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, 2007
	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 large accelerated filers, accelerated filers, or non-accelerated filers. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer	Accelerated filer	Non-accelerated filer
PPL Corporation	[ X ]	[     ]	[     ]
PPL Energy Supply, LLC	[     ]	[     ]	[ X ]
PPL Electric Utilities Corporation	[     ]	[     ]	[ X ]

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

PPL Corporation	Yes	No  X
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, 385,949,422 shares outstanding at April 30, 2007.
PPL Energy Supply, LLC	PPL Corporation indirectly holds all of the membership interests in PPL Energy Supply, LLC.
PPL Electric Utilities Corporation	Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at April 30, 2007.

This document is available free of charge at the Investor Center on PPL's Web site at www.pplweb.com. However, information on this Web site 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, 2007

Table of Contents

				Page
GLOSSARY OF TERMS AND ABBREVIATIONS					i
FORWARD-LOOKING INFORMATION					1
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		PPL Corporation and Subsidiaries
			Condensed Consolidated Statements of Income		2
			Condensed Consolidated Statements of Cash Flows		3
			Condensed Consolidated Balance Sheets		4
		PPL Energy Supply, LLC and Subsidiaries
			Condensed Consolidated Statements of Income		6
			Condensed Consolidated Statements of Cash Flows		7
			Condensed Consolidated Balance Sheets		8
		PPL Electric Utilities Corporation and Subsidiaries
			Condensed Consolidated Statements of Income		10
			Condensed Consolidated Statements of Cash Flows		11
			Condensed Consolidated Balance Sheets		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		42
			PPL Energy Supply, LLC and Subsidiaries		54
			PPL Electric Utilities Corporation and Subsidiaries		65
	Item 3. Quantitative and Qualitative Disclosures About Market Risk				69
	Item 4. Controls and Procedures				69
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings				69
	Item 1A. Risk Factors				69
	Item 6. Exhibits				70
SIGNATURES					72
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
			PPL Corporation and Subsidiaries		73
			PPL Energy Supply, LLC and Subsidiaries		74
			PPL Electric Utilities Corporation and Subsidiaries		75
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
			PPL Corporation		76
			PPL Energy Supply, LLC		78
			PPL Electric Utilities Corporation		80
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
			PPL Corporation		82
			PPL Energy Supply, LLC		84
			PPL Electric Utilities Corporation		86

GLOSSARY OF TERMS AND ABBREVIATIONS

PPL Corporation and its current and former subsidiaries

Elfec - Empresa de Luz y Fuerza Electrica Cochabamba S.A., a Bolivian electric distribution company in which PPL Global has a majority ownership interest.

Emel - Empresas Emel S.A., a Chilean electric distribution holding company in which PPL Global has a majority ownership interest.

Griffith - a 600 MW gas-fired station in Kingman, Arizona, that was jointly owned by an indirect subsidiary of PPL Generation and LS Power Group until the sale of PPL Generation's interest in June 2006.

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).

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

PPL Capital Funding - PPL Capital Funding, Inc., a wholly owned financing subsidiary of 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 that markets and trades 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 that specializes 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 that owns and operates U.S. generating facilities through various subsidiaries.

PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Supply that owns and operates international energy businesses that are focused on the regulated distribution of electricity.

PPL Martins Creek - PPL Martins Creek, LLC, a subsidiary of PPL Generation that owns generating operations in Pennsylvania.

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

PPL Services - PPL Services Corporation, a subsidiary of PPL that 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 subsidiary of PPL Electric that was formed to issue transition bonds under the Customer Choice Act.

SIUK Capital Trust I - a business trust created to issue preferred securities and whose common securities were held by WPD LLP. The securities were redeemed in February 2007.

WPD - refers collectively to WPDH Limited and WPDL.

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.

Other terms and abbreviations

£ - British pounds sterling.

2006 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2006.

APB - Accounting Principles Board.

ARO - asset retirement obligation.

Bcf - billion cubic feet.

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.

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

DOE - Department of Energy, a U.S. government agency.

EITF - Emerging Issues Task Force, an organization that assists the FASB in improving financial reporting through the identification, discussion and resolution of financial accounting 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.

EWG - exempt wholesale generator.

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.

Fitch - Fitch, Inc.

FSP - FASB Staff Position

FTR - financial transmission rights, which are financial instruments established to manage price risk related to electricity transmission congestion. They entitle the holder to receive compensation or remit payment for certain congestion-related transmission charges that arise when the transmission grid is congested.

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

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

ISO - Independent System Operator.

ITC - intangible transition charge on customer bills to recover intangible transition costs associated with securitizing stranded costs under the Customer Choice Act.

LIBOR-London Interbank Offered Rate.

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.

Moody's - Moody's Investors Service, Inc.

MW - megawatt, one thousand kilowatts.

NorthWestern - NorthWestern Energy Division, a Delaware corporation and a subsidiary 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.

NRC - Nuclear Regulatory Commission, the federal agency that regulates the 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.

NYMEX- New York Mercantile Exchange.

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

PJM(PJM Interconnection, L.L.C.) - operator of the electric transmission network and electric energy market in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

PLR (Provider of Last Resort) - the role of PPL Electric in providing electricity to retail customers within its delivery territory who have not chosen to select an alternative electricity supplier under the Customer Choice Act.

PP&E- property, plant and equipment.

Preferred Securities - company-obligated mandatorily redeemable preferred securities issued by SIUK Capital Trust I, which solely held debentures of WPD LLP. The securities of SIUK Capital Trust I were redeemed in February 2007.

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.

PUHCA - Public Utility Holding Company Act of 1935, legislation passed by the U.S. Congress. Repealed effective February 2006 by the Energy Policy Act of 2005.

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.

Regulation S-X - SEC regulation governing the form and content of and requirements for financial statements required to be filed pursuant to the federal securities laws.

SCR - selective catalytic reduction, a pollution control process.

Scrubber - an air pollution control device that can remove particulates and/or gases (such as sulfur dioxide) from exhaust gases.

SEC - Securities and Exchange Commission, a U.S. government agency whose primary mission is to protect investors and maintain the integrity of the securities markets.

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

S&P - Standard & Poor's Ratings Services.

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 may be available on qualified synthetic fuel products.

Tolling agreement- agreement whereby the owner of an electric generating facility agrees to use that facility to convert fuel provided by a third party into electric energy for delivery back to the third party.

VaR- value-at-risk.

