness of the Corporation. Nothing in this Article shall deprive the Trustee of any of its rights as such holder.

Section 2.08   Notice to Trustee to Effectuate Subordination.

Notwithstanding the provisions of this Article or any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from the Corporation, from a Holder or from a holder of any Senior Indebtedness of the Corporation or from any representative or representatives of such holder or any trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued and, prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 901 of the Original Indenture, in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 701 or 702 of the Original Indenture acknowledging that Notes or portions thereof are deemed to have been paid for all purposes of the Indenture, acknowledging that the entire indebtedness of the Corporation in respect thereof has been satisfied and discharged or acknowledging satisfaction and discharge of the Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Article of the persons receiving such moneys from the Trustee.

Section 2.09   Modification, Extension, etc. of Senior Indebtedness of the Corporation.

The holders of Senior Indebtedness of the Corporation may, without affecting in any manner the subordination of the payment of the principal and interest, if any, on the Notes, at any time or from time to time and in their absolute discretion, agree with the Corporation to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness of the Corporation, or amend or supplement any instrument pursuant to which any Senior Indebtedness of the Corporation is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Corporation including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee.

Section 2.10   Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness of the Corporation.

With respect to the holders of Senior Indebtedness of the Corporation, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are specifically set forth in the Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Corporation shall be read into the Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Corporation, and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Corporation or any other Person, money or assets to which any holders of Senior Indebtedness of the Corporation shall be entitled by virtue of this Article or otherwise.

Section 2.11   Paying Agents Other Than the Trustee.

In case at any time any Paying Agent other than the Trustee shall have been appointed by the Corporation and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 2.07, 2.08 and 2.10 shall not apply to the Corporation if it acts as Paying Agent.

Section 2.12   Rights of Holders of Senior Indebtedness of the Corporation Not Impaired.

No right of any present or future holder of Senior Indebtedness of the Corporation to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Corporation or by any noncompliance by the Corporation with the terms, provisions and covenants of the Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.

Section 2.13   Effect of Subordination Provisions; Termination.

Notwithstanding anything contained herein to the contrary, other than as provided in the immediately succeeding sentence, all the provisions of the Indenture shall be subject to the provisions of this Article, so far as the same may be applicable thereto.

Notwithstanding anything contained herein to the contrary, the provisions of this Article Two shall be of no further effect, and the Notes shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness of the Corporation on or after May 18, 2004.

ARTICLE THREE

FORM OF GUARANTEE

The Guarantee to be endorsed on the Notes shall be in substantially the form set forth below:

[FORM OF GUARANTEE]

PPL Corporation (formerly called PP&L Resources, Inc.), a corporation organized under the laws of the Commonwealth of Pennsylvania (the "Guarantor", which term includes any successor under the Indenture, dated as of November 1, 1997 (the "Original Indenture") with JPMorgan Chase Bank (formerly known as the Chase Manhattan Bank), as Trustee, as amended and supplemented, including the Supplemental Indenture Number 5 dated January 21, 2004 (the "Indenture"), which is referred to in the Note upon which this Guarantee is endorsed), for value received, hereby fully and unconditionally guarantees to the Holder of the Note upon which this Guarantee is endorsed, the due and punctual payment of the principal and interest, if any, on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, or otherwise, in accordance with the terms of such Note and of the Indenture. In case of the failure of PPL Capital Funding, Inc. (formerly called PP&L Capital Funding, Inc.), a corporation organized under the laws of the State of Delaware (the "Corporation", which term includes any successor under the Indenture), punctually to make any such payment, the Guarantor hereby agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, or otherwise, and as if such payment were made by the Corporation.

From January 21, 2004 until May 18, 2004, the Guarantee will be the Guarantor's unsecured obligation and will rank without preference or priority equally with all of the Guarantor's existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of the Guarantor's Senior Indebtedness.

On and after May 18, 2004, the Guarantee will become the Guarantor's unsecured obligation and will rank without preference or priority equally with all of the Guarantor's existing and future unsecured and unsubordinated indebtedness (including ranking equally with all prior unsubordinated Securities issued pursuant to the Original Indenture), senior in right of payment to all of the Guarantor's subordinated indebtedness.

The Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Note or the Indenture, any failure to enforce the provisions of such Note or the Indenture, or any waiver, modification or indulgence granted to the Corporation with respect thereto, by the Holder of such Note or the Trustee or any other circumstance which may otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; provided, however, that notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantor, increase the principal amount of such Note, or increase the interest rate thereon or change the Stated Maturity thereof.

The Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or the Holder of such Note exhaust any right or take any action against the Corporation or any other Person, filing of claims with a court in the event of insolvency or bankruptcy of the Corporation, any right to require a proceeding first against the Corporation, protest or notice with respect to such Note or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Guarantee. This Guarantee shall constitute a guaranty of payment and not of collection. The Guarantor hereby agrees that, in the event of a default in payment of principal or interest, if any, on such Note, whether at its Stated Maturity, by declaration of acceleration, or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in the Indenture, directly against the Guarantor to enforce this Guarantee without first proceeding against the Corporation.

The obligations of the Guarantor hereunder with respect to such Note shall be continuing and irrevocable until the date upon which the entire principal and interest, if any, on such Note has been, or has been deemed pursuant to the provisions of Article Seven of the Original Indenture to have been, paid in full or otherwise discharged.

The Guarantor shall be subrogated to all rights of the Holder of such Note upon which this Guarantee is endorsed against the Corporation in respect of any amounts paid by the Guarantor on account of such Note pursuant to the provisions of this Guarantee or the Indenture; provided, however, that the Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal and interest, if any, on all Notes issued under the Indenture shall have been paid in full.

This Guarantee shall remain in full force and effect and continue notwithstanding any petition filed by or against the Corporation for liquidation or reorganization, the Corporation becoming insolvent or making an assignment for the benefit of creditors or a receiver or trustee being appointed for all or any significant part of the Corporation's assets, and shall, to the fullest extent permitted by law, continue to be effective or reinstated, as the case may be, if at any time payment of the Note upon which this Guarantee is endorsed, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Holder of such Note, whether as a "voidable preference," "fraudulent transfer," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned on such Note, such Note shall, to the fullest extent permitted by law, be reinstated and deemed paid only by such amount paid and not so rescinded, reduced, restored or returned.

From the Original Issue Date to, but excluding, May 18, 2004, the following provisions shall apply:

1.  The Guarantor, for itself, its successors and assigns, covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that the payment under the Guarantee of the principal and interest, if any, on each and all of the Notes is hereby expressly subordinated and subject to the extent and in the manner set forth herein, in right of payment to the prior payment in full of all Senior Indebtedness of the Guarantor.

2.  Each Holder of the Notes, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Guarantee, and appoints the Trustee its attorney-in-fact for any and all such purposes.

3.  In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of the Guarantor or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Guarantor, whether or not involving insolvency or bankruptcy, or (b) subject to the provisions of paragraph 6 below, that (i) a default shall have occurred with respect to the payment of principal or interest on or other monetary amounts due and payable on any Senior Indebtedness of the Guarantor, or (ii) there shall have occurred a default (other than a default in the payment of principal or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness of the Guarantor, as defined therein or in the instrument under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist, or (c) that the principal and accrued interest on the Notes shall have been declared due and payable pursuant to Section 801 of the Original Indenture and such declaration shall not have been rescinded and annulled as provided in Section 802 in the Original Indenture, then:

(1)   the holders of all Senior Indebtedness of the Guarantor shall first be entitled to receive payment of the full amount due thereon, or provision shall be made for such payment in money or money's worth, before the Holders of any of the Notes are entitled to receive a payment on account of the Guarantee of the principal or interest on the indebtedness evidenced by the Notes, including, without limitation, any payments made pursuant to Articles Four and Five of the Original Indenture;

(2)   any payment by, or distribution of assets of, the Guarantor of any kind or character, whether in cash, property or securities, to which any Holder or the Trustee would be entitled except for the provisions of this Guarantee, shall be paid or delivered by the Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness of the Guarantor or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Guarantor may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness of the Guarantor held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness of the Guarantor remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Guarantor, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Notes or to the Trustee under the Guarantee and the Indenture; and

(3)   in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Guarantor of any kind or character, whether in cash, property or securities, in respect of principal or interest on the Notes or in connection with any repurchase by the Guarantor of the Notes, shall be received by the Trustee or any Holder before all Senior Indebtedness of the Guarantor is paid in full, or provision is made for such payment in money or money's worth, such payment or distribution in respect of principal or interest on the Notes or in connection with any repurchase by the Guarantor of the Notes shall be paid over to the holders of such Senior Indebtedness of the Guarantor or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness of the Guarantor remaining unpaid until all such Senior Indebtedness of the Guarantor shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Guarantor.

4.  Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit of cash or Eligible Obligations pursuant to Section 701 or 702 of the Original Indenture (provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon will not be subject to any rights of holders of Senior Indebtedness of the Guarantor including, without limitation, those arising under this Guarantee; provided that no event described in clauses (e) and (f) of Section 801 of the Original Indenture with respect to the Guarantor has occurred during such 123-day period.

5.  For purposes of this Guarantee only, the words "cash, property or securities" shall not be deemed to include shares of stock of the Guarantor as reorganized or readjusted, or securities of the Guarantor or any other corporation provided for by a plan or reorganization or readjustment which are subordinate in right of payment to all Senior Indebtedness of the Guarantor which may at the time be outstanding to the same extent as, or to a greater extent than, the Guarantee of the Notes are so subordinated as provided in this Guarantee. The consolidation of the Guarantor with, or the merger of the Guarantor into, another corporation or the liquidation or dissolution of the Guarantor following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Eleven of the Original Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of paragraphs 3, 4 and 5 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eleven of the Original Indenture. Nothing in paragraphs 1 and 2 above or in paragraphs 3, 4 and 5 above shall apply to claims of, or payments to, the Trustee under or pursuant to Section 907 in the Original Indenture.

6.  Any failure by the Guarantor to make any payment on or perform any other obligation in respect of Senior Indebtedness of the Guarantor, other than any indebtedness incurred by the Guarantor or assumed or guaranteed, directly or indirectly, by the Guarantor for money borrowed (or any deferral, renewal, extension or refunding thereof) or any other obligation as to which the provisions of this paragraph shall have been waived by the Guarantor in the instrument or instruments by which the Guarantor incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default under clause (b) of paragraph 3 above if (i) the Guarantor shall be disputing its obligation to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Guarantor which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within which a party may seek further appeal or review, or (B) in the event that a judgment that is subject to further review or appeal has been issued, the Guarantor shall in good faith be prosecuting an appeal or other proceeding for review and a stay or execution shall have been obtained pending such appeal or review.

7.  Senior Indebtedness of the Guarantor shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory to such holders) in full payment of such Senior Indebtedness of the Guarantor then outstanding. Upon the payment in full of all Senior Indebtedness of the Guarantor, the rights of the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness of the Guarantor to receive any further payments or distributions of cash, property or securities of the Guarantor applicable to the holders of the Senior Indebtedness of the Guarantor until all amounts owing on the Notes shall be paid in full; and such payments or distributions of cash, property or securities received by the Holders of the Notes, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior Indebtedness of the Guarantor shall, as between the Guarantor, its creditors other than the holders of Senior Indebtedness of the Guarantor, and the Holders, be deemed to be a payment by the Guarantor to or on account of Senior Indebtedness of the Guarantor, it being understood that the provisions of this Guarantee are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness of the Guarantor, on the other hand.

8.  Nothing contained in this Guarantee or elsewhere in the Indenture or in the Guarantee is intended to or shall impair, as among the Guarantor, its creditors other than the holders of Senior Indebtedness of the Guarantor and the Holders, the obligation of the Guarantor, which is absolute and unconditional, to pay to the Holders, pursuant to the terms of the Guarantee, the principal and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Guarantor other than the holders of Senior Indebtedness of the Guarantor, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Guarantee of the holders of Senior Indebtedness of the Guarantor in respect of cash, property or securities of the Guarantor received upon the exercise of any such remedy.

9.  Upon any payment or distribution of assets or securities of the Guarantor referred to in this Guarantee, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Guarantee.

10.  The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness of the Guarantor (or a representative of such holder or a trustee under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued) to establish that such notice has been given by a holder of such Senior Indebtedness of the Guarantor or such representative or trustee on behalf of such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Guarantor to participate in any payment or distribution pursuant to this Guarantee, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the right of such Person under this Guarantee, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment or distribution.

11.  Upon the maturity of the principal of any Senior Indebtedness of the Guarantor by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness of the Guarantor and interest, if any, thereon shall first be paid in full before any payment of principal or interest, if any, is made upon the Notes under the Guarantee.

12.  The Trustee shall be entitled to all rights set forth in this Guarantee with respect to any Senior Indebtedness of the Guarantor at any time held by it, to the same extent as any other holder of Senior Indebtedness of the Guarantor. Nothing in this Guarantee shall deprive the Trustee of any of its rights as such holder.

13.  Notwithstanding the provisions of this Guarantee or any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from the Guarantor, from a Holder or from a holder of any Senior Indebtedness of the Guarantor or from any representative or representatives of such holder or any trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued and, prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 901 of the Original Indenture, in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 701 or 702 of the Original Indenture acknowledging that Notes or portions thereof are deemed to have been paid for all purposes of the Indenture, acknowledging that the entire indebtedness of the Corporation in respect thereof has been satisfied and discharged or acknowledging satisfaction and discharge of the Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Guarantee of the Persons receiving such moneys from the Trustee.

14.  The holders of Senior Indebtedness of the Guarantor may, without affecting in any manner the subordination of the payment of the principal and interest, if any, on the Notes under the Guarantee, at any time or from time to time and in their absolute discretion, agree with the Guarantor to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness of the Guarantor, or amend or supplement any instrument pursuant to which any Senior Indebtedness of the Guarantor is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Guarantor including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee.

15.  With respect to the holders of Senior Indebtedness of the Guarantor, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are specifically set forth in the Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Guarantor shall be read into the Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Guarantor, and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of the Guarantor shall be entitled by virtue of this Guarantee or otherwise.

16.  In case at any time any Paying Agent other than the Trustee shall have been appointed by the Guarantor and be then acting hereunder, the term "Trustee" as used in this Guarantee shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Guarantee in addition to or in place of the Trustee; provided, however, that paragraphs 12, 13 and 15 above shall not apply to the Guarantor if it acts as Paying Agent.

17.  No right of any present or future holder of Senior Indebtedness of the Guarantor to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any noncompliance by the Guarantor with the terms, provisions and covenants of the Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.

18.  Notwithstanding anything contained herein to the contrary, other than as provided in the immediately succeeding paragraph, all the provisions of the Indenture shall be subject to the provisions of this Guarantee, so far as the same may be applicable thereto.

19.  Notwithstanding anything contained herein to the contrary, the provisions of this Guarantee shall be of no further effect, and the Guarantee shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness of the Guarantor, if the Guarantor shall have delivered to the Trustee a notice to such effect. Any such notice delivered by the Guarantor shall not be deemed to be a supplemental indenture for purposes of Article Twelve of the Original Indenture.

This Guarantee is not superior in right of payment to, and ranks pari passu with, the guarantees of the securities issued under the Subordinated Indenture.

This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of the Note upon which this Guarantee is endorsed shall have been manually executed by or on behalf of the Trustee under the Indenture.

All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in such Indenture.

This Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed as of the date first written above.

PPL CORPORATION

By:______________________________

[END OF FORM]

ARTICLE FOUR

REMARKETING

Section 4.01   Remarketing; Payment of Purchase Price

(a)   The Corporation will notify, not later than seven nor more than 15 calendar days prior to the fifth Business Day immediately preceding the Purchase Contract Settlement Date, Holders of Notes of the remarketing to take place on the fifth Business Day immediately preceding the Purchase Contract Settlement Date, and, if necessary, on the fourth Business Day immediately preceding the Purchase Contract Settlement Date and, if necessary, on the third Business Day immediately preceding the Purchase Contract Settlement Date (and, if such Notes are held in global form by DTC, the Corporation will cause DTC to notify its participants).

(b)   The Notes of holders of New PEPS Unit who have not notified the Purchase Contract Agent of their intention to effect a Cash Settlement or have failed to pay the Purchase Price to the Securities Intermediary will be sold by the Remarketing Agent (the "Remarketing") on the fifth Business Day immediately preceding the Purchase Contract Settlement Date, and, if necessary, on the fourth Business Day immediately preceding the Purchase Contract Settlement Date and, if necessary, on the third Business Day immediately preceding the Purchase Contract Settlement Date. The Purchase Contract Agent shall notify, by noon, New York City time, on the sixth Business Day immediately preceding the Purchase Contract Settlement Date, the Remarketing Agent, the Collateral Agent, the Trustee and the Guarantor of the aggregate principal amount of Notes that are part of New PEPS Units to be remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the Pledge Agreement, will present for remarketing such Notes to the Remarketing Agent. Upon receipt of such notice from the Purchase Contract Agent and such Notes from the Collateral Agent, the Remarketing Agent will use its reasonable efforts to remarket the Remarketed Notes, at a price of approximately 100.5% (but not less than 100%) of the aggregate principal amount of such Remarketed Notes, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date and, if the remarketing on such date fails, on the fourth Business Day immediately preceding the Purchase Contract Settlement Date and, if the remarketing on such date fails, on the third Business Day immediately preceding the Purchase Contract Settlement Date. If the Remarketing Agent is able to remarket the Remarketed Notes at a price equal to or greater than 100% of the aggregate principal amount of the Remarketed Notes (a "Successful Remarketing"), the Remarketing Agent will remit the entire amount of the proceeds derived from the Successful Remarketing of the Notes that were components of New PEPS Units to the Collateral Agent; provided, however, that the Remarketing Agent may deduct as the remarketing fee ("Remarketing Fee"), an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the Remarketed Notes from any amount of the proceeds of a Successful Remarketing in excess of the aggregate principal amount of the Remarketed Notes. The portion of the proceeds equal to the aggregate principal amount of the Remarketed Notes that were components of New PEPS Units will automatically be applied by the Collateral Agent, in accordance with the Pledge Agreement, to satisfy in full such New PEPS Units Holders' obligations to pay the Purchase Price for the common stock under the related Purchase Contracts on the Purchase Contract Settlement Date. Any proceeds in excess of those required to pay the Purchase Price and the Remarketing Fee will be remitted to the Purchase Contract Agent for payment to the holders of the related New PEPS Units. Holders of the New PEPS Units whose Notes are so remarketed will not otherwise be responsible for the payment of any Remarketing Fee in connection therewith. Immediately following a Successful Remarketing, the Remarketing Agent shall notify the Corporation, the Guarantor, the Calculation Agent and the Trustee of the initial Reset Rate and the Spread. If, (i) in spite of using its reasonable efforts, the Remarketing Agent cannot remarket the Remarketed Notes (other than to the Guarantor), of such holders of New PEPS Units at a price not less than 100% of the aggregate principal amount of the Remarketed Notes on or before the third Business Day immediately preceding the Purchase Contract Settlement Date or (ii) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, the remarketing will be deemed to have failed (a "Failed Final Remarketing") and in accordance with the terms of the Pledge Agreement the Collateral Agent for the benefit of the Guarantor will exercise its rights as a secured party with respect to such Notes that are components of New PEPS Units including those actions specified in paragraph (d) below.

