The Registrants periodically evaluate opportunities for potential acquisitions, divestitures and development projects. Development projects are periodically reexamined based on market conditions and other factors to determine whether to proceed with the projects, sell, cancel or expand them, execute tolling agreements or pursue other options. Any resulting transactions may impact future financial results.

In April 2012, an indirect, wholly owned subsidiary of PPL Energy Supply completed the acquisition from a subsidiary of The AES Corporation of all of the equity interests of AES Ironwood, L.L.C. (subsequently renamed PPL Ironwood, LLC) and AES Prescott, L.L.C. (subsequently renamed PPL Prescott, LLC), which own and operate, respectively, the Ironwood Facility. The Ironwood Facility began operation in 2001 and, since 2008, PPL EnergyPlus has supplied natural gas for the operation of the Ironwood Facility and received the facility's full electricity output and capacity value pursuant to a tolling agreement that expires in 2021. The acquisition provides PPL Energy Supply, through its subsidiaries, operational control of additional combined-cycle gas generation in PJM.

At the date of acquisition, total future minimum lease payments to be made by PPL EnergyPlus to PPL Ironwood, LLC under the tolling agreement were $270 million. These payments will continue to be made by PPL EnergyPlus to PPL Ironwood, LLC following the acquisition. The tolling agreement obligation of PPL Ironwood, LLC will be recognized as a liability at fair value on the acquisition date. This liability of PPL Ironwood, LLC, and the existing assets recognized by PPL EnergyPlus (which represent PPL EnergyPlus' rights to and the related accounting for the tolling agreement), will eliminate in consolidation because PPL Ironwood, LLC is now a subsidiary of PPL Energy Supply as a result of the acquisition. Any difference between these assets and the liability recorded will result in a gain or loss on the acquisition date. PPL Energy Supply cannot estimate the amount of this gain or loss at this time. See Note 11 in PPL's and PPL Energy Supply's 2011 Form 10-K for additional information on the tolling agreement.

The consideration paid for this acquisition, subject to working capital, net indebtedness and fair value adjustments, was as follows.

Aggregate enterprise consideration	$	302
Less: estimated long-term debt outstanding assumed through consolidation (net of restricted cash reserves)		217
Cash consideration paid for equity interests (including estimated working capital adjustments)	$	85

The estimated long-term debt outstanding assumed through consolidation consisted of $226 million of 8.857% senior secured bonds due 2025, plus $8 million of debt service reserve loans, net of $17 million of restricted cash reserves.

PPL Energy Supply has not completed its analysis of the allocation of the fair value of the acquired assets and liabilities assumed due to the timing of the closing of the transaction. PPL Energy Supply cannot estimate at this time the amount of goodwill, if any, that will result from this acquisition.

See Notes 1 and 10 in PPL's 2011 Form 10-K for information on PPL's April 1, 2011 acquisition of WPD Midlands.

In connection with the 2011 acquisition, PPL completed a reorganization designed to transition WPD Midlands from a functional structure to a regional structure requiring a smaller combined support structure, reducing duplication and implementing more efficient procedures. More than 700 employees of WPD Midlands will have received separation benefits as a result of the reorganization by the end of 2012.

Separation benefits totaling $104 million, pre-tax, were associated with the reorganization, of which $93 million were recorded in the second half of 2011. Additional severance compensation was recorded during the three months ended March 31, 2012, as shown in the table below. The separation benefits are included in "Other operation and maintenance" on the Statement of Income.

Accrued severance at December 31, 2011	$	21
Severance compensation		6
Severance paid		(8)
Accrued severance at March 31, 2012	$	19

The pro forma operating revenues and net income attributable to PPL for the three months ended March 31, which includes WPD Midlands as if the acquisition had occurred January 1, 2010, are as follows.

	2011

Operating Revenues - PPL consolidated pro forma	$	3,215
Net Income Attributable to PPL - PPL consolidated pro forma		526

The pro forma financial information presented above has been derived from the historical consolidated financial statements of PPL and from the historical combined financial statements of WPD Midlands. Income (loss) from discontinued operations (net of income taxes), which was not significant, was excluded from the pro forma amounts above.

The pro forma adjustments include adjustments to depreciation, net periodic pension costs, interest expense, nonrecurring adjustments and the related income tax effects. Nonrecurring adjustments for the three months ended March 31 include the following pre-tax credits (expenses).