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 "Item 1A. Risk Factors" in the companies' 2006 Form 10-K and in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q report, 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;

· market prices for crude oil and the potential impact on synthetic fuel operations, synthetic fuel purchases from third parties and the phase-out of synthetic fuel tax credits;

· weather conditions affecting generation production, customer energy usage and operating costs;

· competition in retail and wholesale power markets;

· liquidity of wholesale power markets;

· defaults by our counterparties under our energy or fuel contracts;

· the effect of any business or industry restructuring;

· the profitability and liquidity, including access to capital markets and credit facilities, of PPL and its subsidiaries;

· new accounting requirements or new interpretations or applications of existing requirements;

· operation and availability of existing generation facilities and operating costs;

· transmission and distribution system conditions and operating costs;

· current and future environmental conditions and requirements and the related costs of compliance, including environmental capital expenditures and emission allowances and other expenses;

· significant delays in the planned installation of pollution control equipment at certain coal-fired generating units in Pennsylvania due to weather conditions, contractor performance or other reasons;

· market prices of commodity inputs for ongoing capital expenditures;

· collective labor bargaining negotiations;

· 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;

· any impact of hurricanes or other severe weather on PPL and its subsidiaries, including any impact on fuel prices;

· receipt of necessary governmental permits, approvals and rate relief;

· new state, federal or foreign legislation, including new tax legislation;

· state, federal and foreign regulatory developments;

· the impact of any state, federal or foreign investigations applicable to PPL and its subsidiaries and the energy industry;

· capital market conditions, including changes in interest rates, and decisions regarding capital structure;

· stock price performance of PPL;

· the market prices of equity securities and the impact on pension costs and resultant cash funding requirements for defined benefit pension plans;

· securities and credit ratings;

· foreign currency exchange rates;

· the outcome of litigation against PPL and its subsidiaries;

· potential effects of threatened or actual terrorism or war 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 STATEMENTS OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except per share data)
	Three Months Ended March 31,
	2007			2006
Operating Revenues
Utility	$	1,175		$	1,112
Unregulated retail electric		22			25
Wholesale energy marketing		249			335
Net energy trading margins		7			10
Energy-related businesses		185			168
Total		1,638			1,650
Operating Expenses
Operation
Fuel		299			241
Energy purchases		120			223
Other operation and maintenance		336			311
Amortization of recoverable transition costs		81			72
Depreciation		118			102
Taxes, other than income		79			70
Energy-related businesses (Note 8)		202			158
Total		1,235			1,177
Operating Income		403			473
Other Income - net		26			8
Interest Expense		121			114
Income from Continuing Operations Before Income Taxes, Minority Interest and Dividends on Preferred Securities of a Subsidiary		308			367
Income Taxes		74			95
Minority Interest		1
Dividends on Preferred Securities of a Subsidiary		5			1
Income from Continuing Operations		228			271
(Loss) Income from Discontinued Operations (net of income taxes) (Note 8)		(25	)		9
Net Income	$	203		$	280
Earnings Per Share of Common Stock:
Income from Continuing Operations:
Basic	$	0.59		$	0.71
Diluted	$	0.58		$	0.70
Net Income:
Basic	$	0.53		$	0.74
Diluted	$	0.52		$	0.73
Dividends Declared Per Share of Common Stock	$	0.305		$	0.275