(c)   Pursuant to the Remarketing Agreement and subject to the terms of the Supplemental Remarketing Agreement, on or prior to the ninth Business Day immediately preceding the Purchase Contract Settlement Date, Holders of Notes that are not pledged pursuant to the Pledge Agreement ("Separate Notes") may elect to have their Separate Notes remarketed by delivering their Separate Notes, together with a notice of such election, substantially in the form of Exhibit F to the Pledge Agreement, to the Custodial Agent. The Custodial Agent shall hold such Separate Notes in an account separate from the Collateral Account. A Holder of Separate Notes electing to have its Separate Notes remarketed will also have the right to withdraw such election by written notice to the Custodial Agent, substantially in the form of Exhibit G to the Pledge Agreement, on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, upon receipt of which notice the Custodial Agent shall return such Separate Notes to such Holder. On the sixth Business Day immediately preceding the Purchase Contract Settlement Date, the Custodial Agent shall notify the Remarketing Agent and the Corporation of the aggregate principal amount of the Separate Notes to be remarketed and will deliver to the Remarketing Agent for remarketing all Separate Notes delivered to the Custodial Agent pursuant to Section 5.7(c) of the Pledge Agreement and not withdrawn pursuant to the terms in Section 5.7(c) of the Pledge Agreement prior to such date. After deducting the Remarketing Fee to the extent permitted under the terms of the Remarketing Agreement, the Remarketing Agent will remit to the Custodial Agent the remaining portion of the proceeds derived from a Successful Remarketing of the Separate Notes for the benefit of such Holders. In the event of a Failed Final Remarketing, the Remarketing Agent will promptly return such Separate Notes to the Custodial Agent for redelivery to such Holders.

(d)   With respect to Notes that are components of New PEPS Units and which are subject to a Failed Final Remarketing, the Collateral Agent for the benefit of the Corporation reserves all of its rights as a secured party with respect thereto and, subject to applicable law, may, among other things, (i) retain the Notes or (ii) sell the Notes in one or more public or private sales, each in full satisfaction of the holders of New PEPS Units obligation's under the Purchase Contracts.

(e)   If in connection with the Remarketing, it shall not be advisable, in the view of counsel (which need not be an opinion) for each of the Remarketing Agent and the Guarantor, under applicable law, regulations or interpretations in effect as of the fifth, the fourth or the third Business Day immediately preceding the Purchase Contract Settlement Date, as the case may be, to register the offer and sale by the Remarketing Agent of the Notes under the Securities Act of 1933 as otherwise contemplated by Section 5 of the Remarketing Agreement or to deliver a Prospectus in connection with the Remarketing, the Guarantor will:

      (i)   use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper and advisable to permit and effectuate the offer and sale of the Notes in connection with the Remarketing hereunder without registration under the Securities Act of 1933 pursuant to an exemption therefrom, if available, including the exemption afforded by Rule 144A promulgated under the Securities Act of 1933 by the Securities and Exchange Commission, and

      (ii)   if requested by the Remarketing Agent, furnish a current preliminary remarketing memorandum and a current final remarketing memorandum (in such quantities as the Remarketing Agent may reasonably request) to be used by the Remarketing Agent in the Remarketing hereunder by a date that is not later than fifteen Business Days prior to the Purchase Contract Settlement Date (or such earlier date as the Remarketing Agent may reasonably request). The Guarantor shall pay all expenses relating thereto.

Section 4.02   Failed Final Remarketing.

(a)   If a Failed Final Remarketing occurs Holders of Notes that are not part of a New PEPS Unit will retain possession of their Notes.

(b)   Holders of Notes that are not pledged to the Corporation and remain Outstanding after a Failed Final Remarketing will have the right to put their Notes in whole or in part to the Corporation on a date to be determined by the Corporation in its sole discretion that is no earlier than 30 days and no later than 60 days from May 18, 2004 (the "Put Exercise Date"), for an amount to be paid on the Put Exercise Date equal to the principal amount of their Notes being put, plus accrued and unpaid interest, by delivering to the Trustee, prior to 5:00 p.m., New York City time, on or prior to the second Business Day before the Put Exercise Date, a Put Notice substantially in the form contained in the form of Note attached hereto as Exhibit A.

(c)   In addition to the events listed as Events of Default in Section 801 of the Original Indenture, it shall be an additional Event of Default with respect to the Notes, if the Corporation defaults in the payment of an amount equal to the principal amount of, plus accrued and unpaid interest on, any Note following the exercise by the Holder of such Note of the put right established pursuant to this Section.

(d)   If there is no Successful Remarketing on May 11, 2004, the Guarantor will cause a notice of the failure of Remarketing of the Notes to be published before 9:00 a.m., New York City time, on May 12, 2004 and another Remarketing will be attempted on that day. If there has not been a Successful Remarketing on May 12, 2004, the Guarantor will cause a notice of the failure of Remarketing of the Notes to be published before 9:00 a.m., New York City time, on May 13, 2004 and another Remarketing will be attempted on that day. If there has not been a Successful Remarketing on May 13, 2004, the Guarantor will cause a notice of the failure of Remarketing of the Notes to be published before 9:00 a.m., New York City time, on May 14, 2004 and, within 10 days of May 18, 2004, will mail a notice to each Holder of Notes eligible to exercise the put right, with a copy to the Trustee, stating the Put Exercise Date and the date by which a Holder must provide the Trustee with notice of its election to exercise the put right. Notices to be published under this paragraph will be validly published by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service, or by publication in a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal.

(e)   The Corporation will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to this Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.02, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Indenture by virtue of any conflict.

ARTICLE FIVE

MISCELLANEOUS PROVISIONS

Section 5.01   Recitals by Corporation

The recitals in this Supplemental Indenture are made by the Corporation and the Guarantor only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and this Supplemental Indenture as fully and with like effect as if set forth herein full and the Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture.

Section 5.02   Ratification and Incorporation of Original Indenture

As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this Supplemental Indenture shall be read, taken and construed as one and the same instrument.

Section 5.03   Executed in Counterparts

This Supplemental Indenture may be executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

ARTICLE SIX

TAX TREATMENT; ERISA

Section 6.01   Tax Agreements

The Corporation agrees, and by purchasing a beneficial ownership interest in the Notes each Holder of the Notes will be deemed to have agreed, for United States federal income tax purposes to treat the acquisition of a New PEPS Unit as the acquisition of a unit consisting of a Purchase Contract and a beneficial ownership interest in a Note issued by the Corporation and to treat the Notes as indebtedness.

Section 6.02   ERISA Agreements

Each purchaser and any subsequent transferee of the New PEPS Units (or any component security of such units), will be deemed to have represented and warranted on each day from and including the date of its purchase of the New PEPS Units (or any component security of such units) through and including the date of the satisfaction of the obligation under the new purchase contract and/or the disposition of any such New PEPS Unit (or any component security of such unit) either (i) that no portion of the assets used by such purchaser or subsequent transferee to acquire the New PEPS Units (or any component security of such units) constitute the assets of any Plan or (ii) that the acquisition, holding and the disposition of any New PEPS Unit (and any component security of such unit) by such purchaser or subsequent transferee does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or a violation of any applicable Similar Laws.

IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

	PPL Capital Funding, INC. By:  /s/ James E. Abel
	Name: James E. Abel
Attest:	Title: Treasurer
/s/ Diane M. Koch
	PPL Corporation
	By:  /s/ James E. Abel
	Name: James E. Abel
Attest:	Title: Vice President-Finance and                Treasurer
/s/ Diane M. Koch
	JPMORGAN CHASE BANK, as Trustee
	By:  /s/ Alfia Monastra
	Name: Alfia Monastra
Attest:	Title: Vice President
/s/ Catherine F. Donohue

EXHIBIT A

(Form of Face of Note)

If the Note is to be a Global Note, insert: THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

CUSIP No.

$

No.

PPL CAPITAL FUNDING, INC.
NOTES DUE MAY 18, 2006

PPL Capital Funding, Inc., a Delaware corporation (the "Corporation," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to         , or registered assigns, the principal sum of           DOLLARS ($         ), [or such other principal amount as shall be set forth in the Schedule of Increases or Decreases attached hereto]* on May 18, 2006 (such date is hereinafter referred to as the "Stated Maturity"). This Note will bear interest (i) at the rate of 7.29% per year (the "Coupon Rate") from November 18, 2003 through and including the day immediately preceding May 18, 2004 and (ii)(A) in the case of a Successful Remarketing, at the Reset Rate on and after the Purchase Contract Settlement Date and (B) in the case of a Failed Final Remarketing, at the Coupon Rate on and after the Purchase Contract Settlement Date, until the principal thereof is paid or duly made available for payment. Interest will be payable, initially, quarterly in arrears on February 18, 2004 and May 18, 2004 (each, an "Interest Payment Date") to the Person in whose name this Note, or any Predecessor Security, is registered at the close of business on the Regular Record Date for such interest installment; provided, however, that following the Purchase Contract Settlement Date, interest will be payable following a Successful Remarketing, quarterly in arrears on February 18, May 18, August 18 and November 18 of each year, or if there is no Successful Remarketing, semi-annually in arrears on May 18 and November 18 of each year commencing November 18, 2004, and such dates shall then be the "Interest Payment Dates."

_________________________________________

*   Insert in Global Notes and Pledged Notes

The amount of interest payable on this Note for any period will be computed (1) for any full quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month; provided that, following a Successful Remarketing, the amount of interest for each day the Notes are Outstanding will be calculated by dividing the interest rate in effect for that day by 360 and multiplying the result by the principal amount of the Notes. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on that date will be made on the next day that is a Business Day (and without any interest or other payment in respect of any delay); provided, that after a Successful Remarketing, if an Interest Payment Date (other than at Stated Maturity) would fall on a day that is not a Business Day, such Interest Payment Date shall be the following day that is a Business Day, except that if such next day is in a different month, then that Interest Payment Date will be the immediately preceding day that is a Business Day; provided, further, that if the Stated Maturity shall fall on a day that is not a Business Day, the interest due on such day shall be paid on the following day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment which shall be, (1) with respect to any Interest Payment Date for the Notes when represented by a Global Note, the Business Day immediately preceding such Interest Payment Date and (2) with respect to any Interest Payment Date for the Notes when held in certificated form, the 15^th day (whether or not a Business Day) prior to such Interest Payment Date. Any such interest installment not punctually paid or duly provided for on any Interest Payment Date shall forthwith cease to be payable to the Holders at the close of business on such Regular Record Date and may be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest, notice whereof shall be given to the Holders of the Notes not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes shall be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal and the interest on this Note shall be payable at the office or agency of the Corporation maintained for that purpose in the Borough of Manhattan, The City of New York, in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Corporation (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto.

The interest rate on the Notes, as determined by the Calculation Agent on the applicable Interest Determination Date, will be reset in the case of a Successful Remarketing, at the Reset Rate on and after the Purchase Contract Settlement Date. If a Successful Remarketing occurs, the Reset Rate will be equal to 3-month LIBOR plus a Spread; provided, however, that the Reset Rate shall not exceed the maximum rate permitted by applicable law. The Reset Rate shall then be reset quarterly on February 18, May 18, August 18 and November 18 of each year, commencing August 18, 2004 (each, an "Interest Reset Date").

The interest rate on the Notes in effect for the period from and including May 18, 2004 to and excluding August 18, 2004 shall be determined by the Calculation Agent on the applicable Interest Determination Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding day that is a Business Day, except that if such next day is in a different month, then that Interest Reset Date will be the immediately preceding day that is a Business Day. After a Successful Remarketing, the interest rate in effect on May 18, 2004 or on any Interest Reset Date will be the applicable Reset Rate as reset on May 18, 2004 or on such Interest Reset Date, as the case may be, and the interest rate applicable to any other day is the interest rate in effect on May 18, 2004 or the immediately preceding Interest Reset Date, as the case may be.

JPMorgan Chase Bank, or any successor Calculation Agent appointed by the Corporation, will be the Calculation Agent; provided, however, that for the initial interest rate reset on May 18, 2004, the Calculation Agent shall be the Remarketing Agent. Following a Successful Remarketing and upon request of any Holder, the Calculation Agent will disclose to such Holder the Reset Rate then in effect and, if determined, the Reset Rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date with respect to the Notes. The Calculation Agent shall determine each applicable Reset Rate in accordance with the following provisions. The Calculation Agent's determination of any interest rate will be conclusive and binding in the absence of any manifest error.

"3-month LIBOR" means the rate determined in accordance with the following provisions:

(a)   the rate for deposits in United States dollars having a maturity of three months, commencing on the applicable Interest Reset Date, that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on the preceding Interest Determination Date. If no such rate so appears, 3-month LIBOR on such Interest Determination Date will be determined in accordance with the provisions described in clause (b) below.

(b)   With respect to an Interest Determination Date on which no such rate appears on the Designated LIBOR Page as specified in clause (a) above, the Calculation Agent will request the principal London offices of each of four major reference banks (which may include the Remarketing Agent or affiliates of the Remarketing Agent, the Trustee or the Calculation Agent) in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of three months, commencing on the applicable Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such Interest Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are so provided, then 3-month LIBOR on such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, then 3-month LIBOR on such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such Interest Determination Date by three major banks (which may include the Remarketing Agent or affiliates of the Remarketing Agent, the Trustee or the Calculation Agent) in The City of New York selected by the Calculation Agent for loans in United States dollars to leading European banks, having a three month maturity and in a principal amount that is representative for a single transaction in United States dollars in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, 3-month LIBOR determined as of such Interest Determination Date will be 3-month LIBOR in effect on such Interest Determination Date, or if no such 3-month LIBOR is then in effect, the interest rate on the Notes will be the rate in effect on such Interest Determination Date.

"Designated LIBOR Page" means the display designated as "Page 3750" on Moneyline Telerate, Inc., or such other page as may replace Page 3750 on such service or any successor service or services as may be nominated by the British Bankers' Association for the purpose of displaying the London interbank rates of major banks for United States dollars.

"Interest Determination Date" means the second London Business Day immediately preceding the applicable Interest Reset Date; provided, however, that for the initial interest rate reset on May 18, 2004, the Interest Determination Date means the second London Business Day immediately preceding each date of Remarketing if there is a Successful Remarketing on such date.

"London Business Day" means any Business Day on which dealings in deposits in United States dollars are transacted in the London interbank market.

"Spread" means the number of basis points (one one-hundredth of a percentage point) to be added to 3-month LIBOR that the Remarketing Agent determines is required for a Successful Remarketing.

From the January 21, 2004 until May 18, 2004, the Notes will be the Corporation's direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation's existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of the Corporation's Senior Indebtedness.

On and after May 18, 2004, the Notes will become the Corporation's direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation's existing and future unsecured and unsubordinated indebtedness (including equal to all prior unsubordinated Securities issued pursuant to the Indenture), senior in right of payment to all of the Corporation's subordinated indebtedness.

If a Successful Remarketing of the Notes has not occurred prior to or on the third Business Day immediately preceding the Purchase Contract Settlement Date, Holders of Notes that remain Outstanding will have the right to put their Notes to the Corporation for an amount equal to the principal amount of their Notes, plus accrued and unpaid interest, on a date which is no earlier than 30 days and no later than 60 days from May 18, 2004 (the "Put Exercise Date"), by notifying the Trustee on or prior to the second Business Day before the Put Exercise Date.

In addition to the events listed as Events of Default in Section 801 of the Indenture, it shall be an additional Event of Default with respect to the Notes, if the Corporation defaults in the payment of an amount equal to the principal amount of, plus accrued and unpaid interest on, any Note following the exercise by the Holder of such Note of the put right referred to in the preceding paragraph.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed under its corporate seal.

Dated:
	PPL Capital FUNDING, INC.
	By:_________________________________
Attest:
_____________________________________

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

	JPMORGAN CHASE BANK, as Trustee
	By:____________________________      Authorized Officer
Dated:

(Form of Reverse of Note)

This Note is one of a duly authorized issue of Securities of the Corporation (the "Securities") issued and issuable in one or more series under an Indenture, dated as of November 1, 1997 (such Indenture as originally executed and delivered and as supplemented and amended from time to time thereafter including by Supplemental Indenture Number 5 dated as of January 21, 2004, being herein called the "Indenture"), among the Corporation (formerly known as PP&L Capital Funding, Inc.), PPL Corporation (formerly known as PP&L Ressources, Inc.), as Guarantor (herein called the "Guarantor", which term includes any successor under the Indenture), and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee (herein called the "Trustee", which term includes any successor under the Indenture). This Security is one of the series designated on the face hereof as Notes due May 18, 2006 (the "Notes"). Such series is limited in aggregate principal amount up to $99,379,000.00. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

The Notes are not subject to a sinking fund provision and are not redeemable prior to Stated Maturity.

The Indenture permits, with certain exceptions as therein provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under the Indenture, considered as one class; provided, however, that if there shall be Securities of more than one series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that if the Securities of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that the Indenture permits the Trustee to enter into one or more supplemental indentures for limited purposes without the consent of any Holders of Securities. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Corporation with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Corporation for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Notes at the time Outstanding a direction inconsistent with such request and shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.

The provisions for defeasance and covenant defeasance in the Indenture shall not apply to the Notes.

