XML 52 R42.htm IDEA: XBRL DOCUMENT

Fair Value Measurements and Credit Concentration (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements and Credit Concentration [Line Items]

Fair Value of Assets and Liabilities Measured on Recurring Basis

The assets and liabilities measured at fair value were:

				March 31, 2013								December 31, 2012
				Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
PPL
Assets
	Cash and cash equivalents			$	853	$	853					$	901	$	901
	Restricted cash and cash equivalents (a)				186		186						135		135
	Price risk management assets:
		Energy commodities			1,676		3	$	1,651	$	22		2,068		2	$	2,037	$	29
		Interest rate swaps			27				27				15				15
		Foreign currency contracts			96				96
		Cross-currency swaps			83				83				14				13		1
	Total price risk management assets				1,882		3		1,857		22		2,097		2		2,065		30
	NDT funds:
		Cash and cash equivalents			8		8						11		11
		Equity securities
			U.S. large-cap		457		342		115				412		308		104
			U.S. mid/small-cap		68		28		40				60		25		35
		Debt securities
			U.S. Treasury		95		95						95		95
			U.S. government sponsored agency		9				9				9				9
			Municipality		83				83				82				82
			Investment-grade corporate		40				40				40				40
			Other		3				3				3				3
		Receivables (payables), net			1		(1)		2						(2)		2
	Total NDT funds				764		472		292				712		437		275
	Auction rate securities (b)				19				3		16		19				3		16
Total assets				$	3,704	$	1,514	$	2,152	$	38	$	3,864	$	1,475	$	2,343	$	46

Liabilities
	Price risk management liabilities:
		Energy commodities		$	1,432	$	2	$	1,422	$	8	$	1,566	$	2	$	1,557	$	7
		Interest rate swaps			69				69				80				80
		Foreign currency contracts			3				3				44				44
		Cross-currency swaps			1				1				4				4
	Total price risk management liabilities			$	1,505	$	2	$	1,495	$	8	$	1,694	$	2	$	1,685	$	7

PPL Energy Supply
Assets
	Cash and cash equivalents			$	147	$	147					$	413	$	413
	Restricted cash and cash equivalents (a)				122		122						63		63
	Price risk management assets:
		Energy commodities			1,676		3	$	1,651	$	22		2,068		2	$	2,037	$	29
	Total price risk management assets				1,676		3		1,651		22		2,068		2		2,037		29
	NDT funds:
		Cash and cash equivalents			8		8						11		11
		Equity securities
			U.S. large-cap		457		342		115				412		308		104
			U.S. mid/small-cap		68		28		40				60		25		35
		Debt securities
			U.S. Treasury		95		95						95		95
			U.S. government sponsored agency		9				9				9				9
			Municipality		83				83				82				82
			Investment-grade corporate		40				40				40				40
			Other		3				3				3				3
		Receivables (payables), net			1		(1)		2						(2)		2
	Total NDT funds				764		472		292				712		437		275
	Auction rate securities (b)				16				3		13		16				3		13
Total assets				$	2,725	$	744	$	1,946	$	35	$	3,272	$	915	$	2,315	$	42

Liabilities
	Price risk management liabilities:
		Energy commodities		$	1,432	$	2	$	1,422	$	8	$	1,566	$	2	$	1,557	$	7
	Total price risk management liabilities			$	1,432	$	2	$	1,422	$	8	$	1,566	$	2	$	1,557	$	7

PPL Electric
Assets
	Cash and cash equivalents			$	31	$	31					$	140	$	140
	Restricted cash and cash equivalents (c)				12		12						13		13
Total assets				$	43	$	43					$	153	$	153

LKE
Assets
	Cash and cash equivalents			$	52	$	52			$	43	$	43
	Restricted cash and cash equivalents (d)				27		27				32		32
	Price risk management assets:
			Interest rate swaps		24			$	24		14			$	14
	Total price risk management assets				24				24		14				14
Total assets				$	103	$	79	$	24	$	89	$	75	$	14

Liabilities
	Price risk management liabilities:
		Interest rate swaps		$	54			$	54	$	58			$	58
Total price risk management liabilities				$	54			$	54	$	58			$	58

LG&E
Assets
	Cash and cash equivalents			$	34	$	34			$	22	$	22
	Restricted cash and cash equivalents (d)				27		27				32		32
	Price risk management assets:
			Interest rate swaps		12			$	12		7			$	7
Total price risk management assets					12				12		7				7
Total assets				$	73	$	61	$	12	$	61	$	54	$	7

Liabilities
	Price risk management liabilities:
		Interest rate swaps		$	54			$	54	$	58			$	58
Total price risk management liabilities				$	54			$	54	$	58			$	58

KU
Assets
	Cash and cash equivalents			$	16	$	16			$	21	$	21
	Price risk management assets:
			Interest rate swaps		12			$	12		7			$	7
	Total price risk management assets				12				12		7				7
Total assets				$	28	$	16	$	12	$	28	$	21	$	7

(a) Current portion is included in "Restricted cash and cash equivalents" and the long-term portion is included in "Other noncurrent assets" on the Balance Sheets.