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	Three Months Ended March 31,
	2007			2006
Cash Flows from Operating Activities
Net income	$	203		$	280
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		124			108
Amortizations - recoverable transition costs and other		108			77
Pension and other postretirement benefits - net		22			(3	)
Deferred income taxes and investment tax credits		(32	)		(48	)
Impairment of assets held for sale		65
Other		(33	)		(34	)
Change in current assets and current liabilities
Accounts receivable		(48	)		(99	)
Accounts payable		(29	)		(15	)
Fuel, materials and supplies		58			(20	)
Prepayments		(135	)		(95	)
Other		(21	)		147
Other operating activities
Other assets		16			(15	)
Other liabilities		(12	)		14
Net cash provided by operating activities		286			297
Cash Flows from Investing Activities
Expenditures for property, plant and equipment		(341	)		(198	)
Purchases of emission allowances		(4	)		(53	)
Proceeds from the sale of emission allowances		30			29
Purchases of nuclear decommissioning trust investments		(42	)		(73	)
Proceeds from the sale of nuclear decommissioning trust investments		38			69
Purchases of short-term investments		(127	)		(39	)
Proceeds from the sale of short-term investments		132			97
Net decrease (increase) in restricted cash		10			(6	)
Other investing activities		5			15
Net cash used in investing activities		(299	)		(159	)
Cash Flows from Financing Activities
Issuance of long-term debt		505
Retirement of long-term debt		(201	)		(225	)
Issuance of common stock		5			2
Payment of common stock dividends		(105	)		(95	)
Net increase (decrease) in short-term debt		29			(36	)
Other financing activities		(12	)		(1	)
Net cash provided by (used in) financing activities		221			(355	)
Effect of Exchange Rates on Cash and Cash Equivalents		(1	)
Net Increase (Decrease) in Cash and Cash Equivalents		207			(217	)
Cash and Cash Equivalents at Beginning of Period		794			555
Reclassification of cash to assets held for sale		(36	)
Cash and Cash Equivalents at End of Period	$	965		$	338
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	March 31, 2007		December 31, 2006
Assets
Current Assets
Cash and cash equivalents	$	965	$	794
Short-term investments		354		359
Restricted cash		96		102
Accounts receivable (less reserve: 2007, $44; 2006, $50)		542		591
Unbilled revenues		413		469
Fuel, materials and supplies		308		378
Prepayments		242		79
Deferred income taxes		196		162
Price risk management assets		497		551
Other acquired intangibles		126		124
Assets held for sale (Note 8)		849
Other		18		21
Total Current Assets		4,606		3,630
Investments
Investment in unconsolidated affiliates - at equity		44		47
Nuclear plant decommissioning trust funds		520		510
Other		7		7
Total Investments		571		564
Property, Plant and Equipment
Electric plant in service
Transmission and distribution		8,281		8,836
Generation		8,756		8,744
General		809		779
		17,846		18,359
Construction work in progress		807		682
Nuclear fuel		381		354
Electric plant		19,034		19,395
Gas and oil plant		377		373
Other property		189		311
		19,600		20,079
Less: accumulated depreciation		7,885		8,010
Total Property, Plant and Equipment		11,715		12,069
Regulatory and Other Noncurrent Assets
Recoverable transition costs		803		884
Goodwill		1,004		1,154
Other acquired intangibles		324		367
Price risk management assets		176		144
Other		908		935
Total Regulatory and Other Noncurrent Assets		3,215		3,484
Total Assets	$	20,107	$	19,747
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
		March 31, 2007			December 31, 2006
Liabilities and Equity
Current Liabilities
Short-term debt		$	71		$	42
Long-term debt			1,015			1,018
Long-term debt with affiliate trust						89
Accounts payable			592			667
Above market NUG contracts			59			65
Taxes			88			194
Interest			129			109
Dividends			123			111
Price risk management liabilities			379			550
Liabilities held for sale and related minority interest (Note 8)			394
Other			408			503
Total Current Liabilities			3,258			3,348
Long-term Debt			6,933			6,728
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes and investment tax credits			2,271			2,331
Price risk management liabilities			458			459
Accrued pension obligations			354			364
Asset retirement obligations			342			336
Above market NUG contracts			60			71
Other			831			627
Total Deferred Credits and Other Noncurrent Liabilities			4,316			4,188
Commitments and Contingent Liabilities (Note 10)
Minority Interest			26			60
Preferred Securities of a Subsidiary			301			301
Shareowners' Common Equity
Common stock - $0.01 par value (a)			4			4
Capital in excess of par value			2,829			2,810
Earnings reinvested			2,711			2,626
Accumulated other comprehensive loss			(271	)		(318	)
Total Shareowners' Common Equity			5,273			5,122
Total Liabilities and Equity		$	20,107		$	19,747
(a)	780 million shares authorized; 385 million shares outstanding at March 31, 2007 and December 31, 2006.
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
	Three Months Ended March 31,
	2007			2006
Operating Revenues
Wholesale energy marketing	$	249		$	335
Wholesale energy marketing to affiliate		481			446
Utility		216			203
Unregulated retail electric		22			25
Net energy trading margins		7			10
Energy-related businesses		183			160
Total		1,158			1,179
Operating Expenses
Operation
Fuel		233			168
Energy purchases		69			169
Energy purchases from affiliate		37			39
Other operation and maintenance		244			222
Depreciation		81			68
Taxes, other than income		24			21
Energy-related businesses (Note 8)		201			151
Total		889			838
Operating Income		269			341
Other Income - net		24			8
Interest Expense		72			56
Interest Expense with Affiliates		4			3
Income from Continuing Operations Before Income Taxes and Minority Interest		217			290
Income Taxes		44			69
Minority Interest		1
Income from Continuing Operations		172			221
(Loss) Income from Discontinued Operations (net of income taxes) (Note 8)		(25	)		9
Net Income	$	147		$	230
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
	Three Months Ended March 31,
	2007			2006
Cash Flows from Operating Activities
Net income	$	147		$	230
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		87			75
Pension and other postretirement benefits - net		12			(12	)
Deferred income taxes and investment tax credits		5			(1	)
Impairment of assets held for sale		65
Other		(15	)		(42	)
Change in current assets and current liabilities
Accounts receivable		(28	)		(64	)
Accounts payable		(66	)		(1	)
Fuel, materials and supplies		35			(36	)
Other		(8	)		85
Other operating activities
Other assets		8			(11	)
Other liabilities		(19	)		2
Net cash provided by operating activities		223			225
Cash Flows from Investing Activities
Expenditures for property, plant and equipment		(270	)		(147	)
Purchases of emission allowances		(4	)		(53	)
Proceeds from the sale of emission allowances		30			29
Purchases of nuclear decommissioning trust investments		(42	)		(73	)
Proceeds from the sale of nuclear decommissioning trust investments		38			69
Purchases of short-term investments		(93	)
Proceeds from the sale of short-term investments		72			33
Net decrease (increase) in restricted cash		3			(7	)
Other investing activities		2			13
Net cash used in investing activities		(264	)		(136	)
Cash Flows from Financing Activities
Issuance of long-term debt		6
Retirement of long-term debt		(121	)		(3	)
Contributions from Member		500			15
Distributions to Member		(72	)		(58	)
Net decrease in short-term debt					(136	)
Other financing activities		(2	)		(2	)
Net cash provided by (used in) financing activities		311			(184	)
Effect of Exchange Rates on Cash and Cash Equivalents		(1	)
Net Increase (Decrease) in Cash and Cash Equivalents		269			(95	)
Cash and Cash Equivalents at Beginning of Period		524			227
Reclassification of cash to assets held for sale		(36	)
Cash and Cash Equivalents at End of Period	$	757		$	132
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
	March 31, 2007		December 31, 2006
Assets
Current Assets
Cash and cash equivalents	$	757	$	524
Short-term investments		348		328
Restricted cash		49		51
Accounts receivable (less reserve: 2007, $24; 2006, $29)		248		354
Unbilled revenues		248		301
Accounts receivable from affiliates		172		136
Collateral on PLR energy supply to affiliate		300		300
Fuel, materials and supplies		281		330
Prepayments		112		66
Deferred income taxes		176		117
Price risk management assets		496		551
Other acquired intangibles		126		124
Assets held for sale (Note 8)		849
Other		6		10
Total Current Assets		4,168		3,192
Investments
Investment in unconsolidated affiliates - at equity		44		47
Nuclear plant decommissioning trust funds		520		510
Other		3		4
Total Investments		567		561
Property, Plant and Equipment
Electric plant in service
Transmission and distribution		4,081		4,673
Generation		8,756		8,744
General		324		318
		13,161		13,735
Construction work in progress		713		578
Nuclear fuel		381		354
Electric plant		14,255		14,667
Gas and oil plant		64		64
Other property		188		309
		14,507		15,040
Less: accumulated depreciation		5,958		6,115
Total Property, Plant and Equipment		8,549		8,925
Other Noncurrent Assets
Goodwill		949		1,099
Other acquired intangibles		196		245
Price risk management assets		169		135
Other		470		498
Total Other Noncurrent Assets		1,784		1,977
Total Assets	$	15,068	$	14,655
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
	March 31, 2007		December 31, 2006
Liabilities and Equity
Current Liabilities
Long-term debt	$	176	$	181
Long-term debt with affiliate trust				89
Accounts payable		475		571
Accounts payable to affiliates		32		36
Above market NUG contracts		59		65
Taxes		42		151
Interest		107		82
Deferred revenue on PLR energy supply to affiliate		12		12
Price risk management liabilities		371		541
Liabilities held for sale and related minority interest (Note 8)		394
Other		287		325
Total Current Liabilities		1,955		2,053
Long-term Debt		4,890		5,106
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes and investment tax credits		1,387		1,363
Price risk management liabilities		443		437
Accrued pension obligations		273		279
Asset retirement obligations		342		336
Above market NUG contracts		60		71
Deferred revenue on PLR energy supply to affiliate		20		23
Other		519		393
Total Deferred Credits and Other Noncurrent Liabilities		3,044		2,902
Commitments and Contingent Liabilities (Note 10)
Minority Interest		26		60
Member's Equity		5,153		4,534
Total Liabilities and Equity	$	15,068	$	14,655
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	Three Months Ended March 31,
	2007		2006
Operating Revenues
Retail electric	$	864	$	812
Wholesale electric		1		1
Wholesale electric to affiliate		37		39
Total		902		852
Operating Expenses
Operation
Energy purchases		51		53
Energy purchases from affiliate		481		446
Other operation and maintenance		92		89
Amortization of recoverable transition costs		81		72
Depreciation		32		29
Taxes, other than income		54		49
Total		791		738
Operating Income		111		114
Other Income - net		12		9
Interest Expense		32		38
Interest Expense with Affiliate		4		4
Income Before Income Taxes		87		81
Income Taxes		30		29
Net Income		57		52
Dividends on Preferred Securities		5		1
Income Available to PPL	$	52	$	51
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	Three Months Ended March 31,
	2007			2006
Cash Flows from Operating Activities
Net income	$	57		$	52
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		32			29
Amortizations - recoverable transition costs and other		86			78
Other		3
Change in current assets and current liabilities
Accounts receivable		(46	)		(27	)
Accounts payable		2			(35	)
Prepayments		(118	)		(101	)
Other		3			16
Other operating activities
Other assets		3			(7	)
Other liabilities		8			10
Net cash provided by operating activities		30			15
Cash Flows from Investing Activities
Expenditures for property, plant and equipment		(63	)		(43	)
Purchases of short-term investments		(32	)		(39	)
Proceeds from the sale of short-term investments		57			64
Net increase in note receivable from affiliate					(100	)
Net decrease in restricted cash		5			2
Other investing activities		3			3
Net cash used in investing activities		(30	)		(113	)
Cash Flows from Financing Activities
Retirement of long-term debt		(80	)		(222	)
Payment of common dividends to PPL		(40	)		(38	)
Net increase in short-term debt		29			100
Other financing activities		(5	)		(1	)
Net cash used in financing activities		(96	)		(161	)
Net Decrease in Cash and Cash Equivalents		(96	)		(259	)
Cash and Cash Equivalents at Beginning of Period		150			298
Cash and Cash Equivalents at End of Period	$	54		$	39
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	March 31, 2007		December 31, 2006
Assets
Current Assets
Cash and cash equivalents	$	54	$	150
Restricted cash		42		43
Accounts receivable (less reserve: 2007, $18; 2006, $19)		262		219
Unbilled revenues		158		163
Accounts receivable from affiliates		6		6
Note receivable from affiliate		300		300
Prepayments		121		3
Prepayment on PLR energy supply from affiliate		12		12
Other		46		101
Total Current Assets		1,001		997
Property, Plant and Equipment
Electric plant in service
Transmission and distribution		4,200		4,163
General		435		412
		4,635		4,575
Construction work in progress		84		95
Electric plant		4,719		4,670
Other property		2		3
		4,721		4,673
Less: accumulated depreciation		1,821		1,793
Total Property, Plant and Equipment		2,900		2,880
Regulatory and Other Noncurrent Assets
Recoverable transition costs		803		884
Acquired intangibles		124		118
Prepayment on PLR energy supply from affiliate		20		23
Other		402		413
Total Regulatory and Other Noncurrent Assets		1,349		1,438
Total Assets	$	5,250	$	5,315
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
	March 31, 2007		December 31, 2006
Liabilities and Equity
Current Liabilities
Short-term debt	$	71	$	42
Long-term debt		556		555
Accounts payable		84		53
Accounts payable to affiliates		178		164
Taxes		36		58
Collateral on PLR energy supply from affiliate		300		300
Other		82		141
Total Current Liabilities		1,307		1,313
Long-term Debt		1,342		1,423
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes and investment tax credits		758		814
Other		270		206
Total Deferred Credits and Other Noncurrent Liabilities		1,028		1,020
Commitments and Contingent Liabilities (Note 10)
Shareowners' Equity
Preferred securities		301		301
Common stock - no par value (a)		364		364
Additional paid-in capital		424		424
Earnings reinvested		484		470
Total Shareowners' Equity		1,573		1,559
Total Liabilities and Equity	$	5,250	$	5,315