Prior to due presentment of this Note for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Corporation, the Trustee nor any such agent shall be affected by notice to the contrary.

No recourse shall be had for the payment of the principal or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Corporation or the Guarantor, as the case may be, subject to the provisions of the Guarantee of the Notes, or of any successor corporations, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

The Notes shall be issuable in denominations of $1,000 and any integral multiples thereof except that an interest in a Note held as part of one New PEPS Unit represents a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount of a Note; provided, however, that upon release by the Collateral Agent of Notes underlying the beneficial ownership interest in the Notes pledged to secure the New PEPS Units holders' obligations under the related Purchase Contracts (other than any release of the Notes in connection with the creation of Treasury Units, an early settlement with separate cash, an early settlement upon a cash merger, a notice to settle with cash or a remarketing, as described in Sections 3.13, 5.08, 5.05(b)(2), 5.03(b) and 5.03(c), respectively, of the Purchase Contract Agreement) the Notes will be issuable in denominations of $25 principal amount and integral multiples thereof. As provided in the Indenture and subject to the limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Corporation.

The Corporation agrees, and by purchasing a beneficial ownership interest in the Notes each Holder of the Notes will be deemed to (i) have agreed, for United States federal income tax purposes to treat the acquisition of a New PEPS Unit as the acquisition of a unit consisting of a Purchase Contract and a beneficial ownership interest in a Note issued by the Corporation and to treat the Notes as indebtedness and (ii) to have represented and warranted on each day from and including the date of its purchase of the New PEPS Units (or any component security of such units) through and including the date of the satisfaction of the obligation under the new purchase contract and/or the disposition of any such New PEPS Unit (or any component security of such unit) either (a) that no portion of the assets used by such purchaser or subsequent transferee to acquire the New PEPS Units (or any component security of such units) constitute the assets of any employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), plan, individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986 as amended (the "Code") or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, "Similar Laws"), or any entity whose underlying assets are considered to include "plan assets" of any such plan, account or arrangement or (b) that the acquisition, holding and the disposition of any New PEPS Unit (and any component security of such unit) by such purchaser or subsequent transferee does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or a violation of any applicable Similar Laws.

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

[Insert Form of Guarantee]

ABBREVIATIONS

The following abbreviations, when used in the inscription on the fact of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -- as tenants in common	UNIF GIFT MIN ACT -- _________ Custodian ___________
	(Cust)                          (Minor)
TEN ENT -- as tenants by the entireties	Under Uniform Gifts to Minors Act _____________
	(State)
JT TEN -- as joint tenants with rights of survivorship and not as tenants in common

Additional abbreviations may also be used though not on the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto __________ (please insert Social Security or other identifying number of assignee)
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE
the within Security and all rights thereunder, hereby irrevocably constituting and appointing
Agent to transfer said Security on the books of the Corporation, with full power of substitution in the premises.
Dated: _________________________
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.
	Signature Guarantee: ____________________

SIGNATURE GUARANTEE

Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

PUT NOTICE

The undersigned elects have this Note (or portion thereof specified below) purchased by the Corporation pursuant to the put right provided for in Section 4.02(b) of Supplemental Indenture Number 5, payment of the principal amount thereof together with accrued and unpaid interest to the Put Exercise Date to be made to the undersigned at:

_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
           (Please print or typewrite name and address of the undersigned)

If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof which the holder elects to have repaid:____________________; and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Notes to be issued to the holder for the portion of the within Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid);___________________.

Date: _________               Signature: ______________________________________________
                                              (sign exactly as name appears on the other side of the Note)

Signature Guarantee: ________________________________________________________
                                              (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrockers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Securities and Exchange Commission Rule 17Ad-15.

[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED NOTES]

SCHEDULE OF INCREASES OR DECREASES

The following increases or decreases in this [Global Certificate][Pledged Note]
have been made:

Date Amount of decrease in
principal amount of Note evidenced by the [Global Certificate][Pledged Note] Amount of increase in principal amount of Note evidenced by the [Global Certificate][Pledged Note] Principal amount of Note evidenced by the [Global Certificate][Pledged Note] following such decrease or increase Signature of authorized officer of Trustee or Custodial Agent

EXHIBIT B

CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

JPMORGAN Chase Bank, as Trustee

By: _______________________________
                         Authorized Officer

EX-4

Exhibit 4(a)

EX-4

Exhibit 4(b)

__________________________________________

PPL CAPITAL FUNDING, INC.,
as Issuer

PPL CORPORATION,
as Guarantor

to

JPMORGAN CHASE BANK,
as Trustee

_________

Indenture

Dated as of February 26, 2004

4.33% Notes Series A due 2009

and

4.33% Notes Exchange Series A due 2009

__________________________________________

Table of Contents

			Page
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION			1
	SECTION 101.	Definitions.	1
	SECTION 102.	Compliance Certificates and Opinions.	7
	SECTION 103.	Form of Documents Delivered to Trustee.	7
	SECTION 104.	Acts of Holders.	8
	SECTION 105.	Notices, Etc. to Trustee or Company.	10
	SECTION 106.	Notice to Holders of Securities; Waiver.	11
	SECTION 107.	Conflict With Trust Indenture Act.	11
	SECTION 108.	Effect of Headings and Table of Contents.	11
	SECTION 109.	Successors and Assigns.	11
	SECTION 110.	Separability Clause.	12
	SECTION 111.	Benefits of Indenture.	12
	SECTION 112.	GOVERNING LAW.	12
	SECTION 113.	Legal Holidays.	12
ARTICLE TWO THE SECURITIES			12
	SECTION 201.	Title and Terms.	12
	SECTION 202.	Legends.	14
	SECTION 203.	Execution, Authentication, Delivery and Dating.	17
	SECTION 204.	Form of Trustee's Certificate of Authentication.	17
	SECTION 205.	Temporary Securities.	18
	SECTION 206.	Registration, Registration of Transfer and Exchange.	18
	SECTION 207.	Mutilated, Destroyed, Lost and Stolen Securities.	19
	SECTION 208.	Payment of Interest; Interest Rights Preserved.	20
	SECTION 209.	Persons Deemed Owners.	21
	SECTION 210.	Book-Entry Provisions for the Global Securities.	21
	SECTION 211.	Special Transfer Provisions.	23
	SECTION 212.	Cancellation.	26
	SECTION 213.	Computation of Interest.	26
ARTICLE THREE COVENANTS			26
	SECTION 301.	Payment of Principal and Interest.	26
	SECTION 302.	Maintenance of Office or Agency.	27
	SECTION 303.	Money for Securities Payments to Be Held in Trust.	28
	SECTION 304.	Existence as a Corporation.	29
	SECTION 305.	Annual Officer's Certificate.	29
ARTICLE FOUR REDEMPTION OF SECURITIES			29
	SECTION 401.	No Right of Redemption.	29
ARTICLE FIVE SATISFACTION AND DISCHARGE			29
	SECTION 501.	Satisfaction and Discharge of Indenture.	29
ARTICLE SIX EVENTS OF DEFAULT; REMEDIES			30
	SECTION 601.	Events of Default.	30
	SECTION 602.	Acceleration of Stated Maturity; Rescission and Annulment.	31
	SECTION 603.	Collection of Indebtedness and Suits
		for Enforcement by Trustee.	32
	SECTION 604.	Trustee May File Proofs of Claim.	32
	SECTION 605.	Trustee May Enforce Claims Without Possession
		of Securities.	33
	SECTION 606.	Application of Money Collected.	33
	SECTION 607.	Limitation on Suits.	34
	SECTION 608.	Unconditional Right of Holders to Receive Principal
		and Interest.	34
	SECTION 609.	Restoration of Rights and Remedies.	34
	SECTION 610.	Rights and Remedies Cumulative.	35
	SECTION 611.	Delay or Omission Not Waiver.	35
	SECTION 612.	Control by Holders of Securities.	35
	SECTION 613.	Waiver of Past Defaults.	35
	SECTION 614.	Undertaking for Costs.	36
	SECTION 615.	Waiver of Usury, Stay or Extension Laws.	36
ARTICLE SEVEN THE TRUSTEE			36
	SECTION 701.	Certain Duties and Responsibilities.	36
	SECTION 702.	Notice of Defaults.	37
	SECTION 703.	Certain Rights of Trustee.	37
	SECTION 704.	Not Responsible for Recitals or Issuance of Securities.	39
	SECTION 705.	May Hold Securities.	39
	SECTION 706.	Money Held in Trust.	39
	SECTION 707.	Compensation and Reimbursement.	39
	SECTION 708.	Disqualification; Conflicting Interests.	40
	SECTION 709.	Corporate Trustee Required; Eligibility.	40
	SECTION 710.	Resignation and Removal; Appointment of Successor.	40
	SECTION 711.	Acceptance of Appointment by Successor.	41
	SECTION 712.	Merger, Conversion, Consolidation or Succession to
		Business.	42
	SECTION 713.	Preferential Collection of Claims Against Company.	42
	SECTION 714.	Appointment of Authenticating Agent.	42
ARTICLE EIGHT GUARANTEE			45
	SECTION 801.	Guarantee.	45
	SECTION 802.	Subrogation.	46
	SECTION 803.	Consideration.	46
ARTICLE NINE CONSOLIDATION, MERGER, CONVEYANCE OR
OTHER TRANSFER OF GUARANTOR			47
	SECTION 901.	Guarantor May Consolidate, Etc., Only on Certain Terms.	47
	SECTION 902.	Successor Person Substituted.	47
	SECTION 903.	Limitations.	47
ARTICLE TEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY			48
	SECTION 1001.	Lists of Holders.	48
	SECTION 1002.	Reports by Trustee and Company.	48
ARTICLE ELEVEN CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER OF THE COMPANY			49
	SECTION 1101.	Company May Consolidate, Etc., Only on Certain Terms.	49
	SECTION 1102.	Successor Person Substituted.	49
	SECTION 1103.	Limitations.	49
ARTICLE TWELVE SUPPLEMENTAL INDENTURES			50
	SECTION 1201.	Supplemental Indentures Without Consent of Holders.	50
	SECTION 1202.	Supplemental Indentures With Consent of Holders.	51
	SECTION 1203.	Execution of Supplemental Indentures.	52
	SECTION 1204.	Effect of Supplemental Indentures.	52
	SECTION 1205.	Conformity With Trust Indenture Act.	52
	SECTION 1206.	Reference in Securities to Supplemental Indentures.	52
ARTICLE THIRTEEN IMMUNITY OF STOCKHOLDERS, OFFICERS
AND DIRECTORS			53
	SECTION 1301.	Liability Limited.	53

Exhibit A Form of 4.33% Note [Series A] [Exchange Series A] due 2009

PPL CAPITAL FUNDING, INC.

Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of February 26, 2004

Trust Indenture Act Section		Indenture Section
§310	(a)(1)	709
	(a)(2)	709
	(a)(3)	Not Applicable
	(a)(4)	Not Applicable
	(b)	708
		710
§311	(a)	713
	(b)	713
	(c)	Not Applicable
§312	(a)	1001
	(b)	1001
	(c)	1001
§313	(a)	1002
	(b)(1)	Not Applicable
	(b)(2)	1002
	(c)	1002
	(d)	1002
§314	(a)	1002
	(a)(4)	305
	(b)	Not Applicable
	(c)(1)	102
	(c)(2)	102
	(c)(3)	Not Applicable
	(d)	Not Applicable
	(e)	102
§315	(a)	701(a)
	(b)	702
	(c)	701(b)
	(d)	701(c)
	(d)(1)	701(a)(1), 801(c)(1)
	(d)(2)	701(c)(2)
	(d)(3)	701(c)(3)
	(e)	614
§316	(a)	612
		613
	(a)(1)(A)	602
		612
	(a)(1)(B)	613
	(a)(2)	Not Applicable
	(b)	608
§317	(a)(1)	603
	(a)(2)	604
	(b)	303
§318	(a)	107

Note: This reconciliation table shall not, for any purpose, be deemed to be part of this Indenture.

INDENTURE, dated as of February 26, 2004 among PPL CAPITAL FUNDING, INC., a Delaware corporation (herein called the "Company"), having its principal office at Two North Ninth Street, Allentown, Pennsylvania 18101, as issuer, PPL Corporation, a Pennsylvania corporation (the "Guarantor"), as guarantor, and JPMorgan Chase Bank, a New York banking corporation, having its principal corporate trust office at 4 New York Plaza, New York, New York 10004, as Trustee (herein called the "Trustee").

RECITAL

The Company and the Guarantor have duly authorized the execution and delivery of this Indenture to provide for the issuance of the Company's 4.33% Notes Series A due 2009 and 4.33% Notes Exchange Series A due 2009 (herein called the "Securities"), to be issued as contemplated herein; and all acts necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been performed.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities (except as otherwise contemplated herein), as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.   Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)   the terms defined in this Section 101 have the meanings assigned to them in this Section 101 and include the plural as well as the singular;

(b)   all terms used herein without definition which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c)   all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation;

(d)   any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; and

(e)   the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

"Act," when used with respect to any Holder of a Security, has the meaning specified in Section 104(a) hereof.

"Additional Interest" means all amounts, if any, payable pursuant to Section 6 of the Registration Rights Agreement.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct generally the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Agent Members" has the meaning specified in Section 210(a) hereof.

"Authenticating Agent" means any Person or Persons authorized by the Trustee to act on behalf of the Trustee to authenticate the Securities.

"Authorized Officer" means the President, any Vice President, the Treasurer, or any other Person duly authorized by the Company or the Guarantor, as applicable, to act in respect of matters relating to this Indenture.

"Board of Directors" means either the board of directors of the Company or the Guarantor or any committee thereof duly authorized to act in respect of matters relating to this Indenture.

"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been duly adopted by the Board of Directors of the Company or the Guarantor, as the case may be, and to be in full force and effect on the date of such certification, and delivered to the Trustee.

"Business Day" means any day, other than a Saturday or Sunday, that is not a day on which banking institutions or trust companies are generally authorized or required by law, regulation or executive order to close in The City of New York or other city in which any Paying Agent is located.

"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the date of execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body, if any, performing such duties at such time.

"Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person.

"Company Order" or "Company Request" mean, respectively, a written order or request, as the case may be, signed in the name of the Company by an Authorized Officer thereof and delivered to the Trustee.

"Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at 4 New York Plaza (15^th Floor), New York, New York 10004, Attention: Institutional Trust Services.

"corporation" means a corporation, association, company, joint stock company, limited liability company or business trust, and references to "corporate" and other derivations of "corporation" herein shall be deemed to include appropriate derivations of such entities.

"Defaulted Interest" has the meaning specified in Section 208 hereof.

"Definitive Security" means any Security that is not a Global Security.

"Depositary" means, with respect to Securities issuable or issued in whole or in part in the form of one or more Global Securities, DTC or any other clearing agency registered under the Exchange Act and appointed as such pursuant to Section 210(d).

"Dollar" or "$" means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts.

"DTC" means The Depository Trust Company.

"Event of Default" has the meaning specified in Section 601 hereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Exchange Securities" has the meaning ascribed thereto in Section 201.

"Global Security" means a Security evidencing all or part of the Securities, issued to the Depositary or its nominee and registered in the name of the Depositary or its nominee.

"Global Security Legend" has the meaning provided in Section 202(b) hereof.

"Guarantee" means any guarantee of payment of the Securities and certain other obligations of the Company pursuant to Article Eight by the Guarantor.

"Guarantor" means the Person named as the "Guarantor" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, "Guarantor" shall mean such successor person.

"Holder" means a Person in whose name a Security is registered in the Security Register.

"Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended, including, for all purposes of this instrument, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Indenture.

"IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

"Initial Purchasers" means the several initial purchasers party to the Purchase and Exchange Agreement.

"interest", where the context requires, shall include Additional Interest, if any.

"Interest Payment Date" means each March 1 and September 1 of each year, commencing September 1, 2004.

"Notice of Default" means a written notice of the kind specified in Section 601(c).

"Obligations" has the meaning specified in Section 801 hereof.

"Officer's Certificate" means a certificate signed by an Authorized Officer of the Company or the Guarantor, as applicable, and delivered to the Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company or the Guarantor and who shall be acceptable to the Trustee.

"Original Issue Date" means February 26, 2004.

"Outstanding", when used with respect to the Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(a)   Securities theretofore canceled or delivered to the Trustee for cancellation;

(b)   Securities for whose payment money in the necessary amount has been theretofore deposited with the Trustee or the Paying Agent (other than the Company or the Guarantor) in trust or set aside and segregated in trust by the Company or the Guarantor (if the Company or the Guarantor shall act as Paying Agent) for the Holders of such Securities; and

(c)   Securities which have been paid pursuant to Section 207 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it and the Company that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

provided, however, that in determining whether or not the Holders of the requisite principal amount of the Securities Outstanding under this Indenture have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all Securities Outstanding under this Indenture, determined without regard to this clause) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded; provided, however, that Securities so owned which have been pledged in good faith may be regarded as Outstanding if it is established to the reasonable satisfaction of the Trustee that the pledgee, and not the Company, or any such other obligor or Affiliate of either thereof, has the right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

"Paying Agent" means any Person, including the Company or the Guarantor, authorized by the Company or Guarantor, as applicable, to pay the principal of, or interest on, any Securities on behalf of the Company or any Guarantees on behalf of the Guarantor.

"Person" means any individual, corporation, partnership, limited liability partnership, joint venture, trust or unincorporated organization or any government or any political subdivision, instrumentality or agency thereof.

"Place of Payment", when used with respect to the Securities means the place or places, at which, subject to Section 302, principal of, and interest on, the Securities are payable.

"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 207 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Purchase and Exchange Agreement" means the Purchase and Exchange Agreement, dated as of February 20, 2004, among the Company, the Guarantor and Wachovia Capital Markets, LLC, Banc One Capital Markets, Inc. and J.P. Morgan Securities Inc., as the representatives of the Initial Purchasers.

"QIB" means any "qualified institutional buyer" (as term is defined in Rule 144A).

"Registered Exchange Offer" shall have the meaning contemplated by and in accordance with the terms of the Registration Rights Agreement.

"Registration Rights Agreement" means the Registration Rights Agreement, dated as of February 26, 2004, among the Company, the Guarantor and Wachovia Capital Markets, LLC, Banc One Capital Markets, Inc. and J.P. Morgan Securities Inc., as the representatives of the Initial Purchasers.