(b) Included in "Other investments" on the Balance Sheets.

(c) Current portion is included in "Other current assets" and the long-term portion is included in "Other noncurrent assets" on the Balance Sheets.

(d) Included in "Other noncurrent assets" on the Balance Sheets.

Reconciliation of Net Assets and Liabilities Classified as Level 3

A reconciliation of net assets and liabilities classified as Level 3 for the three months ended March 31 is as follows:

					Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
					2013								2012
					Energy		Auction		Cross-				Energy		Auction		Cross-
					Commodities,		Rate		Currency				Commodities,		Rate		Currency
					net		Securities		Swaps		Total		net		Securities		Swaps		Total
PPL
Balance at beginning of
	period				$	22	$	16	$	1	$	39	$	13	$	24	$	4	$	41
		Total realized/unrealized
			gains (losses)
				Included in earnings		(8)						(8)		18						18
				Included in OCI (a)						3		3		2				2		4
		Settlements				(1)						(1)		(6)						(6)
		Transfers into Level 3				1						1
		Transfers out of Level 3								(4)		(4)		(8)				(3)		(11)
Balance at end of period					$	14	$	16	$		$	30	$	19	$	24	$	3	$	46

PPL Energy Supply
Balance at beginning of
	period				$	22	$	13			$	35	$	13	$	19			$	32
		Total realized/unrealized
			gains (losses)
				Included in earnings		(8)						(8)		18						18
				Included in OCI (a)										2						2
		Settlements				(1)						(1)		(6)						(6)
		Transfers into Level 3				1						1
		Transfers out of Level 3												(8)						(8)
Balance at end of period					$	14	$	13			$	27	$	19	$	19			$	38

(a) "Energy Commodities, net" and "Cross-Currency Swaps" are included in "Qualifying derivatives" and "Auction Rate Securities" are included in "Available-for-sale securities" on the Statements of Comprehensive Income.

Significant Unobservable Inputs Used in Fair Value Measurement of Assets and Liabilities Classified as Level 3

The significant unobservable inputs used in and quantitative information about the fair value measurement of assets and liabilities classified as Level 3 are as follows:

March 31, 2013

Fair Value, net

Range

Asset

Valuation

Unobservable

(Weighted

(Liability)

Technique

Input(s)

Average) (a)

PPL

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

23% - 100% (96%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

21% (21%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

55% - 74% (64%)

PPL Energy Supply

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

23% - 100% (96%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

21% (21%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

58% - 74% (65%)

December 31, 2012

Fair Value, net

Range

Asset

Valuation

Unobservable

(Weighted

(Liability)

Technique

Input(s)

Average) (a)

PPL

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

21% - 100% (75%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

24% (24%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

54% - 74% (64%)

Cross-currency swaps (f)

Discounted cash flow

Credit valuation adjustment

22% (22%)

PPL Energy Supply

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

21% - 100% (75%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

24% (24%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

57% - 74% (65%)

(a) For energy commodities and auction rate securities, the range and weighted average represent the percentage of fair value derived from the unobservable inputs. For cross-currency swaps, the range and weighted average represent the percentage decrease in fair value due to the unobservable inputs used in the model to calculate the credit valuation adjustment.

(b) At March 31, 2013, retail natural gas sales contracts extend through 2017, and $3 million of the fair value is scheduled to deliver within the next 12 months. As the forward price of natural gas increases/(decreases), the fair value of the contracts (decreases)/increases.

(c) At March 31, 2013, power sales contracts extend into 2014, and $(4) million of the fair value is scheduled to deliver within the next 12 months. As the forward price of basis increases/(decreases), the fair value of the contracts (decreases)/increases.

(d) At March 31, 2013, FTR purchase contracts extend through 2015, and $1 million of the fair value is scheduled to deliver within the next 12 months. As the forward implied spread increases/(decreases), the fair value of the contracts increases/(decreases).

(e) At March 31, 2013, auction rate securities have a weighted average contractual maturity of 23 years. The model used to calculate fair value incorporates an assumption that the auctions will continue to fail. As the modeled forward rates of the SIFMA Index increase/(decrease), the fair value of the securities increases/(decreases).

(f) The credit valuation adjustment incorporates projected probabilities of default and estimated recovery rates. As the credit valuation adjustment increases/(decreases), the fair value of the swaps (decreases)/increases.

Fair Value of Assets and Liabilities Classified as Level 3 Measured on Recurring Basis Included in Earnings

Net gains and losses on assets and liabilities classified as Level 3 and included in earnings for the periods ended March 31 are reported in the Statements of Income as follows:

		Three Months

		Energy Commodities, net
		Unregulated Retail				Wholesale Energy				Net Energy			Energy
		Electric and Gas				Marketing				Trading Margins			Purchases
		2013		2012		2013		2012		2013	2012		2013		2012
PPL and PPL Energy Supply
Total gains (losses) included in earnings		$	(7)	$	16	$	(2)	$	4		$	(1)	$	1	$	(1)
Change in unrealized gains (losses) relating to
	positions still held at the reporting date		(7)		46		(2)		(18)			(1)		1		(5)

Fair Value of Financial Instruments Not Recorded at Fair Value - Other

The carrying amounts of contract adjustment payments related to the Purchase Contract component of the Equity Units and long-term debt on the Balance Sheets and their estimated fair values are set forth below.