(a)	170 million shares authorized; 66 million shares issued and outstanding at March 31, 2007 and December 31, 2006.
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

Combined Notes to Condensed Consolidated Financial Statements (Unaudited)

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 Sheets as of December 31, 2006, are derived from each Registrant's 2006 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 2006 Form 10-K. The results of operations for the three months ended March 31, 2007, are not necessarily indicative of the results to be expected for the full year ending December 31, 2007, or other future periods, because results for interim periods can be disproportionately influenced by various factors and developments and seasonal variations.

(PPL and PPL Energy Supply)

The classification of certain amounts in the March 31, 2006 financial statements has been changed to conform to the presentation in the March 31, 2007 financial statements. PPL has announced plans to sell its Latin American businesses and the transport operations of its domestic telecommunications subsidiary. On the Statements of Income, the operating results of the Latin American businesses for the three months ended March 31, 2007 and 2006, are classified as "(Loss) Income from Discontinued Operations." At March 31, 2007, the assets and liabilities related to these divestitures are reflected in the Balance Sheet as "Assets held for sale" and "Liabilities held for sale and related minority interest." See Note 8 for additional information.

2.   Summary of Significant Accounting Policies

(PPL, PPL Energy Supply and PPL Electric)

The following accounting policy disclosures represent updates to the "Summary of Significant Accounting Policies" Note in each Registrant's 2006 Form 10-K.

Income Taxes

Prior to January 1, 2007, and in accordance with SFAS 5 "Accounting for Contingencies," PPL and its subsidiaries evaluated uncertain tax positions and accrued charges for probable exposures based on management's best estimate of the amount of benefit that should be recognized in the financial statements.

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. The adoption resulted in the recognition of a cumulative effect adjustment to the opening balance of retained earnings for that fiscal year. Effective with the adoption, uncertain tax positions are no longer considered to be contingencies assessed in accordance with SFAS 5. FIN 48 requires an entity to evaluate its tax positions following a two-step process. The first step requires an entity to determine whether, based on the technical merits supporting a particular tax position, it is more likely than not (greater than a 50 percent chance) that the tax position will be sustained. This determination assumes that the relevant taxing authority will examine the tax position and is aware of all the relevant facts surrounding the tax position. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The measurement of the benefit equals the largest amount of benefit that has a likelihood of realization, upon settlement, that exceeds 50 percent. If the more-likely-than-not threshold is not met, it is inappropriate to recognize any tax benefits associated with the tax position. See Note 5 for the impact of adopting FIN 48 as well as the required disclosures.

New Accounting Standards

See Note 17 for a discussion of new accounting standards recently adopted or pending adoption.

3.   Segment and Related Information

(PPL and PPL Energy Supply)

See the "Segment and Related Information" Note in each Registrant's 2006 Form 10-K for a discussion of reportable segments.

Financial data for the segments are:

	Three Months Ended March 31,
	PPL				PPL Energy Supply
	2007		2006		2007		2006
Income Statement Data
Revenues from external customers
Supply	$	453	$	528	$	932	$	966
International Delivery		226		213		226		213
Pennsylvania Delivery		959		909
		1,638		1,650		1,158		1,179
Intersegment revenues
Supply		481		446
Pennsylvania Delivery		37		41
Net Income
Supply (a)		117		143		119		149
International Delivery (b)		28		81		28		81
Pennsylvania Delivery		58		56
	$	203	$	280	$	147	$	230

	PPL				PPL Energy Supply
	March 31, 2007		December 31, 2006		March 31, 2007		December 31, 2006
Balance Sheet Data
Total assets
Supply	$	8,635	$	8,039	$	9,015	$	8,447
International Delivery		6,053		6,208		6,053		6,208
Pennsylvania Delivery		5,419		5,500
	$	20,107	$	19,747	$	15,068	$	14,655

(a)	2006 includes the results of discontinued operations of the Griffith plant. See Note 8 for additional information.
(b)	2007 and 2006 include the results of discontinued operations of the Latin American businesses. See Note 8 for additional information.