"Regular Record Date" for the interest on the Securities and Additional Interest, if any, means (1) with respect to any Interest Payment Date for the Securities when represented by a Global Security, the Business Day immediately preceding such Interest Payment Date and (2) with respect to any Interest Payment Date for the Securities when held in certificated form, the 15th day (whether or not a Business Day) prior to such Interest Payment Date.

"Responsible Officer", when used with respect to the Trustee, means the chairman or any vice chairman of the board of directors, the chairman or any vice chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any senior trust officer, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

"Restricted Securities" has the meaning specified in Section 202(a) hereof.

"Restricted Securities Legend" has the meaning specified in Section 202(a) hereof.

"Rule 144A" means Rule 144A under the Securities Act.

"Securities" has the meaning stated in the recital of this Indenture and more particularly means any securities authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933, as amended.

"Security Register" and "Security Registrar" have the respective meanings specified in Section 206.

"Shelf Registration Statement" shall have the meaning contemplated by and in accordance with the terms of the Registration Rights Agreement.

"Special Record Date" for the payment of any Defaulted Interest on the Securities of any series means a date fixed by the Trustee pursuant to Section 208(a).

"Stated Maturity" means March 1, 2009.

"Subsidiary" means any corporation, company, limited liability company or other business entity of which the requisite number of shares of stock or other equity ownership interests having ordinary voting power (without regard to the occurrence of any contingency) to elect a majority of the directors, managers or trustees thereof, or any partnership of which more than 50% of the partners' equity interests (considering all partners' equity interests as a single class) is, in each case, at the time owned or controlled, directly or indirectly, by the Guarantor, one or more of the Subsidiaries, or any combination thereof.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder.

"Trust Indenture Act" means, as of any time, the Trust Indenture Act of 1939 as in force at such time.

"United States" means the United States of America, its territories, its possessions and other areas subject to its jurisdiction.

SECTION 102.   Compliance Certificates and Opinions.

Except as otherwise expressly provided in this Indenture, upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor, as the case may be, shall furnish to the Trustee an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(a)   a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(b)   a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c)   a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d)   a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

SECTION 103.   Form of Documents Delivered to Trustee.

(a)   Any Officer's Certificate may be based (without further examination or investigation), insofar as it relates to or is dependent upon legal matters, upon an opinion of, or representations by, counsel, unless, in any case, such officer has actual knowledge that the certificate or opinion or representations with respect to the matters upon which such Officer's Certificate may be based as aforesaid are erroneous.

Any Opinion of Counsel may be based (without further examination or investigation), insofar as it relates to or is dependent upon factual matters, information with respect to which is in the possession of the Company or the Guarantor, upon a certificate of, or representations by, an officer or officers of the Company or the Guarantor, as the case may be, unless such counsel has actual knowledge that the certificate or opinion or representations with respect to the matters upon which his opinion may be based as aforesaid are erroneous. In addition, any Opinion of Counsel may be based (without further examination or investigation), insofar as it relates to or is dependent upon matters covered in an Opinion of Counsel rendered by other counsel, upon such other Opinion of Counsel, unless such counsel has actual knowledge that the Opinion of Counsel rendered by such other counsel with respect to the matters upon which his Opinion of Counsel may be based as aforesaid are erroneous. If, in order to render any Opinion of Counsel provided for herein, the signer thereof shall deem it necessary that additional facts or matters be stated in any Officer's Certificate provided for herein, then such certificate may state all such additional facts or matters as the signer of such Opinion of Counsel may request.

(b)   In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Where (i) any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, or (ii) two or more Persons are each required to make, give or execute any such application, request, consent, certificate, statement, opinion or other instrument, any such applications, requests, consents, certificates, statements, opinions or other instruments may, but need not, be consolidated and form one instrument.

(c)   Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer's Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally filed in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Anything in this Indenture to the contrary notwithstanding, if any such corrective document or instrument indicates that action has been taken by or at the request of the Company or the Guarantor which could not have been taken had the original document or instrument not contained such error or omission, the action so taken shall not be invalidated or otherwise rendered ineffective but shall be and remain in full force and effect, except to the extent that such action was a result of willful misconduct or bad faith. Without limiting the generality of the foregoing, any Securities or Guarantees issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company or the Guarantor, as the case may be, entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities, except as aforesaid.

SECTION 104.   Acts of Holders.

(a)   Any request, demand, authorization, direction, notice, consent, election, waiver or other action provided by this Indenture to be made, given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or the Guarantor, as applicable. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 701) conclusive in favor of the Trustee, the Company and the Guarantor, if made in the manner provided in this Section.

(b)   The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof or may be proved in any other manner which the Trustee, the Company and the Guarantor deem sufficient. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.

(c)   The ownership, principal amount and register numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register.

(d)   Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security.

(e)   Until such time as written instruments shall have been delivered to the Trustee with respect to the requisite percentage of principal amount of Securities for the action contemplated by such instruments, any such instrument executed and delivered by or on behalf of a Holder may be revoked with respect to any or all of such Securities by written notice by such Holder or any subsequent Holder, proven in the manner in which such instrument was proven.

(f)   Securities authenticated and delivered after any Act of Holders may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any action taken by such Act of Holders. If the Company shall so determine, new Securities, so modified as to conform, in the opinion of the Trustee and the Company, to such action may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

(g)   The Company may, at its option, by Company Order, fix in advance a record date for the determination of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or other Act solicited by the Company, but the Company shall have no obligation to do so; provided, however, that the Company may not fix a record date for the giving or making of any notice, declaration, request or direction referred to in the next sentence. In addition, the Trustee may, at its option, fix in advance a record date for the determination of Holders entitled to join in the giving or making of any Notice of Default, any declaration of acceleration referred to in Section 602, any request to institute proceedings referred to in Section 607 or any direction referred to in Section 612. If any such record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act, or such notice, declaration, request or direction, may be given before or after such record date, but only the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining (i) whether Holders of the requisite proportion of the Outstanding Securities have authorized or agreed or consented to such Act (and for that purpose the Outstanding Securities shall be computed as of the record date) and/or (ii) which Holders may revoke any such Act (notwithstanding subsection (e) of this Section); and any such Act, given as aforesaid, shall be effective whether or not the Holders which authorized or agreed or consented to such Act remain Holders after such record date and whether or not the Securities held by such Holders remain Outstanding after such record date.

SECTION 105.   Notices, Etc. to Trustee or Company.

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (a) the Trustee by any Holder, by the Company or by the Guarantor, or (b) the Company or the Guarantor by the Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise expressly provided herein) if in writing and delivered personally to an officer or other responsible employee of the addressee, or transmitted by facsimile transmission, telex or other direct written electronic means to such telephone number or other electronic communications address set forth for such party below or such other address as the parties hereto shall from time to time designate, or transmitted by registered mail, charges prepaid, to the applicable address set forth for such party below or to such other address as either party hereto may from time to time designate:

If to the Company and/or the Guarantor, to:

PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101

Attention: Treasurer
Telephone: (610) 774-5987
Telecopy: (610) 774-5235

and

PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101

Attention: Vice President-Finance and Treasurer
Telephone: (610) 774-5987
Telecopy: (610) 774-5235

If to the Trustee, to:

JPMorgan Chase Bank
4 New York Plaza (15^th Floor),
New York, New York 10004

Attention: Institutional Trust Services
Telephone: (212) 623-5181
Telecopy: (212) 683-6216

Any communication contemplated herein shall be deemed to have been made, given, furnished and filed if personally delivered, on the date of delivery, if transmitted by facsimile transmission, telex or other direct written electronic means, on the date of transmission, and if transmitted by registered mail, on the date of receipt.

SECTION 106.   Notice to Holders of Securities; Waiver.

Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given, and shall be deemed given, to Holders if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such Notice.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.

Any notice required by this Indenture may be waived in writing by the Person entitled to receive such notice, either before or after the event otherwise to be specified therein, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 107.   Conflict With Trust Indenture Act.

If any provision of this Indenture limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this Indenture by, or is otherwise governed by, any provision of the Trust Indenture Act, such other provision shall control; and if any provision hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall control. For purposes of this Section, the Indenture shall be deemed to be at all times qualified under the Trust Indenture Act.

SECTION 108.   Effect of Headings and Table of Contents.

The Article and Section headings in this Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 109.   Successors and Assigns.

All covenants and agreements in this Indenture by each of the Company or the Guarantor shall bind its successors and assigns, whether so expressed or not.

SECTION 110.   Separability Clause.

In case any provision in this Indenture or the Securities shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111.   Benefits of Indenture.

Nothing in this Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 112.   GOVERNING LAW.

THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

SECTION 113.   Legal Holidays.

In any case where any Interest Payment Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal or Additional Interest need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Stated Maturity, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Stated Maturity, as the case may be, to such Business Day.

ARTICLE TWO

THE SECURITIES

SECTION 201.   Title and Terms.

(a)   The Securities shall be known and designated as the "4.33% Notes Series A due 2009" and the "4.33% Notes Exchange Series A due 2009" (the "Exchange Securities") of the Company. The Securities shall be issuable in denominations of $1,000 or integral multiples thereof. The limit upon the aggregate principal amount of the 4.33% Notes Series A due 2009 which may be authenticated and delivered pursuant to Section 203 hereof shall be $201,000,000; the limit upon the aggregate principal amount of the Exchange Securities which may be authenticated and delivered pursuant to Section 203 hereof shall be $201,000,000; and at all times, the limit of the aggregate principal amount of the 4.33% Notes Series A due 2009 plus the Exchange Securities shall be $201,000,000, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Securities pursuant to Sections 205, 206, 207 or 1206.

(b)   The Securities shall mature on the date of Stated Maturity.

(c)   Interest on the Securities shall accrue at the rate of 4.33% per annum from and including the Original Issue Date or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for until the principal thereof is paid or made available for payment. Interest shall be paid semi-annually in arrears on each Interest Payment Date. In addition, Additional Interest may accrue on the Securities and be payable at the times and in the circumstances described in the Registration Rights Agreement.

(d)   A Holder of any Security at the close of business on a Regular Record Date shall be entitled to receive interest and Additional Interest, if any, on such Security on the corresponding Interest Payment Date.

(e)   Principal of, interest, and Additional Interest, if any, on Global Securities shall be payable to DTC in immediately available funds.

(f)   Principal and interest on Definitive Securities shall be payable in immediately available funds at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee; provided, that interest and Additional Interest, if any, on Definitive Securities shall be payable at the Company's option (A) to Holders having an aggregate principal amount of Securities of $2,000,000 or less, by check mailed to the Holders of such Securities at the address therefor set forth in the Security Register and (B) to Holders having an aggregate principal amount of Securities of more than $2,000,000, either by check mailed to each such Holder at the address therefor set forth in the Security Register or, upon application by any such Holder to the Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder's account within the United States specified in such application, which application shall remain in effect until the Holder notifies, in writing, the Security Registrar to the contrary.

(g)   The Securities shall not be redeemable.

(h)   The Securities shall be guaranteed as to payment by the Guarantor as provided in Article Eight; provided that nothing herein shall require the Guarantee to be endorsed on any Security and the failure to so endorse a Guarantee thereon shall not impair the validity or enforceability of the Guarantee with respect to any such Security.

(i)   The Securities shall initially be issued in the form of one or more Global Securities.

(j)   The Securities shall be in substantially the form of Exhibit A hereto with such appropriate insertions, omissions, legends, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities.

SECTION 202.   Legends.

(a)   Restricted Securities Legends.

Each Security (other than an Exchange Security) issued hereunder shall, upon issuance, bear the legend set forth in Section 202(a)(1) (the "Restricted Securities Legend"), and such legend shall not be removed except as provided in Section 202(a)(2). Each Security that bears or is required to bear the Restricted Securities Legend set forth in Section 202(a)(1) (the "Restricted Securities") shall be subject to the restrictions on transfer set forth in this Section 202(a) (including the Restricted Securities Legend set forth below), and the Holder of each such Restricted Security, by such Holder's acceptance thereof, shall be deemed to have agreed to be bound by all such restrictions on transfer.

As used in this Section 202(a), the term "transfer" encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.

(1)   Restricted Securities Legend for Securities.

Except as provided in Section 202(a)(2), any certificate evidencing a Security (and all Securities issued in exchange therefor or substitution thereof) shall bear a Restricted Securities Legend in substantially the following form:

"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THIS NOTE AND ANY INTEREST OR PARTICIPATION HEREIN MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH PPL CAPITAL FUNDING, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR HEREOF), ONLY (A) TO THE COMPANY OR PPL CORPORATION, AS GUARANTOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) IF ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTION."

(2)   Removal of the Restricted Securities Legends.

Each Security shall bear the Restricted Securities Legend set forth in Section 202(a)(1) until the earlier of:

   (i)   the date which is the later of two years after the original issuance date of such Security and the last date that the Company, the Guarantor or any of either of their Affiliates was the owner of such Security;

   (ii)   the date such Security has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such sale); and

   (iii)   the date such Security is exchanged for Exchange Securities issued in a Registered Exchange Offer, which Exchange Securities shall not bear the Restricted Securities Legend.

In the case of clause (2)(i) or (ii), the Holder must give notice thereof to the Trustee.

Notwithstanding the foregoing, the Restricted Securities Legend may only be removed from any Security if there is delivered to the Company and the Trustee such satisfactory evidence, which may include an opinion of counsel, as may be reasonably required by the Company, that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers of such Security will not violate the registration requirements of the Securities Act or the qualification requirements under any state securities laws. Upon provision of such satisfactory evidence, at the written direction of the Company, the Trustee shall authenticate and deliver in exchange for such Security another Security or Securities having an equal aggregate principal amount that does not bear such legend. If the Restricted Securities Legend has been removed from a Security as provided above, no other Security issued in exchange for all or any part of such Security shall bear such legend, unless the Company has reasonable cause to believe that such other Security is a "restricted security" within the meaning of Rule 144 and instructs the Trustee in writing to cause a Restricted Securities Legend to appear thereon.

Any Security (or Security issued in exchange or substitution therefor) as to which such restrictions on transfer shall have expired in accordance with their terms or as to which the conditions for removal of the Restricted Securities Legend set forth in Section 202(a)(1) as set forth therein have been satisfied may, upon surrender of such Security for exchange to the Security Registrar in accordance with the provisions of Section 206, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, which shall not bear the Restricted Securities Legend required by Section 202(a)(1).

(b)   Global Security Legend.

Each Global Security shall also bear the following legend (the "Global Security Legend") on the face thereof:

"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."

SECTION 203.   Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by an Authorized Officer of the Company, and may have the corporate seal of the Company affixed thereto or reproduced thereon attested by its Secretary, one of its Assistant Secretaries or any other Authorized Officer. The signature of any or all of these officers on the Securities may be manual or facsimile.

A Security bearing the manual or facsimile signature of an individual who was at the time of execution an Authorized Officer of the Company shall bind the Company, notwithstanding that any such individual has ceased to be an Authorized Officer prior to the authentication and delivery of the Security or did not hold such office at the date of such Security.

A Security shall not be valid until an authorized officer of the Trustee manually authenticates the Security. The signature of the Trustee on a Security shall be conclusive evidence that such Security has been duly and validly authenticated and issued under this Indenture. A Security shall be dated the date of its authentication.

The Trustee shall authenticate and make available for delivery Securities designated 4.33% Notes Series A due 2009 for issue on the Original Issue Date in an aggregate principal amount of $201,000,000 upon a Company Order. Such Company Order shall specify the principal amount of the Securities to be authenticated and the date the issue of Securities is to be authenticated. Exchange Securities may be issued in a Registered Exchange Offer pursuant to the Registration Rights Agreement upon a Company Order in exchange for Securities bearing the Restricted Securities Legend. Notwithstanding anything to the contrary contained in this Indenture, the Securities designated 4.33% Notes Series A due 2009 and the Exchange Securities shall be considered as a single class for purposes of any Acts of Holders under the Indenture. Without limiting the generality of the foregoing sentence, all Securities issued under this Indenture shall consent together on all matters as one class and no Securities will have the right to consent as a separate class on any matter.

SECTION 204.   Form of Trustee's Certificate of Authentication.

The Trustee's certificate of authentication shall be in substantially the form set forth below:

This is one of the Securities referred to in the within-mentioned Indenture.

JPMorgan Chase Bank,
as Trustee

By: _________________________________
Authorized Officer

SECTION 205.   Temporary Securities.

Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, with such appropriate insertions, omissions, substitutions and other variations as any officer executing such Securities may determine, as evidenced by such officer's execution of such Securities.

If temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities, upon surrender of the temporary Securities at the office or agency of the Company maintained pursuant to Section 302 in a Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor definitive Securities, of authorized denominations and of like tenor and aggregate principal amount.

Until exchanged in full as hereinabove provided, temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of like tenor authenticated and delivered hereunder.

SECTION 206.   Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept in one of the offices or agencies designated pursuant to Section 302, with respect to the Securities, a register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and the registration of transfer thereof. The Company shall designate one Person to maintain the Security Register for the Securities, and such Person is referred to herein, as the "Security Registrar". The Company hereby designates the Trustee at its Corporate Trust Office as the initial Security Registrar. Anything herein to the contrary notwithstanding, the Company may designate one of its offices or an office of any Affiliate as the office in which the Security Register with respect to the Securities shall be maintained, and the Company may designate itself or any Affiliate as the Security Registrar with respect to the Securities. The Security Register shall be open for inspection by the Trustee and the Company at all reasonable times.

Upon surrender for registration of transfer of any Security at the office or agency of the Company maintained pursuant to Section 302 in a Place of Payment for such Securities, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities, of authorized denominations and of like tenor and aggregate principal amount.

Any Security may be exchanged at the option of the Holder for one or more new Securities, of authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities, which the Holder making the exchange is entitled to receive.

All Securities delivered upon any registration of transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same obligation, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed or shall be accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 205, 207 or 1206 not involving any transfer.

SECTION 207.   Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the ownership of and the destruction, loss or theft of any Security and (b) such security or indemnity as may be reasonably required by them to save each of them and the Guarantor and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

Notwithstanding the foregoing, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section 207, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) in connection therewith.

Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone other than the Holder of such new Security, and any such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 208.   Payment of Interest; Interest Rights Preserved.

