Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities [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 three months ended March 31 were as follows.

		2012		2011
PPL Energy Supply
Operating Revenues
	Unregulated retail electric and gas	$	10	$	4
	Wholesale energy marketing		852		57
Operating Expenses
	Fuel		2		23
	Energy purchases		(591)		18

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

The following table presents the expected sales, in GWh, from competitive baseload generation and tolling arrangements that are included in the baseload portfolio based on current forecasted assumptions for 2012-2014.

2012 (a)	2013	2014
39,733	53,136	53,502

(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 March 31, 2012.

	Derivative	Total Power	Fuel Purchases (c)
Year	Sales (a)	Sales (b)	Coal	Nuclear
2012 (d)	91%	95%	100%	100%
2013	75%	82%	97%	100%
2014 (e)	8%	13%	70%	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 (including contracts that qualify for NPNS) 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 1,635GWh and 20.2 Bcf.

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 March 31, 2012.

	2012 (a)	2013	2014
Oil Swaps	162	285	240

(a)       Represents the balance of the current year.

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 March 31, 2012.

	Units	2012 (a)	2013	2014 (b)
Net Power Sales	GWh	(2,076)	(408)
Net Fuel Purchases (c)	Bcf	16.9	2.6	(0.3)

(a)       Represents the balance of the current year.

(b)       Volumes for derivative contracts used in support of these strategies that deliver in future periods are insignificant.

(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 insignificant.

Commodity Volumetric Activity - Marketing Activities

The following table presents the volume of (sales)/purchase contracts, excluding FTRs, RECs, basis and capacity contracts, used in support of these activities at March 31, 2012.

		Units	2012 (a)	2013	2014
Energy sales contracts (b)		GWh	(10,945)	(6,612)	(3,261)
Related energy supply contracts (b)
	Energy purchases	GWh	7,718	2,873	955
	Volumetric hedges (c)	GWh	73	80	65
	Generation supply	GWh	2,630	3,049	2,234
Retail gas sales contracts		Bcf	(11.4)	(6.0)	(1.8)
Retail gas purchase contracts		Bcf	11.2	5.8	1.7

(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 - Financial Transmission Rights and Other Basis Positions

The following table represents the net volumes of derivative FTR and basis (sales)/purchase contracts at March 31, 2012.

	Units	2012 (a)	2013	2014
FTRs	GWh	7,207
Power Basis Positions (b)	GWh	(13,316)	(8,244)	(2,628)
Gas Basis Positions (b)	Bcf	7.1	(5.2)	(4.0)

(a)       Represents the balance of the current year.

(b)       Net volumes that deliver in future periods are (677) GWh and (4.0) Bcf.

Commodity Volumetric Activity - Capacity Positions

These contracts are marked to fair value through earnings. The following table presents the net volumes of derivative capacity (sales)/purchase contracts at March 31, 2012.

	Units	2012 (a)	2013	2014 (b)
Capacity	MW-months	(7,102)	(3,366)	(2,578)

(a)       Represents the balance of the current year.

(b)       Net volumes that deliver in future periods are 989 MW-months.

Fair Value and Balance Sheet Location of Derivative Instruments

The following tables present the fair value and location of derivative instruments recorded on the Balance Sheets.

						March 31, 2012								December 31, 2011
						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			$	3	$	1			$	4	$	3	$	3			$	5
			Cross-currency swaps						2								2
			Foreign currency
				contracts			1			$	4		13		7			$	11
			Commodity contracts				120				3,102		2,129		872		3		1,655		1,557
					Total current		124		3		3,106		2,146		882		8		1,666		1,562
Noncurrent:
	Price Risk Management
		Assets/Liabilities (b):
			Interest rate swaps										49								55
			Cross-currency swaps				37								24
			Commodity contracts				48		1		1,101		1,024		42		2		854		783
					Total noncurrent		85		1		1,101		1,073		66		2		854		838
Total derivatives						$	209	$	4	$	4,207	$	3,219	$	948	$	10	$	2,520	$	2,400

(a)       $816 million and $237 million of net gains associated with derivatives that were no longer designated as hedging instruments are recorded in AOCI at March 31, 2012 and December 31, 2011.

(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 the three months ended March 31.

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	2012	2011		2012		2011
Interest rate swaps	Fixed rate debt	Interest expense	$	$	1	$	1	$	10

									2012				2011
											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			2012		2011			in Income	Portion)		Testing)		Portion)		Testing)
Cash Flow Hedges:
	Interest rate swaps		$	3	$	10	Interest expense		$	(4)			$	(3)	$	(1)
	Cross-currency swaps			12		(25)	Interest expense			(1)				3
							Other income
								(expense) - net		(19)				(13)
	Commodity contracts			113		84	Wholesale energy
								marketing		272	$	4		203		(9)
							Depreciation			1
							Energy purchases			(40)		(4)		(70)		1
Total			$	128	$	69			$	209	$		$	120	$	(9)
Net Investment Hedges:
		Foreign currency contracts	$	(3)	$	(1)

Derivatives Not Designated as	Location of Gain (Loss) Recognized in
Hedging Instruments:	Income on Derivatives	2012		2011
Foreign currency contracts	Other income (expense) - net	$	(18)	$	(9)
Interest rate swaps	Interest expense		(2)		(2)
Commodity contracts	Unregulated retail electric and gas		22		1
	Wholesale energy marketing		1,343		45
	Net energy trading margins (a)		9		7
	Fuel		6		23
	Energy purchases		(1,070)		(55)
	Total	$	290	$	10
Derivatives Not Designated as	Location of Gain (Loss) Recognized as
Hedging Instruments:	Regulatory Liabilities/Assets	2012		2011
Interest rate swaps	Regulatory assets	$	7	$	2

(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.

Credit Risk-Related Contingent Features

At March 31, 2012, the effect of a decrease in credit ratings below investment grade on derivative contracts that contain credit contingent features and were in a net liability position is summarized as follows.

				PPL
		PPL		Energy Supply		LKE		LG&E
Aggregate fair value of derivative instruments in a net liability
	position with credit contingent provisions	$	211	$	168	$	36	$	36
Aggregate fair value of collateral posted on these derivative instruments			53		26		27		27
Aggregate fair value of additional collateral requirements in the event of
	a credit downgrade below investment grade (a)		175		158		9		9

(a)Includes the effect of net receivables and payables already recorded on the Balance Sheet.