4.   Earnings Per Share

(PPL)

Basic EPS is calculated using the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated using the weighted-average shares of common stock outstanding that 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; and

· convertible senior notes.

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

	Three Months Ended March 31,
	2007			2006
Income (Numerator)
Income from continuing operations	$	228		$	271
(Loss) income from discontinued operations (net of income taxes)		(25	)		9
Net Income	$	203		$	280
Shares (Denominator)
Shares for Basic EPS		384,793			379,838
Add incremental shares:
Convertible Senior Notes		1,354			2,980
Restricted stock, stock options and other share-based awards		3,021			2,787
Shares for Diluted EPS		389,168			385,605
Basic EPS
Income from continuing operations	$	0.59		$	0.71
(Loss) income from discontinued operations (net of income taxes)		(0.06	)		0.03
Net Income	$	0.53		$	0.74
Diluted EPS
Income from continuing operations	$	0.58		$	0.70
(Loss) income from discontinued operations (net of income taxes)		(0.06	)		0.03
Net Income	$	0.52		$	0.73

If converted, PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 require cash settlement of the principal amount and permit settlement of any conversion premium in cash or PPL common stock. Based upon the current conversion rate of 40.2212 shares per $1,000 principal amount of notes (or $24.8625 per share), the Convertible Senior Notes have a dilutive impact when the average market price of PPL common stock equals or exceeds $24.87.

See Note 7 for discussion of attainment of the market price trigger related to the Convertible Senior Notes in the first quarter of 2007.

As of March 31, 2007, $102 million of Convertible Senior Notes remained outstanding. The maximum number of shares of PPL common stock that could potentially be issued to settle the conversion premium, based upon the current conversion rate, is 4,113,301 shares. Based on PPL's common stock price at March 31, 2007, the conversion premium equated to 1,612,886 shares, or $66 million.

During the three months ended March 31, 2007, PPL issued 330,311 shares of common stock related to the exercise of stock options and vesting of restricted stock units under its stock-based compensation plans.

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

	Three Months Ended March 31,
(Thousands of Shares)	2007	2006
Antidilutive stock options		1,335

5.   Income Taxes

(PPL and PPL Energy Supply)

Reconciliations of effective income tax rates are:

	Three Months Ended March 31,
PPL	2007			2006
Reconciliation of Income Tax Expense
Federal income tax on Income from Continuing Operations Before Income Taxes, Minority Interest and Dividends on Preferred Securities of a Subsidiary at statutory tax rate - 35%	$	108		$	128
Increase (decrease) due to:
State income taxes		6			9
Amortization of investment tax credit		(3	)		(3	)
Difference related to income recognition of foreign affiliates (net of foreign income taxes)		(9	)		1
Transfer of WPD tax items (a)					(20	)
Stranded costs securitization		(1	)		(1	)
Federal income tax credits		(26	)		(16	)
Other		(1	)		(3	)
		(34	)		(33	)
Total income tax expense	$	74		$	95
Effective income tax rate		24.0%			25.9%
PPL Energy Supply
Reconciliation of Income Tax Expense
Federal income tax on Income from Continuing Operations Before Income Taxes and Minority Interest at statutory tax rate - 35%	$	76		$	102
Increase (decrease) due to:
State income taxes		4			8
Amortization of investment tax credit		(2	)		(2	)
Difference related to income recognition of foreign affiliates (net of foreign income taxes)		(9	)		1
Transfer of WPD tax items (a)					(20	)
Federal income tax credits		(26	)		(16	)
Other		1			(4	)
		(32	)		(33	)
Total income tax expense	$	44		$	69
Effective income tax rate		20.3%			23.8%

(a) In January 2006, WPD, Hyder's liquidator and a former Hyder affiliate signed an agreement to transfer to the affiliate a future tax liability from WPD and certain surplus tax losses from Hyder. The U.K. taxing authority subsequently confirmed this agreement. This transfer resulted in a net reduction of income tax expense of $20 million for the three months ended March 31, 2006, and a decrease to goodwill of $12 million from the resolution of a pre-acquisition tax contingency pursuant to EITF Issue 93-7, "Uncertainties Related to Income Taxes in a Purchase Business Combination."

(PPL Electric)

Reconciliation of effective income tax rates are:

	Three Months Ended March 31,
	2007			2006
Reconciliation of Income Tax Expense
Federal income tax on Income Before Income Taxes at statutory tax rate - 35%	$	30		$	28
Increase (decrease) due to:
State income taxes		3			2
Amortization of investment tax credit		(1	)		(1	)
Stranded costs securitization		(1	)		(1	)
Other		(1	)		1
					1
Total income tax expense	$	30		$	29
Effective income tax rate		34.5%			35.8%

Unrecognized Tax Benefits

(PPL, PPL Energy Supply and PPL Electric)

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. The adoption resulted in the following increases (decreases) to the Balance Sheet.

	PPL			PPL Energy Supply			PPL Electric
Current Assets - Prepayments	$	20		$	20
Current Liabilities - Taxes		(134	)		(107	)	$	(21	)
Deferred Credits and Other Noncurrent Liabilities - Deferred income taxes and investment tax credits		10			9			2
Regulatory and Other Noncurrent Assets - Other		(5	)					(5	)
Deferred Credits and Other Noncurrent Liabilities - Other		139			119			13
Equity - Earnings reinvested (cumulative effect) (a)					(1	)		1

(a) Recorded as an adjustment to the opening balances

At January 1, 2007 the total unrecognized tax benefits and related indirect effects that if recognized would decrease the effective tax rate were:

	PPL			PPL Energy Supply			PPL Electric
Total unrecognized tax benefits	$	226		$	143		$	78
Unrecognized tax benefits associated with taxable or deductible temporary differences		(1	)		9			(10	)
Unrecognized tax benefits associated with business combinations		(19	)		(19	)
Total indirect effect of unrecognized tax benefits on other tax jurisdictions		(43	)		(12	)		(31	)
Total unrecognized tax benefits and related indirect effects that if recognized would decrease the effective tax rate	$	163		$	121		$	37

It is reasonably possible that during the next 12 months the total amount of unrecognized tax benefits, recorded at January 1, 2007, could decrease between $25 million and $106 million for PPL, decrease between $30 million and $91 million for PPL Energy Supply and decrease by up to $9 million for PPL Electric, as a result of subsequent recognition, derecognition and/or changes in measurement of uncertain tax positions related to the creditability of foreign taxes, the timing and utilization of foreign tax credits and the related impact on alternative minimum tax and other credits, the timing and/or valuation of certain deductions, intercompany transactions and unitary filing groups. The events that could cause these changes are direct settlements with taxing authorities, litigation, legal or administrative guidance by relevant taxing authorities and the lapse of an applicable statute of limitation. During the three months ended March 31, 2007, there were no significant changes to PPL and its subsidiaries' unrecognized tax benefits.