Unless otherwise provided as contemplated by Section 201 with respect to the Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the related Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a)   The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a date (a "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall promptly cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities at the address of such Holder as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date.

(b)   The Company may make payment of any Defaulted Interest on the Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section 208, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 209.   Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and (subject to Sections 206 and 208) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company, or the Trustee shall be affected by notice to the contrary.

SECTION 210.   Book-Entry Provisions for the Global Securities.

(a)   The Global Securities initially shall:

   (A)   be registered in the name of DTC (or a nominee thereof);

   (B)   be delivered to the Trustee as custodian for DTC;

   (C)   bear the Restricted Securities Legend set forth in Section 202(a)(1), unless, upon initial issue, such Restrictive Securities Legend is not required in accordance with Section 202(a)(2); and

   (D)   bear the Global Security Legend set forth in Section 202(b).

Members of, or participants in, DTC ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by DTC, or the Trustee as its custodian, or under such Global Security, and DTC may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the Company, the Trustee or any agent of the Company or Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and the Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(b)   The Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities.

(c)   A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary (or a nominee thereof), and no such transfer to any such other Person may be registered. Beneficial interests in a Global Security may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 211.

(d)   If at any time:

   (1)   DTC notifies the Company in writing that it is unwilling or unable to continue to act as Depositary for the Global Securities (including if DTC ceases to be registered as a "clearing agency" under the Exchange Act) and a successor depositary for the Global Securities is not appointed by the Company within 90 days of such notice; or

   (2)   the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Securities under this Indenture in exchange for all or any part of the Securities represented by a Global Security;

DTC shall surrender such Global Security or Global Securities to the Trustee for cancellation and the Company shall execute, and the Trustee, upon receipt of an Officer's Certificate and Company Order for the authentication and delivery of Securities, shall authenticate and deliver in exchange for such Global Security or Global Securities, Definitive Securities in an aggregate principal amount equal to the aggregate principal amount of such Global Security or Global Securities. Such Definitive Securities shall be registered in such names as the Depositary shall identify in writing as the beneficial owners of the Securities represented by such Global Security or Global Securities (or any nominee thereof).

(e)   Notwithstanding the foregoing, in connection with any transfer of beneficial interests in a Global Security to the beneficial owners thereof pursuant to Section 210(d), the Registrar shall reflect on its books and records the date and a decrease in the principal amount of such Global Security in an amount equal to the principal amount of the beneficial interests in such Global Security to be transferred.

(f)   No Obligation of the Trustee.

   (1)   The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, a member of, or a participant in, DTC or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Securities or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice or the payment of any amount or delivery of any Securities (or other security or property) under or with respect to such Securities. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Securities shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may rely and shall be fully protected in relying upon information furnished by DTC with respect to its members, participants and any beneficial owners.

   (2)   The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among DTC participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

SECTION 211.   Special Transfer Provisions.

Unless a Security is (i) transferred after the time period referred to in Rule 144(k) under the Securities Act, (ii) sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such sale), or (iii) exchanged for an Exchange Security in a Registered Exchange Offer, the following provisions shall apply to any sale, pledge or other transfer of Securities:

(a)   Transfer of Securities to a QIB.

The following provisions shall apply with respect to the registration of any proposed transfer of Securities to a QIB:

   (i)   If the Securities to be transferred consist of a beneficial interest in the Global Securities, the transfer of such interest may be effected only through the book-entry systems maintained by DTC.

   (ii)   If the Securities to be transferred consist of Definitive Securities, the Security Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Security stating (or has otherwise advised the Company and the Security Registrar in writing) that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed a certification stating or has otherwise advised the Company and the Security Registrar in writing that:

   (1)   it is purchasing the Securities for its own account or an account with respect to which it exercises sole investment discretion, in each case for investment and not with a view to distribution;

   (2)   it and any such account is a QIB within the meaning of Rule 144A;

   (3)   it is aware that the sale to it is being made in reliance on Rule 144A;

   (4)   it acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information; and

   (5)   it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A.

In addition, the Security Registrar shall reflect on its books and records the date and, if applicable, an increase in the principal amount of the Global Securities in an amount equal to the aggregate principal amount of the Definitive Securities to be transferred, and the Trustee shall cancel the Definitive Securities so transferred.

(b)   Transfer of Securities to an IAI. A form in substantially the form below shall be delivered to the Company in connection with any transfer of a Definitive Security to an IAI:

[Date]

PPL Capital Funding, Inc.
PPL Corporation
c/o JPMorgan Chase Bank, as Trustee
4 New York Plaza (15^th Floor),
New York, New York 10004
Attention: Institutional Trust Services

Dear Sirs:

      This certificate is delivered to request a transfer of $_________ principal amount of the 4.33% Notes Series A due 2009 (the "Securities") of PPL Capital Funding, Inc. (the "Company") fully and unconditionally guaranteed by PPL Corporation (the "Guarantor").

      Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

      Name: __________________________________

      Address: ________________________________

      Payment Instructions: _____________________

      Taxpayer ID Number: _____________________

      The undersigned represents and warrants to you that:

1.   We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")) purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Securities and we invest in or purchase securities similar to the Securities in the normal course of our business. We and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

2.   We understand that the Securities have not been registered under the Securities Act or the securities laws of any state or other jurisdiction and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Securities to offer, sell or otherwise transfer such Securities prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a to the Company or the Guarantor, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act, to a person we reasonably believe is a qualified institutional buyer as defined Rule 144A (a "QIB") under the Securities Act that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in a transaction involving a minimum principal amount of the Securities of $250,000, for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act, or (e) pursuant to another available exemption from the registration requirements of the Securities Act, subject to (x) the Company's right prior to any such offer, sale or transfer pursuant to clauses (d) or (e) to require the delivery of an opinion of counsel, certification and/or other information satisfactory to it and (y) in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (d) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act.

TRANSFEREE: ___________________________


BY: _____________________________________

(c)   Other Exchanges.

In the event that Global Securities are exchanged for Securities in definitive registered form pursuant to Section 210(d) prior to the completion of the Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Securities, such Securities may be exchanged only in accordance with the provisions of clause (a) above (including the certification requirements intended to ensure that such transfers comply with Rule 144A) and such other procedures as may from time to time be adopted by the Company.

(d)   General.

By its acceptance of any Security bearing the Restricted Securities Legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and agrees that it will transfer such Security only as provided in this Indenture. The Security Registrar shall not register a transfer of any Security unless such transfer complies with the restrictions on transfer of such Security set forth in this Indenture. The Security Registrar shall be entitled to receive and rely on written instructions from the Company verifying that such transfer complies with such restrictions on transfer. In connection with any transfer of Securities, each Holder agrees by its acceptance of the Securities to furnish the Security Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Security Registrar shall not be required to determine (but may rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information.

The Security Registrar shall retain copies of all certifications, letters, notices and other written communications received pursuant to Section 202 hereof or this Section 211. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Security Registrar.

SECTION 212.   Cancellation.

All Securities surrendered for payment or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and, if not theretofore canceled, shall be promptly canceled by the Trustee. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever or which the Company shall not have issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 212, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of in accordance with the Trustee's customary procedures, and the Trustee shall promptly deliver a certificate of disposition to the Company unless, by a Company Order, the Company shall direct that canceled Securities be returned to it.

SECTION 213.   Computation of Interest.

Interest on the Securities of each series shall be computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months, and with respect to any period less than a full calendar month, on the basis of the actual number of days elapsed during such period.

ARTICLE THREE

COVENANTS

SECTION 301.   Payment of Principal and Interest.

The Company shall pay the principal of, and interest on, the Securities in accordance with the terms of the Securities and this Indenture. Whenever in this Indenture there is mentioned, in any context, the payment of interest on any Security, such mention shall be deemed to include mention of the payment of Additional Interest to the extent that, in such context, Additional Interest are, were or would be payable in respect thereof pursuant to the provisions of the Registration Rights Agreement and express mention of the payment of Additional Interest (if applicable) in any provisions hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.

SECTION 302.   Maintenance of Office or Agency.

The Company shall maintain in each Place of Payment for the Securities, an office or agency where payment of such Securities shall be made or surrendered for payment, where registration of transfer or exchange of Securities may be effected and where notices and demands to or upon the Company in respect of Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency and prompt notice to the Holders of any such change in the manner specified in Section 106. If at any time the Company shall fail to maintain any such required office or agency in respect of Securities or shall fail to furnish the Trustee with the address thereof, payment of Securities may be made, Securities may be surrendered for registration of transfer or exchange thereof may be effected and notices and demands in respect thereby may be served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent for all such purposes in any such event.

The Company may also from time to time designate one or more other offices or agencies with respect to the Securities for any or all of the foregoing purposes and may from time to time rescind such designations; provided, however, that, no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes in each Place of Payment for such Securities in accordance with the requirements set forth above. The Company shall give prompt written notice to the Trustee, and prompt notice to the Holders in the manner specified in Section 106, of any such designation or rescission and of any change in the location of any such other office or agency.

The Guarantor shall maintain in each Place of Payment for the Securities, an office or agency where payment of the Guarantees shall be made and where notices and demands to or upon the Guarantor in respect of the Guarantees and this Indenture may be served. The Guarantor shall give prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency and prompt notice to the Holders of any such change in the manner specified in Section 106. If at any time the Guarantor shall fail to maintain any such required office or agency in respect of the Guarantees or shall fail to furnish the Trustee with the address thereof, payment of the Guarantees may be made and notices and demands in respect thereby may be served at the Corporate Trust Office of the Trustee, and the Guarantor hereby appoints the Trustee as its agent for all such purposes in any such event.

The Guarantor may also from time to time designate one or more other offices or agencies with respect to the Guarantees for any or all of the foregoing purposes and may from time to time rescind such designations; provided, however, that, no such designation or rescission shall in any manner relieve the Guarantor of its obligation to maintain an office or agency for such purposes in each Place of Payment for the Guarantees in accordance with the requirements set forth above. The Guarantor shall give prompt written notice to the Trustee, and prompt notice to the Holders in the manner specified in Section 106, of any such designation or rescission and of any change in the location of any such other office or agency.

Anything herein to the contrary notwithstanding, any office or agency required by this Section 302 may be maintained at an office of the Company or any Affiliate of the Company, in which event the Company or such Affiliate, as the case may be, shall perform all functions to be performed at such office or agency.

The Company and the Guarantor hereby appoint the Trustee at its Corporate Trust Office as agent for all the foregoing purposes.

SECTION 303.   Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent with respect to the Securities, it shall, on or before each due date of the principal of or interest, if any, on any of such Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and shall promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for the Securities, it shall, prior to each due date of the principal of or interest, if any, on such Securities, deposit with such Paying Agents sums sufficient (without duplication) to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of its action or failure so to act.

The Company shall cause each Paying Agent for the Securities, other than the Company or the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 303, that such Paying Agent shall:

(a)   hold all sums held by it for the payment of the principal of, or interest, if any, on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(b)   give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal of, or interest on, the Securities; and

(c)   at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent and, if as stated in a Company Order delivered to the Trustee, in accordance with the provisions of Article Five; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest, if any, on any Security and remaining unclaimed for two years after such principal, or interest has become due and payable shall be paid to the Company on Company Request, or, if then held by the Company, shall be discharged from such trust; and, upon such payment or discharge, the Holder of such Security shall thereafter, as an unsecured general creditor and not as the Holder of an Outstanding Security, look only to the Company for payment of the amount so due and payable and remaining unpaid, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment to the Company, may at the expense of the Company, either (a) cause to be mailed, on one occasion only, notice to such Holder that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be paid to the Company or (b) cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to the Company.

SECTION 304.   Existence as a Corporation.

Subject to the rights of the Company under Article Eleven, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

SECTION 305.   Annual Officer's Certificate.

Not later than March 1 in each year, commencing March 1, 2005, the Company and the Guarantor shall deliver to the Trustee an Officer's Certificate which need not comply with Section 102, and which need only be executed by its principal executive officer, principal financial officer or principal accounting officer, as to such officer's knowledge of such obligor's compliance with all conditions and covenants under this Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under this Indenture.

ARTICLE FOUR

REDEMPTION OF SECURITIES

SECTION 401.   No Right of Redemption.

The Securities are not subject to redemption.

ARTICLE FIVE

SATISFACTION AND DISCHARGE

SECTION 501.   Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further effect (except as hereinafter expressly provided), and the Trustee, at the expense of the Company, shall execute such instruments as the Company shall reasonably request to evidence and acknowledge the satisfaction and discharge of this Indenture, when:

(a)   no Securities remain Outstanding hereunder; and

(b)   the Company has paid or caused to be paid all other sums payable hereunder by the Company.

Notwithstanding the satisfaction and discharge of this Indenture as aforesaid, the obligations of the Company and the Trustee under Sections 205, 206, 207, 302, 303, 707 and 714 and this Article shall survive.

Upon satisfaction and discharge of this Indenture as provided in this Section 501, the Trustee shall turn over to the Company any and all money, securities and other property then held by the Trustee for the benefit of the Holders of the Securities (except for money held pursuant to the last paragraph of Section 303) and shall execute and deliver to the Company such instruments as, in the judgment of the Company, shall be necessary, desirable or appropriate to effect or evidence the satisfaction and discharge of this Indenture.

ARTICLE SIX

EVENTS OF DEFAULT; REMEDIES

SECTION 601.   Events of Default.

"Event of Default", means any one of the following events:

(a)   the Company defaults in the payment of any interest on any Security when it becomes due and payable and continuance of such default for a period of 30 days; or

(b)   the Company defaults in the payment of the principal of any Security when it becomes due and payable at its Stated Maturity or upon acceleration; or

(c)   default in the performance of, or breach of, any covenant or warranty of the Company or the Guarantor in this Indenture (other than a covenant or warranty a default in the performance of which or breach of which is elsewhere in this Section 601 specifically dealt with) and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company or the Guarantor, as applicable, by the Trustee, or to the Company or the Guarantor, as applicable, and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Trustee, or the Holders of a principal amount of Securities not less than the principal amount of Securities the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Holders of such principal amount of Securities, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company or the Guarantor within such period and is being diligently pursued; or

(d)   the Guarantee (i) ceases to be effective (except in accordance with its terms); or (ii) is found in any judicial proceeding to be unenforceable or invalid; or (iii) is denied or disaffirmed by the Guarantor; or

(e)   the entry by a court having jurisdiction in the premises of (1) a decree or order for relief in respect of the Company or the Guarantor in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (2) a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the Company or the Guarantor seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company or the Guarantor or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for relief or any such other decree or order shall have remained unstayed and in effect for a period of 60 consecutive days; or

(f)   the commencement by the Company or the Guarantor of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or the Guarantor to the entry of a decree or order for relief in respect of the Company or the Guarantor in a case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or the Guarantor, or the filing by the Company or the Guarantor of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by the Company or the Guarantor to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or the Guarantor or of any substantial part of its property, or the making by the Company or the Guarantor of an assignment for the benefit of creditors, or the admission by the Company or the Guarantor in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors of the Company or the Guarantor, as the case may be.

SECTION 602.   Acceleration of Stated Maturity; Rescission and Annulment.

If an Event of Default shall have occurred and be continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the principal amount of all of the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon receipt by the Company of notice of such declaration such principal amount shall become immediately due and payable.

At any time after such a declaration of acceleration with respect to the Securities shall have been made and before a judgment or decree for payment of the money due shall have been obtained by the Trustee as hereinafter in this Article provided, such declaration and its consequences shall, without further act, be deemed to have been rescinded and annulled, if

(a)   the Company shall have paid or deposited with the Trustee a sum sufficient to pay:

   (1)   all overdue interest, if any, on all Outstanding Securities;

   (2)   the principal on any Outstanding Securities which have become due otherwise than by such declaration of acceleration and overdue interest thereon;

   (3)   to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities;

   (4)   all amounts due to the Trustee under Section 707;

and

(b)   all Events of Default with respect to the Securities, other than the nonpayment of the principal of Securities which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 613.

No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon.

SECTION 603.   Collection of Indebtedness and Suits for Enforcement by Trustee.

If an Event of Default described in clause (a) or (b) of Section 601 shall have occurred, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities, the whole amount then due and payable on the Securities for principal and interest, with interest on any overdue principal and interest, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 707.

If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

If an Event of Default with respect to the Securities shall have occurred and be continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 604.   Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(a)   to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due to the Trustee under Section 707) and of the Holders allowed in such judicial proceeding, and

(b)   to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amounts due it under Section 707.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, be a member of a creditors' or similar other committee.

SECTION 605.   Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered.

SECTION 606.   Application of Money Collected.

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, to the extent permitted by law, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or interest upon presentation of the Securities in respect of which or for the benefit of which such money shall have been collected and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

First: To the payment of all amounts due the Trustee under Section 707;

Second: To the payment of the amounts then due and unpaid upon the Securities for principal and interest in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively;

Third: To the payment of the remainder, if any, to the Company or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

SECTION 607.   Limitation on Suits.

No Holder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a)   such Holder shall have previously given written notice to the Trustee of a continuing Event of Default;

(b)   the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c)   such Holder or Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d)   the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding; and

(e)   no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.

SECTION 608.   Unconditional Right of Holders to Receive Principal and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of, and (subject to Section 208) interest on, such Security on the Stated Maturity and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 609.   Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Guarantor, the Trustee and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.

SECTION 610.   Rights and Remedies Cumulative.

Except as otherwise provided in the last paragraph of Section 207, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 611.   Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 612.   Control by Holders of Securities.

If an Event of Default shall have occurred and be continuing, the Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that

(a)   such direction shall not be in conflict with any rule of law or with this Indenture, and

(b)   may not involve the Trustee in personal liability in circumstances where indemnity would not, in the Trustee's sole discretion, be adequate.

SECTION 613.   Waiver of Past Defaults.

The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all of the Securities waive any past default hereunder and its consequences, except a default

(a)   in the payment of the principal or interest, or

(b)   in respect of a covenant or provision hereof which under Section 1202 cannot be modified or amended without the consent of the Holder of each Outstanding Security.

Upon any such waiver, such default shall cease to exist, and any and all Events of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 614.   Undertaking for Costs.

The Company and the Trustee agree, and each Holder by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant, in each case in the manner, to the extent, and subject to the exceptions provided in the Trust Indenture Act; provided that the provisions of this Section 614 shall not be deemed to authorize any court to require such an undertaking in and shall not apply to, any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of, or interest, if any, on any Security on or after the Stated Maturity expressed in such Security.