		March 31, 2013				December 31, 2012
		Carrying				Carrying
		Amount		Fair Value		Amount		Fair Value
PPL
	Contract adjustment payments (a)	$	81	$	82	$	105	$	106
	Long-term debt		19,632		21,872		19,476		21,671
PPL Energy Supply
	Long-term debt		3,264		3,568		3,272		3,556
PPL Electric
	Long-term debt		1,967		2,304		1,967		2,333

LKE
	Long-term debt	4,075	4,413	4,075	4,423
LG&E
	Long-term debt	1,112	1,177	1,112	1,178
KU
	Long-term debt	1,842	2,052	1,842	2,056

(a) Reflected in "Other current liabilities" and "Other deferred credits and noncurrent liabilities" on the Balance Sheets.

PPL Energy Supply LLC [Member]

Fair Value Measurements and Credit Concentration [Line Items]

Reconciliation of Net Assets and Liabilities Classified as Level 3

A reconciliation of net assets and liabilities classified as Level 3 for the three months ended March 31 is as follows:

					Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
					2013								2012
					Energy		Auction		Cross-				Energy		Auction		Cross-
					Commodities,		Rate		Currency				Commodities,		Rate		Currency
					net		Securities		Swaps		Total		net		Securities		Swaps		Total
PPL
Balance at beginning of
	period				$	22	$	16	$	1	$	39	$	13	$	24	$	4	$	41
		Total realized/unrealized
			gains (losses)
				Included in earnings		(8)						(8)		18						18
				Included in OCI (a)						3		3		2				2		4
		Settlements				(1)						(1)		(6)						(6)
		Transfers into Level 3				1						1
		Transfers out of Level 3								(4)		(4)		(8)				(3)		(11)
Balance at end of period					$	14	$	16	$		$	30	$	19	$	24	$	3	$	46

PPL Energy Supply
Balance at beginning of
	period				$	22	$	13			$	35	$	13	$	19			$	32
		Total realized/unrealized
			gains (losses)
				Included in earnings		(8)						(8)		18						18
				Included in OCI (a)										2						2
		Settlements				(1)						(1)		(6)						(6)
		Transfers into Level 3				1						1
		Transfers out of Level 3												(8)						(8)
Balance at end of period					$	14	$	13			$	27	$	19	$	19			$	38

Significant Unobservable Inputs Used in Fair Value Measurement of Assets and Liabilities Classified as Level 3

The significant unobservable inputs used in and quantitative information about the fair value measurement of assets and liabilities classified as Level 3 are as follows:

March 31, 2013

Fair Value, net

Range

Asset

Valuation

Unobservable

(Weighted

(Liability)

Technique

Input(s)

Average) (a)

PPL

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

23% - 100% (96%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

21% (21%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

55% - 74% (64%)

PPL Energy Supply

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

23% - 100% (96%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

21% (21%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

58% - 74% (65%)

December 31, 2012

Fair Value, net

Range

Asset

Valuation

Unobservable

(Weighted

(Liability)

Technique

Input(s)

Average) (a)

PPL

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

21% - 100% (75%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

24% (24%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

54% - 74% (64%)

Cross-currency swaps (f)

Discounted cash flow

Credit valuation adjustment

22% (22%)

PPL Energy Supply

Energy commodities

Retail natural gas sales contracts (b)

Discounted cash flow

Observable wholesale prices used as proxy for retail delivery points

21% - 100% (75%)

Power sales contracts (c)

(4)

Discounted cash flow

Proprietary model used to calculate forward basis prices

24% (24%)

FTR purchase contracts (d)

Discounted cash flow

Historical settled prices used to model forward prices

100% (100%)

Auction rate securities (e)

Discounted cash flow

Modeled from SIFMA Index

57% - 74% (65%)

Fair Value of Assets and Liabilities Classified as Level 3 Measured on Recurring Basis Included in Earnings

Net gains and losses on assets and liabilities classified as Level 3 and included in earnings for the periods ended March 31 are reported in the Statements of Income as follows:

		Three Months

		Energy Commodities, net
		Unregulated Retail				Wholesale Energy				Net Energy			Energy
		Electric and Gas				Marketing				Trading Margins			Purchases
		2013		2012		2013		2012		2013	2012		2013		2012
PPL and PPL Energy Supply
Total gains (losses) included in earnings		$	(7)	$	16	$	(2)	$	4		$	(1)	$	1	$	(1)
Change in unrealized gains (losses) relating to
	positions still held at the reporting date		(7)		46		(2)		(18)			(1)		1		(5)

- Definition

Tabular disclosure of the amount of gains or losses for the period included in earnings or resulted in a change to net assets, have arisen from the use of significant unobservable inputs (level 3) to measure the fair value of assets, liabilities, and financial instruments classified in shareholders' equity.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

+ Details