Consistent with prior periods, it is PPL and its subsidiaries' policy to record interest and penalties in "Income Taxes" on their Statements of Income.

At January 1, 2007, interest and penalties accrued on the Balance Sheet were:

	PPL		PPL Energy Supply		PPL Electric
Accrued interest	$	37	$	29	$	8
Accrued penalties		1		1
Total accrued interest and penalties	$	38	$	30	$	8

PPL or its subsidiaries file tax returns in five major tax jurisdictions. PPL Energy Supply's and PPL Electric's U.S. federal and state tax provision are calculated in accordance with an intercompany tax sharing policy with PPL which provides that their taxable income be calculated as if PPL Energy Supply and its domestic subsidiaries and PPL Electric and its subsidiaries each filed a separate consolidated tax return. Based on this tax sharing policy, PPL Energy Supply or its subsidiaries indirectly or directly file tax returns in five major tax jurisdictions and PPL Electric or its subsidiaries indirectly or directly file tax returns in two major tax jurisdictions. These jurisdictions, as well as the tax years that are no longer subject to examination, are as follows:

	PPL and PPL Energy Supply	PPL Electric
U.S. (federal)	1995 and prior	1995 and prior
Pennsylvania (state)	2000 and prior	2000 and prior
Montana (state)	2002 and prior
United Kingdom (foreign)	1999 and prior
Chile (foreign)	2002 and prior

(PPL and PPL Energy Supply)

At March 31, 2007, as a result of PPL's plan to dispose of its Latin American businesses, PPL and PPL Energy Supply classified $4 million of unrecognized tax benefits in "Liabilities held for sale and related minority interests," a current liability on the Balance Sheet. If these unrecognized tax benefits were subsequently recognized, they would not impact PPL's and PPL Energy Supply's effective tax rate.

6.   Comprehensive Income

(PPL and PPL Energy Supply)

The after-tax components of comprehensive income are:

	Three Months Ended March 31,
	PPL					PPL Energy Supply
	2007		2006			2007		2006
Net Income	$	203	$	280		$	147	$	230
Other comprehensive income:
Foreign currency translation adjustments				12					12
Defined benefit plans amortization:
Prior service cost		4					3
Actuarial loss		10					10
Net unrealized gain (loss) on available-for-sale securities		1		(5	)		1		(5	)
Net unrealized gain on qualifying derivatives		32		102			33		94
Total other comprehensive income		47		109			47		101
Comprehensive Income	$	250	$	389		$	194	$	331

(PPL Electric)

PPL Electric's comprehensive income approximates net income.

7.   Credit Arrangements and Financing Activities

Credit Arrangements

(PPL and PPL Energy Supply)

PPL Energy Supply maintains credit facilities in order to enhance liquidity and provide credit support, and as a backstop to its commercial paper program.

In March 2007, PPL Energy Supply extended the expiration date of its 364-day reimbursement agreement to March 2008. Under the agreement, PPL Energy Supply can cause the bank to issue up to $200 million of letters of credit but cannot make cash borrowings. At March 31, 2007, there was $52 million of letters of credit outstanding under this agreement.

PPL Energy Supply maintains a $1.9 billion five-year credit agreement, expiring in June 2011. PPL Energy Supply has the ability to cause the lenders under this facility to issue letters of credit. At March 31, 2007, PPL Energy Supply had an aggregate of $16 million of letters of credit and no cash borrowings outstanding under this facility. PPL Energy Supply also maintains a $300 million five-year letter of credit and revolving credit facility expiring in March 2011. At March 31, 2007, there were no cash borrowings and $239 million of letters of credit outstanding under this facility. PPL Energy Supply's obligations under this facility are supported by a $300 million letter of credit issued on PPL Energy Supply's behalf under a separate $300 million five-year letter of credit and reimbursement agreement, also expiring in March 2011.

PPL Energy Supply maintains a commercial paper program for up to $500 million to provide an additional financing source to fund its short-term liquidity needs, if and when necessary. Commercial paper issuances are supported by PPL Energy Supply's $1.9 billion five-year credit facility. PPL Energy Supply had no commercial paper outstanding at March 31, 2007.

In January 2007, WPD (South West) terminated its £150 million three-year committed credit facility, which was to expire in October 2008. This facility was replaced by a new £150 million five-year committed credit facility at WPDH Limited that expires in January 2012, with the option to extend the expiration date by a maximum of two years. WPD (South West) currently maintains two committed credit facilities: a £100 million 364-day facility expiring in November 2007 and £150 million five-year facility expiring in October 2009. WPD's total committed facilities at March 31, 2007, were £400 million (approximately $784 million). At March 31, 2007, WPD (South West) also had uncommitted credit facilities of £65 million (approximately $127 million). At March 31, 2007, there were no cash borrowings outstanding under any of these facilities.

(PPL and PPL Electric)

PPL Electric maintains credit facilities in order to enhance liquidity and provide credit support, and as a backstop to its commercial paper program.

PPL Electric maintains a $200 million five-year credit facility expiring June 2011. PPL Electric has the ability to cause the lenders under this facility to issue letters of credit. At March 31, 2007, PPL Electric had no cash borrowings or letters of credit outstanding under this credit facility.

PPL Electric maintains a commercial paper program for up to $200 million to provide an additional financing source to fund its short-term liquidity needs, if and when necessary. Commercial paper issuances are supported by PPL Electric's $200 million five-year credit facility. PPL Electric had $30 million of commercial paper outstanding at March 31, 2007, with a weighted average interest rate of 5.38%.

At March 31, 2007, $144 million of accounts receivable and $141 million of unbilled revenue were pledged by a PPL Electric subsidiary under the credit agreement related to PPL Electric's and the subsidiary's participation in an asset-backed commercial paper program. Also at this date, there was $41 million of short-term debt outstanding under the credit agreement at an interest rate of 5.3462%, all of which was being used to cash collateralize letters of credit issued on PPL Electric's behalf. The funds used to cash collateralize the letters of credit are reported in "Restricted Cash" on the Balance Sheets. At March 31, 2007, based on the accounts receivable and unbilled revenue pledged, an additional $108 million was available for borrowing. PPL Electric's sale to its subsidiary of the accounts receivable and unbilled revenue is an absolute sale of the assets, and PPL Electric does not retain an interest in these assets. However, for financial reporting purposes, the subsidiary's financial results are consolidated in PPL Electric's financial statements. PPL Electric currently expects that it and the subsidiary will continue to renew the credit agreement on an annual basis. The credit agreement is due to expire in July 2007.