SECTION 615.   Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SEVEN

THE TRUSTEE

SECTION 701.   Certain Duties and Responsibilities.

(a)   Except during the continuance of an Event of Default,

   (1)   the Trustee undertakes to perform, such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

   (2)   in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.

(b)   In case an Event of Default shall have occurred and be continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

(c)   No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that

   (1)   this subsection shall not be construed to limit the effect of subsection (a) of this Section 701;

   (2)   the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(3)   the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities, as provided herein, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and

(4)   no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(d)   Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

SECTION 702.   Notice of Defaults.

The Trustee shall give notice of any default hereunder to the Holders of the Securities in the manner and to the extent required to do so by the Trust Indenture Act, unless such default shall have been cured or waived; provided, however, that in the case of any default of the character specified in Section 601(c), no such notice to Holders shall be given until at least 45 days after the occurrence thereof. For the purpose of this Section 702, the term "default" means any event which is, or after notice or lapse of time, or both, would become, an Event of Default with respect to the Securities.

SECTION 703.   Certain Rights of Trustee.

Subject to the provisions of Section 701 and to the applicable provisions of the Trust Indenture Act:

(a)   the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)   any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, as the case may be, or as otherwise expressly provided herein, and any resolution of the Board of Directors of the Company or the Guarantor, as the case may be, may be sufficiently evidenced by a Board Resolution thereof;

(c)   whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate of the Company or the Guarantor;

(d)   the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e)   the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any Holder pursuant to this Indenture, unless such Holder shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f)   the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall (subject to applicable legal requirements) be entitled to examine, during normal business hours, the books, records and premises of the Company, personally or by agent or attorney;

(g)   the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(h)   the Trustee shall not be charged with knowledge of any Event of Default unless either (1) a Responsible Officer of the Trustee assigned to the Corporate Trust Office of the Trustee (or any successor division or department of the Trustee) shall have actual knowledge of the Event of Default or (2) written notice of such Event of Default shall have been given to the Trustee by the Company or any other obligor on the Securities, or by any Holder of the Securities; and

(i)   the Trustee shall not be charged with knowledge of the commencement of any period during which Additional Interest is to accrue or of the termination of any such period or as to the amount of any such Additional Interest payable at any time and may rely conclusively on an Officer's Certificate of the Company as to such matters, which Officer's Certificate the Company agrees to provide the Trustee upon the commencement or termination of any such period and prior to any date that such Additional Interest is payable.

SECTION 704.   Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) shall be taken as the statements of the Company and the Guarantor and neither the Trustee nor any Authenticating Agent assumes responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company or the Guarantor of Securities or the proceeds thereof.

SECTION 705.   May Hold Securities.

Each of the Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or the Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 708 and 713, may otherwise deal with the Company or the Guarantor with the same rights it would have if it were not the Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

SECTION 706.   Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under no liability for interest on or investment of any money received by it hereunder except as expressly provided herein or otherwise agreed with, and for the sole benefit of, the Company.

SECTION 707.   Compensation and Reimbursement.

The Company agrees:

(a)   to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b)   except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and

(c)   to indemnify the Trustee and hold it harmless from and against, any loss, liability or expense reasonably incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such.

SECTION 708.   Disqualification; Conflicting Interests.

If the Trustee shall have or acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting interest or resign to the extent, in the manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and this Indenture. To the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest under Section 310(b)(1) thereof by virtue of being a trustee under this Indenture and under the following indentures: the Indenture dated as of November 1, 1997 with the Company and the Guarantor, and the Indenture dated as of May 21, 2003 with PPL Energy Supply, LLC and the Guarantor.

SECTION 709.   Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be:

(a)   a corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal, state or District of Columbia authority, or

(b)   if and to the extent permitted by the Commission by rule, regulation or order upon application, a corporation or other Person organized and doing business under the laws of a foreign government, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 or the Dollar equivalent of the applicable foreign currency and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees,

and, in either case, qualified and eligible under this Article Seven and the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 709, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 709 and the Trust Indenture Act, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Seven.

SECTION 710.   Resignation and Removal; Appointment of Successor.

(a)   No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article Seven shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 711.

(b)   The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 711 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(c)   The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Trustee and the Company.

(d)   If at any time:

   (1)   the Trustee shall fail to comply with Section 708 after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months, or

   (2)   the Trustee shall cease to be eligible under Section 709 or Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Company or by any such Holder, or

   (3)   the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (x) the Company by Board Resolution may remove the Trustee or (y) subject to Section 614, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e)   If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause (other than as contemplated by clause (y) in subsection (d) or this Section), the Company, by Board Resolution, shall promptly appoint a successor Trustee (it being understood that at any time there shall be only one Trustee) and shall comply with the applicable requirements of Section 711. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 711, become the successor Trustee and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 711, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f)   The Company shall give notice of each resignation and each removal of the Trustee or Authenticating Agent and each appointment of a successor Trustee or Authenticating Agent to all Holders of Securities in the manner provided in Section 106. Each notice shall include the name of the successor Trustee or Authenticating Agent and the address of its Corporate Trust Office.

SECTION 711.   Acceptance of Appointment by Successor.

(a)   In case of the appointment hereunder of a successor Trustee, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; provided, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all sums owed to it, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b)   Upon request of any such successor Trustee, the Company shall execute any instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in subsection (a) of this Section.

(c)   No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

(d)   The obligations of the Company under Section 707 shall survive the resignation or removal of the Trustee.

SECTION 712.   Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

SECTION 713.   Preferential Collection of Claims Against Company.

If the Trustee shall be or become a creditor of the Company or any other obligor upon the Securities (other than by reason of a relationship described in Section 311(b) of the Trust Indenture Act), the Trustee shall be subject to any and all applicable provisions of the Trust Indenture Act regarding the collection of claims against the Company, or such other obligor. For purposes of Section 311(b) of the Trust Indenture Act (a) the term "cash transaction" shall have the meaning provided in Rule 11b-4 under the Trust Indenture Act, and (b) the term "self-liquidating paper" shall have the meaning provided in Rule 11b-6 under the Trust Indenture Act.

SECTION 714.   Appointment of Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issuance, exchange or registration of transfer thereof or pursuant to Section 207, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any state or territory thereof or the District of Columbia or the Commonwealth of Puerto Rico, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.

The provisions of Sections 209, 704 and 705 shall be applicable to each Authenticating Agent.

If an Authenticating Agent is appointed pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form:

This is one of the Securities referred to in the within-mentioned Indenture:

JPMorgan Chase Bank,
as Trustee

By: _______________________,
as Authenticating Agent

By: ________________________
Authorized Signatory

ARTICLE EIGHT

GUARANTEE

SECTION 801.   Guarantee.

The Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to each Holder of the Securities and the Trustee (i) the full and punctual payment when due, whether at maturity, by acceleration or otherwise, of the principal of, and interest on, the Securities and all other monetary obligations of the Company under this Indenture (all the foregoing payments and obligations being hereinafter collectively called the "Obligations"). The Guarantee will be unsecured debt of the Guarantor, not subordinated by its terms to any other obligations of the Guarantor. The Guarantor further agrees (to the extent permitted by law) that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article Eight notwithstanding any extension or renewal of any Obligation.

The Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment. The Guarantor waives notice of any default under the Securities or the Obligations. The obligations of the Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; or (e) any change in the ownership of the Company.

The Guarantor further agrees that the Guarantee herein constitutes a guarantee of payment when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Obligations.

The obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment or performance of the Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of the Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Guarantor or would otherwise operate as a discharge of the Guarantor as a matter of law or equity.

The Guarantor further agrees that the Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, or interest on any of the Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against the Guarantor by virtue hereof, upon the failure of the Company to pay any of the Obligations when and as the same shall become due, whether at maturity, by acceleration or otherwise, the Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid interest on such Obligations then due and owing (but only to the extent not prohibited by law).

The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of the Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Guarantee.

The Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys' fees) incurred by the Trustee or the Holders in enforcing any rights under this Section 801.

SECTION 802.   Subrogation.

Notwithstanding any payment or payments made by the Guarantor hereunder, the Guarantor shall not be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Company in respect of payments made by the Guarantor hereunder, until all amounts owing to the Trustee and the Holders, by the Company on account of the Obligations are paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Trustee and the Holders, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Trustee in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Trustee, if required), to be applied against the Obligations.

SECTION 803.   Consideration.

The Guarantor has received, or will receive, direct or indirect benefits from the making of the Guarantee.

ARTICLE NINE

CONSOLIDATION, MERGER, CONVEYANCE OR OTHER
TRANSFER OF GUARANTOR

SECTION 901.   Guarantor May Consolidate, Etc., Only on Certain Terms.

The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless

(a)   the Person formed by such consolidation or into which the Guarantor is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Guarantor, substantially as an entirety shall be a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the Guarantee under Section 801 and the performance of every obligation of the Guarantor under this Indenture on the part of the Guarantor to be performed or observed;

(b)   immediately after giving effect to such transaction, no Event of Default with respect to the Guarantor, and no event which, after notice or lapse of time or both, would become an Event of Default with respect to the Guarantor, shall have occurred and be continuing; and

(c)   the Guarantor shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance or other transfer or lease and such indenture supplemental hereto complies with this Article and that all conditions precedent herein provided for relating to such transactions have been complied with.

SECTION 902.   Successor Person Substituted.

Upon any consolidation by the Guarantor with or merger by the Guarantor into any other Person or any conveyance or other transfer or lease of the properties and assets of the Guarantor substantially as an entirety in accordance with Section 901, the successor Person formed by such consolidation or into which the Guarantor is merged or the Person to which such conveyance, or other transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Guarantor herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of and released from all obligations under the Guarantee pursuant to this Indenture, this Indenture and the Securities Outstanding hereunder (unless the predecessor Person shall have delivered to the Trustee an instrument waiving such relief and release), and the Trustee shall acknowledge in writing that the predecessor Person has been so relieved and released.

SECTION 903.   Limitations.

For purposes of clarification and not in limitation of the provisions of Section 901, nothing in this Indenture shall be deemed to prevent or restrict:

(a)   any consolidation or merger after the consummation of which the Guarantor would be the surviving or resulting corporation, or

(b)   any conveyance or other transfer, or lease of any part of the properties of the Guarantor which does not constitute the entirety, or substantially the entirety, thereof, or

(c)   the approval by the Guarantor of, or the consent by the Guarantor to, any consolidation or merger of any direct or indirect subsidiary or affiliate of the Guarantor, or any conveyance, transfer or lease by any such subsidiary or affiliate of any of its assets.

ARTICLE TEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 1001.   Lists of Holders.

Semiannually, not later than March 1 and September 1 in each year, and at such other times as the Trustee may request in writing, the Company shall furnish or cause to be furnished to the Trustee information as to the names and addresses of the Holders, and the Trustee shall preserve such information and similar information received by it in any other capacity and afford to the Holders access to information so preserved by it, all to such extent, if any, and in such manner as shall be required by the Trust Indenture Act; provided, however, that no such list need be furnished so long as the Trustee shall be the Security Registrar.

SECTION 1002.   Reports by Trustee and Company.

The Trustee shall transmit to the Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the time and in the manner provided pursuant thereto. Reports so required to be transmitted at stated intervals of not more than 12 months shall be transmitted no later than July 15 in each calendar year with respect to the 12-month period ending on the preceding May 15, commencing May 15, 2004. A copy of each such report shall, at the time of such transmission to the Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange.

The Company and the Guarantor shall file with the Trustee (within thirty (30) days after filing with the Commission in the case of reports that pursuant to the Trust Indenture Act must be filed with the Commission and furnished to the Trustee) and transmit to the Holders, such other information, reports and other documents, if any, at such times and in such manner, as shall be required by the Trust Indenture Act.

ARTICLE ELEVEN

CONSOLIDATION, MERGER, CONVEYANCE
OR OTHER TRANSFER OF THE COMPANY

SECTION 1101.   Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless

(a)   the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company, substantially as an entirety shall be a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of, and interest on, all Outstanding Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(b)   immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(c)   the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance or other transfer or lease and such indenture supplemental hereto complies with this Article Eleven and that all conditions precedent herein provided for relating to such transactions have been complied with.

SECTION 1102.   Successor Person Substituted.

Upon any consolidation by the Company with or merger by the Company into any other Person or any conveyance or other transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 1101, the successor Person formed by such consolidation or into which the Company is merged or the Person to which such conveyance, or other transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of and released from all obligations and covenants under this Indenture and the Securities Outstanding hereunder (unless the predecessor Person shall have delivered to the Trustee an instrument waiving such relief and release), and the Trustee shall acknowledge in writing that the predecessor Person has been so relieved and released.

SECTION 1103.   Limitations.

For purposes of clarification and not in limitation of the provisions of Section 1101, nothing in this Indenture shall be deemed to prevent or restrict:

(a)   any consolidation or merger after the consummation of which the Company would be the surviving or resulting corporation, or

(b)   any conveyance or other transfer, or lease of any part of the properties of the Company which does not constitute the entirety, or substantially the entirety, thereof, or

(c)   the approval by the Company of, or the consent by the Company to, any consolidation or merger of any direct or indirect subsidiary or affiliate of the Company, or any conveyance, transfer or lease by any such subsidiary or affiliate of any of its assets.

ARTICLE TWELVE

SUPPLEMENTAL INDENTURES

SECTION 1201.   Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, the Guarantor and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(a)   to evidence the succession of another Person to the Company or the Guarantor, as the case may be, and the assumption by any such successor of the covenants of the Company or the guarantees of the Guarantor, as the case may be, herein and in the Securities or the guarantees of the Guarantor, as the case may be, all as provided in Articles Nine and Eleven; or

(b)   to add one or more covenants of the Company or the Guarantor or other provisions for the benefit of the Holders of the Securities or to surrender any right or power herein conferred upon the Company or the Guarantor; or

(c)   to add any additional Events of Default hereunder; or

(d)   to change or eliminate any provision of this Indenture or to add any new provision to this Indenture; provided, however, that if such change, elimination or addition shall adversely affect the interests of the Holders of Securities Outstanding on the date of such supplemental indenture in any material respect, such change, elimination or addition shall become effective with respect to the Securities only pursuant to the provisions of Section 1202 hereof; or

(e)   to provide collateral security for the Securities; or

(f)   to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of, the Holders thereof, and for any and all other matters incidental thereto; or

(g)   to evidence and provide for the acceptance of appointment hereunder by a successor Trustee; or

(h)   to provide for the procedures required to permit the Company to utilize, at its option, a non certificated system of registration for the Securities; or

(i)   to change any place or places where (1) the principal of, and interest on, the Securities shall be payable, (2) the Securities may be surrendered for registration of transfer, (3) the Securities may be surrendered for exchange and (4) notices and demands to or upon the Company or the Guarantor in respect of the Securities and this Indenture may be served; or

(j)   to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other changes to the provisions hereof or to add other provisions with respect to matters or questions arising under this Indenture, provided that such other changes or additions shall not adversely affect the interests of the Holders of Securities in any material respect.

Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the execution and delivery of this Indenture or at any time thereafter shall be amended and

(x)   if any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company, the Guarantor and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to evidence such amendment hereof; or

(y)   if any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof which, at the date of the execution and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein or are contained herein to reflect any provision of the Trust Indenture Act as in effect at such date, this Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company, the Guarantor and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to this Indenture to effect such changes or elimination or evidence such amendment.

SECTION 1202.   Supplemental Indentures With Consent of Holders.

Subject to the provisions of Section 1201, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities under this Indenture by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, the Guarantor, when authorized by an Officer's Certificate, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture; and provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security so directly affected,

(a)   change the Stated Maturity of the principal of, or any installment of principal of, or interest on, any Security (other than pursuant to the terms thereof), or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the coin or currency (or other property), in which any Security or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof, or

(b)   reduce the percentage in principal amount of the Outstanding Securities, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of any default hereunder and its consequences, or

(c)   modify any of the provisions of this Section 1202, or Section 613 with respect to the Securities, except to increase the percentages in principal amount referred to in this Section or such other Sections or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby.

It shall not be necessary for any Act of Holders under this Section 1202 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 1203.   Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article Twelve or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 701) shall be fully protected in relying upon, an Opinion of Counsel and an Officer's Certificate stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise.

SECTION 1204.   Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article Twelve this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Any supplemental indenture permitted by this Article Twelve may restate this Indenture in its entirety, and, upon the execution and delivery thereof, any such restatement shall supersede this Indenture as theretofore in effect for all purposes.

SECTION 1205.   Conformity With Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.

SECTION 1206.   Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article Twelve may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities, so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company, and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE THIRTEEN

IMMUNITY OF STOCKHOLDERS, OFFICERS AND DIRECTORS

SECTION 1301.   Liability Limited.

No recourse shall be had for the payment of the principal of, or interest on, any Securities or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under this Indenture, against any officer, stockholder or director, as such, past, present or future of the Company, the Guarantor or of any predecessor or successor of the Company or the Guarantor (either directly or through the Company, the Guarantor or a predecessor or successor of the Company or the Guarantor), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. It being expressly agreed and understood that this Indenture and all the Securities are solely obligations of the Company, and the Guarantee is solely the obligation of the Guarantor and that no personal liability whatsoever shall attach to, or be incurred by, officer, stockholder or director, past, present or future, of the Company, the Guarantor or of any predecessor or successor of the Company or the Guarantor, either directly or indirectly through the Company, the Guarantor or any predecessor or successor of the Company or the Guarantor, because of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or to be implied herefrom or therefrom, and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities.

_________________________

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, as of the day and year first above written.

PPL CAPITAL FUNDING, INC.


