Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2011

Notes To Financial Statements [Abstract]

Commodity Price Risk (Non-trading) - Economic Activity - Pre-tax Gains (Losses) Associated with Economic Activity

The unrealized gains (losses) for economic activity for the periods ended September 30 are as follows.

		Three Months				Nine Months
		2011		2010		2011		2010
Operating Revenues
	Unregulated retail electric and gas	$	4	$	8	$	9	$	16
	Wholesale energy marketing		216		52		229		(190)
Operating Expenses
	Fuel		(28)		16		(16)		13
	Energy purchases (a)		(176)		(300)		(49)		(418)

(a)       During the second quarter of 2010, PPL Energy Supply corrected an error relating to the fair value of a capacity contract (classified as economic activity) due to the use of an incorrect forward capacity curve. PPL Energy Supply's energy purchases were understated for the year ended December 31, 2009 and the first quarter of 2010 by an unrealized amount of $35 million ($20 million after tax or $0.05 per share, basic and diluted, for PPL) and $5 million ($3 million after tax or $0.01 per share, basic and diluted, for PPL). Management concluded that the impacts were not material to first quarter 2010 financial statements of PPL and PPL Energy Supply, and were not material to the financial statements for the full year 2010.

Commodity Volumetric Activity - Sales of Baseload Generation - Expected Sales, in GWh, of Baseload Generation

The following table presents the expected sales, in GWh, from baseload generation and tolling arrangements that are included in the baseload portfolio based on current forecasted assumptions for 2011-2013. These expected sales could be impacted by several factors, including plant availability.

2011 (a)	2012	2013
13,575	54,675	54,364

(a)       Represents expected sales for the balance of the current year.

Commodity Volumetric Activity - Sales of Baseload Generation - Percentage of Expected Baseload Generation Sales

The following table presents the percentage of expected baseload generation sales shown above that has been sold forward under fixed price contracts and the related percentage of fuel that has been purchased or committed at September 30, 2011.

	Derivative	Total Power	Fuel Purchases (c)
Year	Sales (a)	Sales (b)	Coal	Nuclear
2011 (d)	90%	100%	100%	100%
2012	92%	91%	96%	100%
2013 (e)	63%	72%	89%	100%

(a)       Excludes non-derivative contracts and contracts that qualify for NPNS. Volumes for option contracts factor in the probability of an option being exercised and may be less than the notional amount of the option.

(b)       Amount represents derivative and non-derivative contracts. Volumes for option contracts factor in the probability of an option being exercised and may be less than the notional amount of the option. Percentages are based on fixed-price contracts only.

(c)       Coal and nuclear contracts receive accrual accounting treatment, as they are not derivative contracts. Percentages are based on both fixed- and variable-priced contracts.

(d)       Represents the balance of the current year.

(e)       Volumes for derivative sales contracts that deliver in future periods total 3,050 GWh.

Commodity Volumetric Activity - Sales of Baseload Generation - Economic Hedges Related to Fuel Price Risk

The following table presents the net volumes (in thousands of barrels) of derivative (sales)/purchase contracts used in support of these strategies at September 30, 2011.

	2011 (a)	2012	2013 (b)
Oil Swaps	(21)	651	540

(a)       Represents the balance of the current year.

(b)       Volumes (in thousands of barrels) for derivative contracts used in support of this strategy that deliver in future periods total 120.

Commodity Volumetric Activity - Optimization of Intermediate and Peaking Generation

The following table presents the net volumes of derivative (sales)/purchase contracts used in support of this strategy at September 30, 2011.

	Units	2011 (a)	2012	2013 (b)
Power Sales (c)	GWh	(1,127)	(2,006)	(1,224)
Fuel Purchases (c)	Bcf	12.0	13.5	8.2

(a)       Represents the balance of the current year.

(b)       Volumes for derivative contracts used in support of these strategies that deliver in future periods total (1,632) GWh and 11.0 Bcf.

(c)       Included in these volumes are non-options and exercised option contracts that converted to non-option derivative contracts. Volumes associated with option contracts are not significant.

Commodity Volumetric Activity - Marketing Activities

The following table presents the volume of (sales)/purchase contracts, excluding FTRs, basis and capacity contracts, used in support of these activities at September 30, 2011.