	Income Statement
	Line Item	2011

2011 Bridge Facility costs	Interest Expense	$	(7)
Net hedge losses	Other Income (Expense) - net		(7)
Other acquisition-related costs (a)	Other Income (Expense) - net		(11)

In September 2011, LG&E and KU entered into an Asset Purchase Agreement with Bluegrass Generation for the purchase of the Bluegrass CTs, aggregating approximately 495 MW, plus limited associated contractual arrangements required for operation of the units, for a purchase price of $110 million. Pursuant to the Asset Purchase Agreement, LG&E and KU will jointly acquire the Bluegrass CTs as tenants in common, with LG&E as owner of a 69% undivided interest, and KU as owner of a 31% undivided interest, in the purchased assets. In May 2012, the KPSC issued an order approving the purchase of the Bluegrass CTs. Also, on May 4, 2012, the FERC issued an order conditionally authorizing the acquisition of the Bluegrass CTs, subject to implementation of satisfactory mitigation measures to address market-power concerns. FERC approval of the proposed mitigation measures is required. LG&E and KU are reviewing the order's conditions and their impact on the closing conditions under the Bluegrass CTs purchase contract, as well as other regulatory, operational and economic aspects of the transaction. Either party can terminate the Asset Purchase Agreement should the purchase transaction fail to occur by June 30, 2012. PPL, LKE, LG&E and KU cannot currently predict the ultimate outcome of this matter.

In September 2011, LG&E and KU requested KPSC approval to build a 640 MW NGCC at the existing Cane Run plant site in Kentucky. In May 2012, the KPSC issued an order approving the request to build the NGCC. Subject to entering into contracting agreements, completing remaining permitting activities and building schedules, construction is expected to begin in 2012 and be completed during 2015. The project, which includes building a natural gas supply pipeline, has an expected cost of approximately $580 million.

In conjunction with this request and to meet new, stricter federal EPA regulations, LG&E and KU anticipate retiring six older coal-fired electric generating units at the Cane Run, Green River and Tyrone plants, which have a combined summer rating of 797 MW. The Cane Run and Green River coal units are anticipated to remain operational until the replacement generation and associated transmission projects are completed. See Note 6 for additional information.

The NRC continues to review the COLA submitted by a PPL Energy Supply subsidiary, PPL Bell Bend, LLC (PPL Bell Bend) for the proposed Bell Bend nuclear generating unit (Bell Bend) to be built adjacent to the Susquehanna plant. PPL Bell Bend has made no decision to proceed with construction of Bell Bend and expects that such decision will not be made for several years given the anticipated lengthy NRC license approval process. Additionally, PPL Bell Bend has announced that it does not expect to proceed with construction absent favorable economics, a joint arrangement with other interested parties and a federal loan guarantee or other acceptable financing. PPL Bell Bend is currently authorized to spend up to $162 million through 2012 on the COLA and other permitting costs (including land costs) necessary for construction. At March 31, 2012 and December 31, 2011, $137 million and $131 million of costs associated with the licensing application were capitalized and are included on the Balance Sheets in noncurrent "Other intangibles." PPL Bell Bend believes it is probable that these costs are ultimately recoverable following NRC approval of the COLA either through construction of the new nuclear unit, transfer of the COLA rights to a joint venture, or sale of the COLA rights to another party. PPL Bell Bend remains active in the DOE Federal loan guarantee application process. See Note 8 in PPL's and PPL Energy Supply's 2011 Form 10-K for additional information.

PPL Electric has experienced delays in obtaining necessary National Park Service (NPS) approvals for the Susquehanna-Roseland transmission line and anticipates a delay of the line's in-service date to 2015. In March 2012, the NPS announced that the route proposed by PPL Electric and PSE&G, previously approved by the Pennsylvania and New Jersey public utility commissions, is the preferred route for the line under the NPS's National Environmental Policy Act review. The NPS has stated that it expects to issue its record of decision in October 2012. An appeal of the New Jersey Board of Public Utilities approval of the line is pending before the New Jersey Superior Court Appellate Division. PPL Electric cannot predict the ultimate outcome or timing of the NPS approval or any further legal challenges to the project. PJM has developed a strategy to manage potential reliability problems until the line is built. PPL Electric cannot predict what additional actions, if any, PJM might take in the event of a further delay to its scheduled in-service date for the new line. See Note 8 in PPL's and PPL Electric's 2011 Form 10-K for additional information.