By:_____________________________
Name: James E. Abel
Title: Treasurer

PPL CORPORATION


By:_____________________________
Name: James E. Abel
Title: Vice President-Finance and Treasurer

JPMORGAN CHASE BANK,
as Trustee


By:_____________________________
Name:
Title:

[FORM OF FACE OF SECURITY]

[Global Legend, if applicable]

[Restrictive Securities Legend, if applicable]

PPL CAPITAL FUNDING, INC.
4.33% Note [Series A] [Exchange Series A] due 2009
Fully and Unconditionally Guaranteed by PPL CORPORATION

Original Issue Date:	February 26, 2004
Stated Maturity:	March 1, 2009
Interest Rate:	4.33%
Interest Payment Dates:	March 1 and September 1
Regular Record Dates:	February 15 and August 15 (whether or not a Business Day), except that when the Securities are represented by a Global Security, one Business Day prior to the Interest Payment Date

Principal Amount $	No.
	CUSIP

PPL CAPITAL FUNDING, INC., a Delaware corporation (herein called the "Company," which term includes any successor under the Indenture referred to below), for value received, hereby promises to pay to             , or registered assigns, the principal sum of              DOLLARS ($ ) [Insert in Global Securities - or such other principal amount as shall be set forth in the Schedule of Increases or Decreases in Global Security attached hereto], on the Stated Maturity shown above and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on each Interest Payment Date as specified above, commencing on September 1, 2004 and on the Stated Maturity at the rate per annum shown above (the "Interest Rate") until the principal hereof is paid or made available for payment and on any overdue principal and on any overdue installment of interest. In addition, Additional Interest may accrue on this Security in the circumstances described in the Registration Rights Agreement. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this 4.33% Note [Series A] [Exchange Series A] due 2009 (this "Security") is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of the Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Securities shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.

Payments of interest on this Security will include interest accrued to but excluding the respective Interest Payment Dates. Payments of interest for this Security shall be computed and paid on the basis of a 360-day year consisting of twelve 30-day months and will accrue from February 26, 2004 or from the most recent Interest Payment Date to which interest has been paid or duly provided for. In the event that any date on which interest is payable on this Security is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. "Business Day" means any day, other than a Saturday or Sunday, that is not a day on which banking institutions or trust companies are generally authorized or required by law, regulation or executive order to close in The City of New York or other city in which any Paying Agent is located.

Payment of principal of and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

The Securities shall not be subject to redemption.

The Securities shall not have a sinking fund.

The Securities shall constitute the direct unsecured and unsubordinated debt obligations of the Company and shall rank equally in priority with the Company's existing and future unsecured and unsubordinated indebtedness.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

PPL CAPITAL FUNDING, INC.


By:  ___________________________
Name:
Title:

TRUSTEE'S CERTIFICATE OF
AUTHENTICATION

This is one of the Securities referred to in
the within-mentioned Indenture.

JPMORGAN CHASE BANK,
as Trustee,

By:____________________________
Authorized Officer

Date:

(Reverse of Security)

4.33% Note [Series A] [Exchange Series A] due 2009

1. This 4.33% Note [Series A] [Exchange Series A] due 2009 is one of a duly authorized issue of Securities of the Company (the "Securities"), issued and issuable under an Indenture, dated as of February 26, 2004 (the "Indenture"), between the Company, PPL Corporation, as guarantor (the "Guarantor"), and JPMorgan Chase Bank, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Securities issued thereunder and of the terms upon which said Securities are, and are to be, authenticated and delivered. The 4.33% Notes Series A due 2009 issued on the Original Issue Date are issuable in the aggregate principal amount of $201,000,000. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

2. To guarantee the full and punctual payment of the principal of, and interest on, the Securities and all other amounts payable by the Company under the Indenture and the Securities when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Securities and the Indenture, the Guarantor has unconditionally guaranteed such obligations pursuant to the terms of the Indenture. The Guarantee is an unsecured and unsubordinated obligation of the Guarantor and ranks equally with all other unsecured and unsubordinated indebtedness and obligations of the Guarantor.

3. Principal, and interest on Definitive Securities shall be payable in immediately available funds at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee; provided, that interest and Additional Interest, if any, on Definitive Securities will be payable at the Company's option (A) to Holders having an aggregate principal amount of Securities of $2,000,000 or less, by check mailed to the Holders of such Securities at the address therefore in the Security Register and (B) to Holders having an aggregate principal amount of Securities of more than $2,000,000, either by check mailed to each such Holder at the address therefore in the Security Register or, upon application by any such Holder to the Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder's account within the United States specified in such application, which application shall remain in effect until the Holder notifies, in writing, the Security Registrar to the contrary.

4. Initially, JPMorgan Chase Bank will act as Trustee, Paying Agent and Security Registrar. The Company may appoint and change any Paying Agent, Security Registrar or co-registrar without notice to any Holder. The Guarantor, the Company or any other Subsidiary of the Guarantor or the Company may act as Paying Agent, Security Registrar or co-registrar.

5. The Securities are in registered form without coupons in denominations of $1,000 and multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Security Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.

6. The registered Holder of this Security may be treated as the owner of it for all purposes (subject to Section 208 of the Indenture).

7. The Trustee and the Paying Agent shall return to the Company upon Company Request any money or property held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such payment to the Company, may at the expense of the Company, either (a) cause to be mailed, on one occasion only, notice to such Holder that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be paid to the Company or (b) cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be paid to the Company.

8. The Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities; provided, however, that the consent of each Holder affected is required to (i) change the stated maturity of the principal or interest on the Security, or reduce the principal amount or interest payable or change the currency in which the Securities are payable, or impair the right to bring suit to enforce any payment, (ii) reduce the percentage of holders whose consent is required for any supplemental indenture or waiver, or (iii) modify the provisions of the Indenture relating to supplemental indentures and waivers of past defaults.

9. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Guarantor and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Articles Nine and Eleven of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add additional provisions for the benefit of the Holders, or to add additional covenants of the Company or the Guarantor, or surrender rights and powers conferred on the Company or the Guarantor, or to comply with any request of the Commission in connection with qualifying the Indenture under the Trust Indenture Act, or to make any change that does not adversely affect the rights of any Holder.

10. Subject to certain exceptions set forth in the Indenture, any default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Holder affected) may be waived with the written consent of the Holders of a majority in principal amount of the then outstanding Securities.

11. Under the Indenture, Events of Default include (1) default for 30 days in payment of interest when due on the Securities; (2) default in payment of principal on the Securities at Stated Maturity, upon declaration or otherwise; (3) default in the performance of, or breach of, any covenant or warranty of the Company or the Guarantor in the Indenture and continuance of such default or breach for a period of 90 days after there has been given, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default"; (4) the Guarantee (i) ceases to be effective (except in accordance with its terms); or (ii) is found in any judicial proceeding to be unenforceable or invalid; or (iii) is denied or disaffirmed by the Guarantor; (5) certain events of bankruptcy, insolvency or reorganization of the Company or the Guarantor (the "bankruptcy events"). However, a default under clause (3) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Securities notify the Company or the Guarantor, as the case may be, of the default and the Company or the Guarantor, as the case may be, does not cure such default within the time specified in clause (3) hereof after receipt of such notice.

12. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities by written notice to the Company to be due and payable immediately.

13. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives indemnity or security reasonably satisfactory to the Trustee. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default or Event of Default (except a default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest.

14. Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

15. No recourse shall be had for the payment of the principal of, or interest on, any Securities or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under this Indenture, against any officer, stockholder or director, as such, past, present or future of the Company, the Guarantor or of any predecessor or successor of the Company or the Guarantor (either directly or through the Company, the Guarantor or a predecessor or successor of the Company or the Guarantor), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. It being expressly agreed and understood that this Indenture and all the Securities are solely obligations of the Company, and the Guarantees are solely obligations of the Guarantor and that no personal liability whatsoever shall attach to, or be incurred by, officer, stockholder or director, past, present or future, of the Company, the Guarantor or of any predecessor or successor of the Company or the Guarantor, either directly or indirectly through the Company, the Guarantor or any predecessor or successor of the Company or the Guarantor, because of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or to be implied herefrom or therefrom, and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities.

16. This Security shall not be valid until an authorized officer of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Security.

This Security shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture. Requests may be made to:

PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Attention: Vice President-Finance and Treasurer

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

_____________________________________________________
(Print or type assignee's name, address and zip code)

__________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint ___________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

_____________________________________________________________________________________________

Date:____________________           Your Signature: _________________________

Signature Guarantee:_____________________________________________________
                                          (Signature must be guaranteed)

_____________________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

[In connection with any transfer or exchange of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

[   ]	1	acquired for the undersigned's own account, without transfer; or
[   ]	2	transferred to the Company; or
[   ]	3	transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"); or
[   ]	4	transferred pursuant to an effective registration statement under the Securities Act; or
[   ]	5	transferred to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter appears as Section 211(b) of the Indenture); or
[   ]	6	transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if box (5) or (6) is checked, the Company may require, prior to registering any such transfer of the Securities, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

	_______________________________________________ Signature
Signature Guarantee:
_______________________________________________ (Signature must be guaranteed)	_______________________________________________ Signature
_______________________________________________	_______________________________________________

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.

_______________________________________]*
Dated:

* To be deleted in Exchange Securities.

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

The following increases or decreases in this Global Security have been made:

Date of Exchange Amount of decrease in Principal Amount of this Global Security Amount of increase in Principal Amount of this Global Security Principal Amount of this Global Security following such decrease or increase Signature of authorized signatory of Trustee or Securities Custodian

EX-4

Exhibit 4(c)

$201,000,000

PPL CAPITAL FUNDING, INC.

4.33% Notes Series A Due 2009

Unconditionally Guaranteed as to Payment by

PPL CORPORATION

REGISTRATION RIGHTS AGREEMENT

February 26, 2004

Wachovia Capital Markets, LLC,
Banc One Capital Markets, Inc.,
J.P. Morgan Securities Inc.,
          as Representatives of the several Initial Purchasers,
          c/o Wachovia Capital Markets, LLC,
                    One Wachovia Center,
                              01 South College Street, TW-7,
                                        Charlotte, North Carolina 28288.

Ladies and Gentlemen:

PPL Capital Funding, Inc., a corporation organized under the laws of the State of Delaware (the "Company"), proposes to issue and sell to Wachovia Capital Markets, LLC, Banc One Capital Markets, Inc., J.P. Morgan Securities Inc., Scotia Capital (USA) Inc. and TD Securities (USA) Inc. (collectively, the "Initial Purchasers"), upon the terms set forth in a purchase and exchange agreement of even date herewith (the "Purchase and Exchange Agreement"), $201,000,000 aggregate principal amount of its 4.33% Notes Series A Due 2009 (the "Initial Notes"), unconditionally guaranteed (the "Initial Guarantees" and, collectively with Initial Notes, the "Initial Securities") as to payment by PPL Corporation, a corporation organized under the laws of the Commonwealth of Pennsylvania (the "Guarantor"). The Initial Securities will be issued pursuant to an indenture, dated as of February 26, 2004 (the "Indenture"), among the Company, the Guarantor and JPMorgan Chase Bank, as trustee (the "Trustee"). As an inducement to the Initial Purchasers to enter into the Purchase and Exchange Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Company and the Guarantor agree with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively the "Holders"), as follows:

1.   Registered Exchange Offer. Unless not permitted by applicable law (after the Company and the Guarantor have complied with the ultimate paragraph of this Section 1), the Company and the Guarantor shall prepare and, not later than 90 days (such 90th day being a "Filing Deadline") after the date on which the Initial Purchasers purchase the Initial Securities pursuant to the Purchase and Exchange Agreement (the "Closing Date"), file with the Securities and Exchange Commission (the "Commission"), a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of Transfer Restricted Securities (as defined below), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities of the Company issued under the Indenture, guaranteed by the Guarantor, identical in all material respects to the Initial Securities, except for the transfer restrictions relating to the Initial Securities, and registered under the Securities Act (the "Exchange Securities"). The Company and the Guarantor shall use their reasonable best efforts to (i) cause such Exchange Offer Registration Statement to become effective under the Securities Act within 240 days after the Closing Date (such 240th day being an "Effectiveness Deadline") and (ii)  keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period").

If the Company and the Guarantor commence the Registered Exchange Offer, the Company and the Guarantor (i) will be entitled to consummate the Registered Exchange Offer 30 days after such commencement (provided that the Company and the Guarantor have accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer) and (ii) will use their reasonable best efforts to consummate the Registered Exchange Offer no later than 40 days after the date that the Exchange Offer Registration Statement is declared effective (such 40th day being the "Consummation Deadline").

Upon the effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantor shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (a) to make such exchange (assuming that such Holder (i) is not an affiliate of the Company or the Guarantor within the meaning of the Securities Act, (ii) acquires the Exchange Securities in the ordinary course of such Holder's business, (iii) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities and (iv) is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) and (b) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

The Company, the Guarantor, the Initial Purchasers and each Exchanging Dealer (as defined below) acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information substantially in the form set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment, is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

"Transfer Restricted Securities" means each Security until (i) the date on which such Security has been exchanged by a person for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement as defined below or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

In connection with the Registered Exchange Offer, the Company and the Guarantor shall:

(a)   mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

(b)   keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c)   utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d)   permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e)   otherwise comply with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer the Company and the Guarantor shall:

(x)    accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer;

(y)   deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z)   cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

The Company and the Guarantor shall use their reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 90 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company and the Guarantor shall make such prospectus and any amendment or supplement thereto available to any broker-dealer upon request for use in connection with any resale of any Exchange Securities for a period of not less than 180 days after the consummation of the Registered Exchange Offer.

The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.

Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company and the Guarantor that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or the Guarantor or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company and the Guarantor will ensure that:

      (i)   any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder,

      (ii)   any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and

      (iii)   any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

2.   Shelf Registration. If (i) the Company and the Guarantor are not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, because of any change in law or in applicable interpretations thereof by the staff of the Commission, (ii) the Registered Exchange Offer is not consummated by the 280th day after the Closing Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer, or (iv) the Company and the Guarantor so elect, the Company and the Guarantor shall take the following actions (the date on which any of the conditions described in the foregoing clauses (i) through (iv) occur, including in the case of clause (iii) the receipt of the required notice, being a "Trigger Date"):

(a)   The Company and the Guarantor shall use their reasonable best efforts to file as promptly as practicable (but in no event more than 90 days after the Trigger Date (such 90th day being a "Filing Deadline")) with the Commission and thereafter use their reasonable best efforts to cause to be declared effective no later than 180 days after the Trigger Date (such 180th day being an "Effectiveness Deadline") a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration"); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

(b)   The Company and the Guarantor shall use their reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming a part thereof to be lawfully delivered by the Holders of the relevant Securities, for a period ending on the earlier of (i) two years from the Closing Date or (ii) such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (A) have been sold pursuant thereto or (B) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof).

(c)   Notwithstanding any other provisions of this Agreement to the contrary, the Company and the Guarantor shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) in each case, other than with respect to information included therein in reliance upon or in conformity with information furnished to the Company and the Guarantor by or on behalf of any Holder specifically for use therein ("Holders' Information"), not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.   Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a)   The Company and the Guarantor shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company and the Guarantor shall use their reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information substantially in the form set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement (including any such changes, reasonably acceptable to the Initial Purchasers, the Company and the Guarantor, necessary to reflect any changes in the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission) and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; and (iv) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders.

(b)   The Company and the Guarantor shall give written notice to the Initial Purchasers, the Holders of the Securities, if applicable, and any Participating Broker-Dealer from whom the Company and the Guarantor have received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii) through (v) of this Section 3(b) shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

      (i)   when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

      (ii)   of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

      (iii)   of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

      (iv)   of the receipt by the Company or the Guarantor of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

      (v)   of the happening of any event that requires the Company or the Guarantor to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

(c)   The Company and the Guarantor shall make every reasonable effort to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of the Registration Statement.

(d)   Upon the written request of any Holder, the Company and the Guarantor shall furnish to such Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one conformed copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any such Holder specifies in such request, all exhibits thereto (including those, if any, incorporated by reference).

(e)   The Company and the Guarantor shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests in writing, all exhibits thereto (including those incorporated by reference).

(f)   The Company and the Guarantor shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company and the Guarantor consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, forming a part of the Shelf Registration Statement.

(g)   The Company and the Guarantor shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company and the Guarantor consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

(h)   Prior to the effective date of any Registration Statement, the Company and the Guarantor will use their reasonable best efforts to register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that neither the Company nor the Guarantor shall be required to qualify to do business as a foreign corporation or as a securities dealer or to file a general consent to service of process or to file annual reports or to comply with any other requirements deemed by the Company or the Guarantor to be unduly burdensome.

(i)   The Company and the Guarantor shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request in writing a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

(j)   Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company and the Guarantor are required to maintain an effective Registration Statement, the Company and the Guarantor shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(k)   In the case of a Shelf Registration Statement, each Holder of Securities to be registered pursuant thereto agrees by acquisition of such Securities that, upon receipt of any notice from the Company and the Guarantor pursuant to paragraphs (ii) through (v) of Section 3(b) above, such Holder will discontinue disposition of such Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 3(j) or until advised in writing (the "Advice") by the Company or the Guarantor that the use of the applicable prospectus may be resumed. If the Company or the Guarantor shall give any notice under paragraphs (ii) through (v) of Section 3(b) above, during the period that the Company and the Guarantor are required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 3(j) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required).

(l)   Not later than the effective date of the applicable Registration Statement, the Company or the Guarantor will provide a CUSIP number for the Initial Securities or the Exchange Securities, as the case may be, and provide the Trustee with printed certificates for the Initial Securities or the Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

(m)   The Company and the Guarantor will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to the Guarantor's security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Guarantor's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

(n)   The Company and the Guarantor shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, as required by applicable law.

(o)   The Company and the Guarantor may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company and the Guarantor such information regarding the Holder and the distribution of the Securities as the Company and the Guarantor may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company and the Guarantor may exclude from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

(p)   In the case of a Shelf Registration Statement, the Company and the Guarantor shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Holders of a majority in aggregate principal amount of the Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities pursuant to such Shelf Registration Statement.

(q)   In the case of any Shelf Registration, the Company and the Guarantor shall (i) make reasonably available for inspection by a representative of the Holders of a majority in aggregate principal amount of the Securities registered pursuant thereto, one firm of legal counsel retained by the Holders of the Securities, any managing underwriter participating in any disposition pursuant to the Shelf Registration Statement and one firm of legal counsel retained by such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and the Guarantor and (ii) use their reasonable best efforts to cause the Guarantor's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by such Holders of Securities or any such underwriter, attorney or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof.