		Units	2011 (a)	2012	2013
Energy sales contracts (b)		GWh	(4,319)	(13,074)	(5,325)
Related energy supply contracts (b)
	Energy purchases	GWh	2,923	7,425	645
	Volumetric hedges (c)	GWh	90	312	43
	Generation supply	GWh	1,265	5,457	4,478
Retail gas sales contracts		Bcf	(2.6)	(9.1)	(0.5)
Retail gas purchase contracts		Bcf	2.5	9.1	0.5

(a)       Represents the balance of the current year.

(b)       Includes NPNS and contracts that are not derivatives,whichreceive accrual accounting.

(c)       PPL Energy Supply uses power and gas options, swaps and futures to hedge the volumetric risk associated with full-requirement sales contracts since the demand for power varies hourly. Volumes for option contracts factor in the probability of an option being exercised and may be less than the notional amount of the option.

Commodity Volumetric Activity - FTRs and Other Basis Positions

The net volume of derivative FTR and basis (sales)/purchase contracts at September 30, 2011 were:

	Units	2011 (a)	2012	2013 (b)
FTRs	GWh	9,720	15,008
Power Basis Positions	GWh	(4,022)	(10,828)	(987)
Gas Basis Positions	Bcf	7.7	12.9	(1.0)

(a)       Represents the balance of the current year.

(b)Volumes that deliver in future periodsare 364 GWh and (2.0) Bcf.

Commodity Volumetric Activity - Capacity Positions

The following table presents the net volumes of derivative capacity (sales)/purchase contracts at September 30, 2011.

	Units	2011 (a)	2012	2013 (b)
Capacity	MW-months	(2,944)	(6,422)	(1,384)

(a)       Represents the balance of the current year.

(b)       Volumes that deliver in future periods are (253) MW-months.

Fair Value and Balance Sheet Location of Derivative Instruments

The following table presents the fair value and location of derivative instruments recorded on the Balance Sheets.

						September 30, 2011								December 31, 2010
						Derivatives designated as				Derivatives not designated				Derivatives designated as				Derivatives not designated
						hedging instruments				as hedging instruments (a)				hedging instruments				as hedging instruments (a)
						Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Current:
	Price Risk Management
		Assets/Liabilities (b):
			Interest rate swaps			$	5	$	63			$	4	$	11	$	19			$	2
			Cross-currency swaps						2						7		9
			Foreign currency
				exchange contracts			5			$	16				7			$	4
			Commodity contracts				667		2		700		734		878		19		1,011		1,095
					Total current		677		67		716		738		903		47		1,015		1,097
Noncurrent:
	Price Risk Management
		Assets/Liabilities (b):
			Interest rate swaps										53		4						32
			Cross-currency swaps				51								37
			Commodity contracts				152		16		523		439		169		7		445		431
					Total noncurrent		203		16		523		492		210		7		445		463
Total derivatives						$	880	$	83	$	1,239	$	1,230	$	1,113	$	54	$	1,460	$	1,560

(a)       $261 million and $326 million of net gains associated with derivatives that were no longer designated as hedging instruments are recorded in AOCI at September 30, 2011 and December 31, 2010.

(b)       Represents the location on the Balance Sheet.

Pre-tax Gain (Loss) on Derivative Instruments Recognized in Income or OCI

The following tables present the pre-tax effect of derivative instruments recognized in income, OCI or regulatory assets for theperiods ended September 30, 2011.

Derivatives in	Hedged Items in		Location of Gain	Gain (Loss) Recognized			Gain (Loss) Recognized
Fair Value Hedging	Fair Value Hedging		(Loss) Recognized	in Income on Derivative			in Income on Related Item
Relationships	Relationships		in Income	Three Months	Nine Months		Three Months		Nine Months
Interest rate swaps	Fixed rate debt	Interest expense			$	2	$	5	$	23
		Other income
			(expense) - net					22		22