(r)   In the case of any Shelf Registration, the Company and the Guarantor, if requested by the Holders of a majority in aggregate principal amount of the Securities registered pursuant thereto, their counsel or any managing underwriting in connection with such Shelf Registration, shall use their reasonable best efforts to cause (i) their counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement with such changes as are customary in connection with the preparation of a Shelf Registration Statement; (ii) their officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) their independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

4.   Registration Expenses. (a) All expenses incident to the Company and the Guarantor's performance of and compliance with this Agreement will be borne by the Company and the Guarantor, regardless of whether a Registration Statement is ever filed or becomes effective, including without limitation;

      (i)   all registration and filing fees and expenses;

      (ii)   all fees and expenses of compliance with federal securities and state "blue sky" or securities laws;

      (iii)   all expenses of printing (including printing certificates for the Securities to be issued in the Registered Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone;

      (iv)   all fees and disbursements of counsel for the Company and the Guarantor;

      (v)   all application and filing fees in connection with listing the Exchange Securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and

      (vi)   all fees and disbursements of independent certified public accountants of the Company and the Guarantor (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Company and the Guarantor will bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company and the Guarantor.

(b)   In connection with any Registration Statement required by this Agreement, the Company and the Guarantor will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Securities in the Registered Exchange Offer and/or selling or reselling Securities pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Sullivan & Cromwell LLP unless another firm reasonably acceptable to the Company and the Guarantor shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.

5.   Indemnification. (a) In the event of a Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the Company and the Guarantor shall indemnify and hold harmless each Holder (including, without limitation, any such Initial Purchaser or Exchanging Dealer) and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act (collectively referred to for purposes of this Section 5 as a Holder) against any and all loss, expense, claim, damage or liability to which, jointly or severally, such Holder or such controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, expense, claim, damage or liability (or actions in respect thereof) arises out of or is based upon any untrue statement or alleged untrue statement of any material fact contained in such Registration Statement or any prospectus forming a part thereof or any amendment or supplement to any thereof, or arises out of or is based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading; and, except as hereinafter in this Section provided, the Company and the Guarantor agree to reimburse each Holder and each person who controls any Holder as aforesaid for any reasonable legal or other expenses as incurred by such Holder or such controlling person in connection with investigating or defending any such loss, expense, claim, damage or liability; provided, however, that the Company and the Guarantor shall not be liable in any such case to the extent that any such loss, expense, claim, damage or liability arises out of or is based on an untrue statement or alleged untrue statement or omission or alleged omission made in any such document in reliance upon, and in conformity with, any Holders' Information furnished to the Company and the Guarantor by or through any such Holder expressly for use in any such document; and provided further, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Holder from whom the person asserting any such losses, expenses, claims, damages or liabilities purchased Securities, or any person controlling such Holder, if a copy of the prospectus (as then amended or supplemented if the Company and the Guarantor shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Holder to such person, at or prior to the written conformation of the sale of the Securities to such person, and if the prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of noncompliance by the Company and the Guarantor with Section 5(a) hereof.

(b)   In the event of a Shelf Registration Statement, each Holder shall indemnify and hold harmless the Company and the Guarantor, their affiliates, their respective officers, directors, members, managers, employees, representatives and agents, and each person, if any, who controls the Company or the Guarantor within the meaning of Section 15 of the Securities Act (collectively referred to for purposes of this Section 5(b) as the Company and the Guarantor), from and against any loss, expense, claim, damage or liability to which it or they may become subject, under the Securities Act or otherwise, insofar as such loss, expense, claim, damage or liability (or actions in respect thereof) arises out of or is based on any untrue statement or alleged untrue statement of any material fact contained in Shelf Registration Statement or in any prospectus forming a part thereof or any amendment or supplement to any thereof, or arises out of or is based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, and only to the extent, that such untrue statement or alleged untrue statement or omission was made in any such documents in reliance upon, and in conformity with, any Holders' Information furnished to the Company and the Guarantor by or through any Holder expressly for use in any such document; and, except as hereinafter in this Section provided, each Holder agrees to reimburse the Company and the Guarantor, their officers and directors, and each of them, and each person, if any, who controls the Company or the Guarantor within the meaning of Section 15 of the Securities Act, for any reasonable legal or other expenses incurred by it or them in connection with investigating or defending any such loss, expense, claim, damage or liability; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities pursuant to such Shelf Registration Statement.

(c)   Upon receipt of notice of the commencement of any action against an indemnified party, the indemnified party shall, with reasonable promptness, if a claim in respect thereof is to be made against an indemnifying party under its agreement contained in this Section 5, notify such indemnifying party in writing of the commencement thereof; but the omission so to notify an indemnifying party shall not relieve it from any liability which it may have to the indemnifying party otherwise than under its agreement contained in this Section 5. In the case of any such notice to an indemnifying party, it shall be entitled to participate at its own expense in the defense, or if it so elects, to assume the defense, of any such action, but if it elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the indemnified party and to any other indemnifying party, defendant in the suit. In the event that any indemnifying party elects to assume the defense of any such action and retain such counsel, the indemnified party shall bear the fees and expenses of any additional counsel retained by it. No indemnifying party shall be liable in the event of any settlement of any such action effected without its consent except as provided in Section 5(e) hereof. Each indemnified party agrees promptly to notify each indemnifying party of the commencement of any litigation or proceedings against it in connection with the issue and sale of the Securities.

(d)   If any Holder or person entitled to indemnification by the terms of subsection (a) of this Section 5 shall have given notice to the Company and the Guarantor of a claim in respect thereof pursuant to Section 5(c) hereunder, and if such claim for indemnification is thereafter held by a court to be unavailable or insufficient for any reason other than by reason of the terms of this Section 5 or if such claim is unavailable under controlling precedent, such Holder or person shall be entitled to contribution from the Company and the Guarantor to liabilities and expenses, except to the extent that contribution is not permitted under Section 11(f) of the Securities Act. In determining the amount of contribution to which such Holder or person is entitled, there shall be considered the relative benefits received by such Holder or person and the Company and the Guarantor from the offering of the Securities that were the subject of the claim for indemnification (taking into account the portion of the proceeds of the offering realized by the Holder under such Shelf Registration and by the Company and the Guarantor in the initial offering), the Holder's or person's relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and any other equitable considerations appropriate under the circumstances. The parties hereto agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation (even if the Holders were treated as one entity for such purpose). Notwithstanding the provisions of this Section 5(d), an indemnifying party that is a Holder of Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.

(e)   No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party and all liability arising out of such litigation, investigation, proceeding or claim, and (ii) does not include a statement as to or an admission of fault, culpability or the failure to act by or on behalf of any indemnified party.

(f)   The indemnity and contribution provided for in this Section 5 shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Holder or any person controlling any Holder, the Company, the Guarantor or their respective directors or officers and (ii) any termination of this Agreement.

6.   Additional Interest Under Certain Circumstances. (a)  Additional interest (the "Additional Interest") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below being herein called a "Registration Default"):

      (i)   any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline;

       (ii)   any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline;

       (iii)   the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or

       (iv)   any Registration Statement required by this Agreement has been declared effective by the Commission but (A) such Registration Statement thereafter ceases to be effective, without being succeeded within 90 days by an additional Registration Statement filed and declared effective or (B) such Registration Statement or the related prospectus ceases to be usable for a period of more than 90 days in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder.

Additional Interest shall accrue on the Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the "Additional Interest Rate") during the 90-day period immediately following the occurrence of such Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall the Additional Interest Rate exceed 0.50% per annum.

Notwithstanding anything to the contrary in this Section, the Company and the Guarantor shall not be required to pay additional interest to a Holder of Transfer Restricted Securities if such Holder failed to comply with its obligations to make the representations set forth in the second to last paragraph of Section 1 or failed to provide the information required to be provided by it, if any, pursuant to Section 3(o).

Following the cure of all Registration Defaults, the accrual of Additional Interest shall cease.

(b)   A Registration Default referred to in Section 6(a)(iv) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company and the Guarantor where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company and the Guarantor that would need to be described in such Shelf Registration Statement or the related prospectus (which could include description in a report filed under the Exchange Act and incorporated by reference in such Shelf Registration Statement) and (ii) in the case of clause (y), the Company and the Guarantor is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and/or related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 90 days, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.

(c)   Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash on the regular interest payment dates with respect to the Securities in the same manner and to the same persons as regular interest payments. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the principal amount of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

7.   Rules 144 and 144A. The Company and the Guarantor shall use their reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company or the Guarantor is not required to file such reports, it will, upon the written request of any Holder of Transfer Restricted Securities, make publicly available other information so long as necessary to permit sales of such Holder's Securities pursuant to Rules 144 and 144A. The Company and the Guarantor covenant that they will take such further action as any Holder of Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). Upon the written request of any Holder of Initial Securities, the Company and the Guarantor shall deliver to such Holder a written statement as to whether they have complied with such requirements. The Company and the Guarantor will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company and the Guarantor by the Initial Purchasers upon request. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company and the Guarantor to register any of their securities pursuant to the Exchange Act.

8.   Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("Managing Underwriters") will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering, subject to the consent of the Company and the Guarantor (which consent shall not be unreasonably withheld) and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith.

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

9.   Miscellaneous.

(a)   Remedies. The Company and the Guarantor acknowledge and agree that any failure by the Company or the Guarantor to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's or the Guarantor's obligations under Sections 1 and 2 hereof. The Company and the Guarantor further agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

(b)   No Inconsistent Agreements. The Company and the Guarantor will not on or after the date of this Agreement enter into any agreement with respect to their securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Guarantor's securities under any agreement in effect on the date hereof.

(c)   Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the Guarantor and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate principal amount of the Securities being sold by such Holders pursuant to such Registration Statement.

(d)   Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

(1)   if to a Holder of the Securities, at the most current address given by such Holder to the Company and the Guarantor.

(2)   if to the Initial Purchasers:

Wachovia Capital Markets, LLC
One Wachovia Center
301 South College Street, TW-7
Charlotte, North Carolina 28288
Fax No.: (704) 383-0661
Attention: James T. Williams, Jr.

with a copy to:

Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Fax No: (212) 558-3588
Attention: Robert W. Downes

(3)   if to the Company and the Guarantor, at their address as follows:

PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, PA 18101
Fax No.: (610) 774-5106
Attention: Treasurer

with a copy to:

PPL Services Corporation
Two North Ninth Street
Allentown, PA 18101
Fax No.: (610) 774-6726
Attention: Thomas D. Salus

and a copy to:

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY  10017-3954
Fax No.: (212) 455-2502
Attention: Vincent Pagano

All such notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.

(e)   Successors and Assigns. This Agreement shall be binding upon the Company and the Guarantor and their successors and assigns.

(f)   Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(g)   Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(h)   Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

(i)   Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company and the Guarantor a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company and the Guarantor in accordance with its terms.

Very truly yours,

PPL CAPITAL FUNDING, INC.

By:                                      
         Name:
         Title:

PPL CORPORATION

By:                                      
         Name:
         Title:

The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first above written.

WACHOVIA CAPITAL MARKETS, LLC
BANC ONE CAPITAL MARKETS, INC.
J.P. MORGAN SECURITIES INC.
Acting severally on behalf of themselves and
      as Representatives of the several Initial Purchasers

WACHOVIA CAPITAL MARKETS, LLC

By: _________________________
        Name:
        Title:

BANC ONE CAPITAL MARKETS, INC.

By: _________________________
        Name:
        Title:

J.P. MORGAN SECURITIES INC.

By: ________________________
        Name:
        Title:

ANNEX A

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company and the Guarantor has agreed that, for a period of 90 days after the consummation of Registered Exchange Offer, it will make this Prospectus available to any broker-dealer after for use in connection with any such resale. See "Plan of Distribution."

ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution."

ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company and the Guarantor have agreed that, for a period of 180 days after the consummation of a Registered Exchange Offer, they will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , 200__, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus. ⁽¹⁾

The Company and the Guarantor will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

____________________________________

⁽¹⁾ In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus.

For a period of 180 days after the consummation of a Registered Exchange Offer, the Company and the Guarantor will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company and the Guarantor have agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

ANNEX D

[ ]   CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:   ____________________________________
Address:   __________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act.

EX-12

Exhibit 12(a)
PPL CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (Millions of Dollars)
				12 Months Ended March 31,			12 Months Ended December 31,
				2004			2003			2002			2001		2000		1999
Fixed charges, as defined:
	Interest on long-term debt			$	441		$	417		$	486		$	351	$	323	$	233
	Interest on short-term debt and   other interest				22			25			71			44		64		47
	Amortization of debt discount,   expense and premium - net				38			41			25			17		5		4
	Interest on capital lease obligations
		Charged to expense														4		9
		Capitalized																1
	Estimated interest component of   operating rentals				44			52			39			36		25		20
	Preferred securities distributions of   subsidiaries on a pre-tax basis				28			45			79			64		31		30
			Total fixed charges	$	573		$	580		$	700		$	512	$	452	$	344
Earnings, as defined:
	Net income (a)			$	729		$	726		$	438		$	167	$	491	$	492
	Preferred security dividend requirement				17			29			67			52		26		26
	Less undistributed income (loss)   of equity method investments				(15	)		(18	)		(23	)		20		74		56
					761			773			528			199		443		462
Add:
	Income taxes				174			170			210			261		294		174
	Amortization of capitalized interest on   capital leases															2		2
	Total fixed charges as above (excluding capitalized interest,   capitalized interest on capital lease   obligations and preferred security   distributions of subsidiaries on a   pre-tax basis)				537			528			600			419		405		307
			Total earnings	$	1,472		$	1,471		$	1,338		$	879	$	1,144	$	945
Ratio of earnings to fixed charges					2.6			2.5			1.9			1.7		2.5		2.7
Ratio of earnings to combined fixed   charges and preferred stock   dividends (b)					2.6			2.5			1.9			1.7		2.5		2.7
(a)	Net income excludes extraordinary item, minority interest, loss from discontinued operations and the cumulative effects of changes in accounting principles.
(b)	PPL, the parent holding company, does not have any preferred stock outstanding; therefore, the ratio of earnings to combined fixed charges and preferred stock dividends is the same as the ratio of earnings to fixed charges.

EX-12

Exhibit 12(b)
PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Millions of Dollars)
			12 Months Ended March 31,			12 Months Ended December 31,
			2004			2003			2002			2001		2000 (b)		1999 (b)
Fixed charges, as defined:
	Interest on long-term debt		$	174		$	149		$	169		$	36	$	54	$	20
	Interest on short-term debt and   other interest			18			25			52			33		75		32
	Amortization of debt discount,   expense and premium - net			27			31			9			2		11		1
	Estimated interest component of   operating rentals			26			38			23			19		9
	Preferred securities distributions of   subsidiaries on a pre-tax basis			5			8			12
		Total fixed charges	$	250		$	251		$	265		$	90	$	149	$	53
Earnings, as defined:
	Net income (loss) (a)		$	714		$	719		$	509		$	168	$	246	$	(20	)
	Preferred security dividend requirement			4			5			9
	Less undistributed income (loss)   of equity method investments			(10	)		(15	)		(22	)		20		74		56
				728			739			540			148		172		(76	)
Add:
	Income taxes (benefit)			185			185			266			274		125		(29	)
	Total fixed charges as above (excluding capitalized interest   and preferred security distributions of   subsidiaries on a pre-tax basis)			238			237			234			66		135		52
		Total earnings	$	1,151		$	1,161		$	1,040		$	488	$	432	$	(53	)
Ratio of earnings to fixed charges				4.6			4.6			3.9			5.4		2.9		(1.0	)
Deficiency																$	106
(a)	Net income (loss) excludes minority interest, loss from discontinued operations and the cumulative effects of changes in accounting principles.
(b)	Due to the corporate realignment on July 1, 2000, data in 2000 and 1999 are not comparable to subsequent years.

EX-31

Exhibit 31(a)

CERTIFICATION
I, WILLIAM F. HECHT, the principal executive officer of PPL Corporation (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  William F. Hecht
			William F. Hecht Chairman, President and Chief Executive Officer PPL Corporation

EX-31

Exhibit 31(b)

CERTIFICATION
I, JOHN R. BIGGAR, the principal financial officer of PPL Corporation (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  John R. Biggar
			John R. Biggar Executive Vice President and Chief Financial Officer PPL Corporation

EX-31

Exhibit 31(c)

CERTIFICATION
I, WILLIAM F. HECHT, the principal executive officer of PPL Energy Supply, LLC (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  William F. Hecht
			William F. Hecht President PPL Energy Supply, LLC

EX-31

Exhibit 31(d)

CERTIFICATION
I, JAMES E. ABEL, the principal financial officer of PPL Energy Supply, LLC (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  James E. Abel
			James E. Abel Treasurer PPL Energy Supply, LLC

EX-31

Exhibit 31(e)

CERTIFICATION
I, JOHN F. SIPICS, the principal executive officer of PPL Electric Utilities Corporation (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  John F. Sipics
			John F. Sipics President PPL Electric Utilities Corporation

EX-31

Exhibit 31(f)

CERTIFICATION
I, JAMES E. ABEL, the principal financial officer of PPL Electric Utilities Corporation (the "registrant"), certify that:
1.	I have reviewed this quarterly report on Form 10-Q of the registrant for the quarter ended March 31, 2004;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 7, 2004			/s/  James E. Abel
			James E. Abel Treasurer PPL Electric Utilities Corporation

EX-32

Exhibit 32(a)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL CORPORATION'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Corporation (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ William F. Hecht                                   
William F. Hecht
Chairman, President and
Chief Executive Officer
PPL Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(b)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL CORPORATION'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Corporation (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ John R. Biggar                                    
John R. Biggar
Executive Vice President and
Chief Financial Officer
PPL Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(c)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ENERGY SUPPLY, LLC'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ William F. Hecht                                   
William F. Hecht
President
PPL Energy Supply, LLC

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(d)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ENERGY SUPPLY, LLC'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ James E. Abel                                     
James E. Abel
Treasurer
PPL Energy Supply, LLC

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(e)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ELECTRIC UTILITIES CORPORATION'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal executive officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ John F. Sipics                                   
John F. Sipics
President
PPL Electric Utilities Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32(f)

CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
FOR PPL ELECTRIC UTILITIES CORPORATION'S 10-Q FOR THE QUARTER ENDED MARCH 31, 2004

In connection with the quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "Company") for the quarter ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Covered Report"), I, the principal financial officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

• The Covered Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

• The information contained in the Covered Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2004 /s/ James E. Abel                                     
James E. Abel
Treasurer
PPL Electric Utilities Corporation

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.