									Three Months				Nine Months
											Gain (Loss)				Gain (Loss)
											Recognized				Recognized
											in Income				in Income
											on Derivative		Gain (Loss)		on Derivative
									Gain (Loss)		(Ineffective		Reclassified		(Ineffective
									Reclassified		Portion and		from AOCI		Portion and
			Derivative Gain				Location of		from AOCI		Amount		into		Amount
			(Loss) Recognized in				Gain (Loss)		into Income		Excluded from		Income		Excluded from
Derivative			OCI (Effective Portion)				Recognized		(Effective		Effectiveness		(Effective		Effectiveness
Relationships			Three Months		Nine Months		in Income		Portion)		Testing)		Portion)		Testing)
Cash Flow Hedges:
	Interest rate swaps		$	(52)	$	(51)	Interest expense		$	(4)			$	(10)	$	(13)
	Cross-currency swaps			46		13	Interest expense							3
							Other income
								(expense) - net		32				49
	Commodity contracts			66		116	Wholesale energy
								marketing		163	$	(9)		530		(31)
							Fuel			1				1
							Depreciation			1				1
							Energy purchases			(42)				(159)		1
Total			$	60	$	78			$	151	$	(9)	$	415	$	(43)
Net Investment Hedges:
		Foreign exchange contracts	$	5	$	4

Derivatives Not Designated as	Location of Gain (Loss) Recognized in
Hedging Instruments:	Income on Derivatives	Three Months		Nine Months
Foreign exchange contracts	Other income (expense) - net	$	11	$	66
Interest rate swaps	Interest expense		(2)		(6)
Commodity contracts	Utility		1		(2)
	Unregulated retail electric and gas		6		11
	Wholesale energy marketing		193		167
	Net energy trading margins (a)		(2)		9
	Fuel		(27)		(12)
	Energy purchases		(192)		(156)
	Total	$	(12)	$	77
Derivatives Not Designated as	Location of Gain (Loss) Recognized as
Hedging Instruments:	Regulatory Liabilities/Assets	Three Months		Nine Months
Interest rate swaps	Regulatory assets - noncurrent	$	(22)	$	(23)

(a)       Differs from the Statement of Income due to intra-month transactions that PPL defines as spot activity, which is not accounted for as a derivative.

The following tables present the pre-tax effect of derivative instruments recognized in income or OCI for theperiods ended September 30, 2010.

Derivatives in	Hedged Items in		Location of Gain	Gain (Loss) Recognized				Gain (Loss) Recognized
Fair Value Hedging	Fair Value Hedging		(Loss) Recognized	in Income on Derivative				in Income on Related Item
Relationships	Relationships		in Income	Three Months		Nine Months		Three Months		Nine Months
Interest rate swaps	Fixed rate debt	Interest expense		$	12	$	46	$	(1)	$	(14)

									Three Months				Nine Months
											Gain (Loss)				Gain (Loss)
											Recognized				Recognized
											in Income				in Income
											on Derivative		Gain (Loss)		on Derivative
									Gain (Loss)		(Ineffective		Reclassified		(Ineffective
									Reclassified		Portion and		from AOCI		Portion and
			Derivative Gain				Location of		from AOCI		Amount		into		Amount
			(Loss) Recognized in				Gain (Loss)		into Income		Excluded from		Income		Excluded from
Derivative			OCI (Effective Portion)				Recognized		(Effective		Effectiveness		(Effective		Effectiveness
Relationships			Three Months		Nine Months		in Income		Portion)		Testing)		Portion)		Testing)
Cash Flow Hedges:
	Interest rate swaps		$	(124)	$	(225)	Interest expense		$	(1)			$	(2)	$	(3)
							Other income
								(expense) - net		(30)				(30)
	Cross-currency swaps			(6)		40	Interest expense			1				2
							Other income
								(expense) - net		(19)				19
	Commodity contracts			360		789	Wholesale energy
								marketing		93	$	(8)		469		(173)
							Fuel			1				2
							Depreciation			1				2
							Energy purchases			(87)		20		(398)		2
Total			$	230	$	604			$	(41)	$	12	$	64	$	(174)
Net Investment Hedges:
		Foreign exchange contracts	$	(1)	$	4

Derivatives Not Designated as	Location of Gain (Loss) Recognized in
Hedging Instruments:	Income on Derivatives	Three Months		Nine Months
Foreign exchange contracts	Other income (expense) - net	$	(1)	$	1
Commodity contracts	Unregulated retail electric and gas		10		22
	Wholesale energy marketing		61		384
	Net energy trading margins (a)		(11)
	Fuel		10		(2)
	Energy purchases		(378)		(873)
	Total	$	(309)	$	(468)

(a)       Differs from the Statement of Income due to intra-month transactions that PPL defines as spot activity, which is not accounted for as a derivative.