(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 March 2007, PPL Capital Funding issued $500 million of 2007 Series A Junior Subordinated Notes due 2067 (Notes). The Notes are fully and unconditionally guaranteed by PPL as to payment of principal, interest and premium, if any. The Notes mature on March 30, 2067, and are callable at par value beginning March 30, 2017. Prior to such time, the Notes may be redeemed at PPL Capital Funding's option at make-whole redemption prices. The Notes bear interest at 6.70% from the date of issuance up to March 30, 2017. Beginning March 30, 2017, and continuing up to the maturity date, the Notes bear interest at three-month LIBOR plus 2.665%, reset quarterly. PPL Capital Funding may defer interest payments on the Notes, from time to time, on one or more occasions for up to ten consecutive years. Deferred interest payments will accumulate additional interest at a rate equal to the interest rate then applicable to the Notes. During any period in which PPL Capital Funding defers interest payments on the Notes, subject to certain exceptions, neither PPL Capital Funding nor PPL may (i) declare or pay any cash dividend or distribution on its capital stock, (ii) redeem, purchase, acquire or make a liquidation payment with respect to any of its capital stock, or (iii) make any payments on any debt or any guarantee of debt by PPL that is equal or junior in right of payment to the Notes or the related guarantee by PPL.

PPL Capital Funding received $493 million of proceeds, net of a discount and underwriting fees, from the issuance of the Notes. Approximately $280 million of the net proceeds will be used to pay at maturity PPL Capital Funding's 8.375% Medium-Term Notes due June 15, 2007. The remainder of the net proceeds will be used for general corporate purposes, including capital expenditures relating to the installation of pollution control equipment by PPL Energy Supply.

In connection with the issuance of the Notes, PPL and PPL Capital Funding entered into a Replacement Capital Covenant, in which PPL and PPL Capital Funding agreed for the benefit of holders of a designated series of unsecured long-term indebtedness of PPL or PPL Capital Funding ranking senior to the Notes that (i) PPL Capital Funding will not redeem or purchase the Notes, or otherwise satisfy, discharge or defease the principal amount of the Notes and (ii) neither PPL nor any of its other subsidiaries will purchase the Notes on or before March 30, 2037, except, subject to certain limitations, to the extent that the applicable redemption or repurchase price or principal amount defeased does not exceed a specified amount of proceeds from the sale, during the 180-day period prior to the date of that redemption, repurchase or defeasance, of qualifying replacement capital securities. The designated series of covered debt to initially benefit from the Replacement Capital Covenant is PPL Capital Funding's 4.33% Notes Exchange Series A Due March 1, 2009.

(PPL and PPL Energy Supply)

The terms of PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 include a market price trigger that permits holders to convert the notes during any fiscal quarter if the closing sale price of PPL's common stock exceeds $29.83 for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. Holders of the Convertible Senior Notes were entitled to convert their notes at any time during the first quarter of 2007 and are also entitled to convert their notes at any time during the second quarter of 2007, as a result of the market price trigger being met. When holders elect to convert the Convertible Senior Notes, PPL Energy Supply is required to settle the principal amount in cash and any conversion premium in cash or PPL common stock. During the first quarter of 2007, an insignificant amount of Convertible Senior Notes were presented for conversion and settled with an insignificant amount of cash and PPL common stock. After such conversions, approximately $102 million of Convertible Senior Notes remain outstanding and are eligible for conversion in the second quarter of 2007.

In December 2006, Elfec issued $11 million of 6.05% UFV (inflation-adjusted bolivianos) denominated bonds with serial maturities from 2012 through 2014. Of these bonds, $5 million were issued in exchange for existing bonds with maturities in 2007 and 2008. Cash proceeds of $6 million were used in January 2007 to refinance bonds with maturities in 2007. These transactions were reflected in PPL's January 2007 financial statements due to the one-month lag in foreign subsidiary reporting.

In February 2007, WPD LLP redeemed all of the 8.23% Subordinated Debentures due 2027 that were held by SIUK Capital Trust I. Upon redemption, WPD LLP paid a premium of 4.115%, or approximately $3 million, on the principal amount of $85 million of subordinated debentures. In connection with this redemption, SIUK Capital Trust I was required to use all of the proceeds received from the repayment of the subordinated debentures to redeem all of its common and preferred securities. WPD LLP received $3 million when its investment in SIUK Capital Trust I was liquidated. See Note 22 of each Registrant's 2006 Form 10-K for a discussion of the trust. The redemption of the subordinated debentures and the trust's common and preferred securities resulted in a loss of $2 million, after tax, for the three months ended March 31, 2007, which is included in "Interest Expense" for PPL and "Interest Expense with Affiliates" for PPL Energy Supply on the Statement of Income. A payment of $29 million was also made to settle related cross-currency swaps. The $29 million payment is included on the Statement of Cash Flows as a component of "Retirement of long-term debt."

(PPL Energy Supply)

During the three months ended March 31, 2007, PPL Energy Supply distributed $72 million to its parent company, PPL Energy Funding, and received cash capital contributions of $500 million.

(PPL and PPL Electric)

During the three months ended March 31, 2007, PPL Transition Bond Company made principal payments on transition bonds of $80 million.

Dividends

(PPL)

In February 2007, PPL announced an increase to its quarterly common stock dividend, effective April 1, 2007, to 30.5 cents per share (equivalent to $1.22 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.

(PPL Electric)

During the three months ended March 31, 2007, PPL Electric paid common stock dividends of $40 million to PPL.

8.   Acquisitions, Development and Divestitures

From time to time, PPL and its subsidiaries are involved in negotiations with third parties regarding acquisitions and dispositions of businesses and assets, joint ventures and development projects. Any such transactions may impact future financial results.

(PPL and PPL Energy Supply)

Domestic

Development

In January 2007, the NRC accepted for review the PPL Susquehanna request to increase the amount of electricity the plant can generate. The total expected capacity increase is 159 MW, of which PPL Susquehanna's share would be 143 MW. PPL Susquehanna's share of the expected capital cost of this project is $274 million. PPL cannot predict whether or when NRC approval will be obtained.

Other

PPL has completed a review of strategic options for the transport operations of its domestic telecommunications subsidiary, which offers fiber optic capacity to other telecommunications companies and enterprise customers. The operating results of this subsidiary are included in the Supply segment. Due to a combination of significant capital requirements for the transport operations and competing capital needs in PPL's core electricity supply and delivery businesses, PPL has decided to actively market these transport operations, and believes a sale is probable within one year.

In the first quarter of 2007, PPL and PPL Energy Supply recorded a $31 million pre-tax ($18 million after tax) write-down in the carrying value of the transport assets to their estimated fair value. This impairment charge is included in "Energy-related businesses" expenses on the Statement of Income.

In accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the assets and liabilities of these transport operations have been classified as "held for sale" on the Balance Sheet at March 31, 2007. The transport operations did not meet the criteria for discontinued operations presentation on the Statement of Income because there are not separate and distinguishable cash flows. The major classes of "Assets held for sale" and "Liabilities held for sale and related minority interest" on the Balance Sheet at March 31, 2007, were as follows (corresponding amounts at December 31, 2006, are also noted for comparative purposes but, have not been reclassified on the balance sheet as of that period):

	March 31, 2007		December 31, 2006
Current assets	$	2	$	3
PP&E and other acquired intangibles		59		89
Total assets held for sale	$	61	$	92
Current liabilities	$	4	$	6
Long-term debt		1		1
Deferred credits and other noncurrent liabilities		11		13
Total liabilities held for sale	$	16	$	20

International

Sales

In 2005, WPD sold an equity investment by transferring substantially all risks and rewards of ownership of the two subsidiaries that held the investment, receiving $9 million (at then-current exchange rates). The gain was deferred until WPD's continuing involvement in the subsidiaries ceased. In July 2006, WPD ceased involvement with one subsidiary. At that time, PPL Global recognized a pre-tax gain of $5 million. In December 2006, WPD ceased involvement in the other subsidiary. In the first quarter of 2007, due to the one-month lag in foreign subsidiary reporting, PPL Global recognized the remaining pre-tax gain of $5 million, which is included in "Other Income - net" on the Statement of Income.

In March 2006, PPL Global completed the sale of its minority interest in Aguaytia Energy, LLC, a combined generating and natural gas facility in Peru. PPL Global received $15 million from the sale, and recorded a pre-tax gain of $4 million, which is included in "Other Income - net" on the Statement of Income.

Other

In February 2006, WPD received legal notification citing one of its real estate investments as an environmentally protected area, thus restricting planned development. An impairment assessment was performed based on a third-party appraisal. As a result, PPL Global recorded an impairment charge of $8 million ($6 million after tax), which is included in "Other Income - net" on the Statement of Income.

In 2000, WPD acquired Hyder. Subsequently, WPD sold the majority of Hyder's non-electricity delivery businesses and placed the remaining companies in liquidation. In March 2006, WPD received $24 million in proceeds as an initial distribution related to the planned ongoing liquidation of the remaining non-electricity delivery businesses. These proceeds were included in the second quarter 2006 financial results due to the one-month lag in foreign subsidiary reporting. In December 2006, WPD received a further distribution of $4 million, which is included in the first quarter 2007 financial results, due to the one-month lag in foreign subsidiary reporting. This distribution is included in "Other Income - net" on the Statement of Income. In March 2007, WPD received a further distribution of $2 million, which will be included in the second quarter 2007 financial results due to the one-month lag in foreign subsidiary reporting. The Hyder non-electricity delivery businesses are mostly liquidated. WPD continues to operate the Hyder electricity delivery business.

Discontinued Operations

Anticipated Sale of Latin American Businesses

In March 2007, PPL completed a review of strategic options for its Latin American businesses and announced its intention to sell its regulated electricity delivery businesses in Chile, El Salvador and Bolivia, which are included in the International Delivery segment. In April 2007, PPL agreed to sell the Bolivian businesses, subject to certain conditions including completion of a definitive agreement, to a group organized by their local management and employees of the companies. This transaction is expected to be completed in 2007. As a result of the decision to sell, PPL recorded a $22 million after tax write-down in the carrying value of the Bolivian businesses to their estimated fair value. The remaining companies are expected to be sold through an auction process, which is also anticipated to be completed in 2007. Proceeds of the sales are expected to be used to invest in growth opportunities in PPL's core electricity supply and delivery businesses and/or for the repurchase of securities, including PPL common stock. In accordance with SFAS 144, the results of operations for the three months ended March 31, 2007 and 2006, have been classified as discontinued operations on the Statements of Income. The assets and liabilities at March 31, 2007, are classified as "held for sale" on the Balance Sheet.

Following are the components of "(Loss) Income from Discontinued Operations" on the Statements of Income related to PPL's Latin American regulated electricity delivery businesses.

	Three Months Ended March 31,
	2007			2006
Operating revenues	$	155		$	131
Operating expenses (a)		169			115
Operating (loss) income		(14	)		16
Other income - net		3			2
Interest expense (b)		5			6
(Loss) income before income taxes and minority interest		(16	)		12
Income tax expense (c)		7			1
Minority interest		2			1
(Loss) Income from Discontinued Operations (net of income taxes)	$	(25	)	$	10

(a)	2007 includes the write-down in the carrying value of the Bolivian businesses.
(b)	Both periods include $2 million of interest expense allocated pursuant to EITF 87-24, "Allocation of Interest to Discontinued Operations," based on the discontinued operation's share of the net assets of PPL Energy Supply.
(c)	2007 includes an additional $18 million U.S. deferred tax charge. As a result of PPL's decision to sell its Latin American businesses, it no longer qualifies for the permanently reinvested exception to recording deferred taxes pursuant to APB Opinion No. 23, "Accounting for Income Taxes-Special Areas."

The major classes of "Assets held for sale" and "Liabilities held for sale and related minority interest" on the Balance Sheet at March 31, 2007, were as follows (corresponding amounts at December 31, 2006, are also noted for comparative purposes, but have not been reclassified on the balance sheet as of that period):

	March 31, 2007		December 31, 2006
Current Assets
Cash and cash equivalents	$	36	$	27
Accounts receivable		98		92
Current assets - other		51		49
Total Current Assets		185		168
PP&E		432		475
Regulatory and Other Noncurrent Assets
Goodwill		144		148
Other		27		27
Total Regulatory and Other Noncurrent Assets		171		175
Total assets held for sale	$	788	$	818
Current Liabilities
Accounts payable	$	50	$	55
Current liabilities - other		36		48
Total Current Liabilities		86		103
Long-term Debt		209		215
Deferred Credits and Other Noncurrent Liabilities		49		46
Minority Interest		34		33
Total liabilities held for sale and related minority interest	$	378	$	397

Sale of Interest in Griffith Plant

In June 2006, a subsidiary of PPL Energy Supply, which is included in the Supply segment, sold its 50% ownership interest in the 600 MW Griffith power plant located in Kingman, Arizona, for $110 million in cash, adjusted by the $5 million settlement of the steam turbine indemnifications in December 2006. Proceeds of the sale were used to fund a portion of PPL's capital expenditure requirements. The book value of PPL's interest in the plant was $150 million on the sale date.

Following are the components of "(Loss) Income from Discontinued Operations" on the Statement of Income related to the sale of PPL's interest in the Griffith plant.

	Three Months Ended March 31, 2006
Operating revenues		$	2
Operating expenses			3
Loss from operations before income taxes			(1	)
Income tax expense
Loss from Discontinued Operations (net of income taxes)		$	(1	)

See "Guarantees and Other Assurances" in Note 10 for more information on PPL Energy Supply's indemnifications related to the sale.

9.   Pension and Other Postretirement Benefits

(PPL and PPL Energy Supply)

Net periodic pension and other postretirement benefit costs were:

	Three Months Ended March 31,
	Pension Benefits												Other Postretirement Benefits
	Domestic						International
	2007			2006			2007			2006			2007			2006
PPL
Service cost	$	16		$	16		$	6		$	5		$	2		$	2
Interest cost		33			31			42			34			8			7
Expected return on plan assets		(44	)		(41	)		(56	)		(48	)		(5	)		(5	)
Amortization of:
Transition (asset) obligation		(1	)		(1	)								2			2
Prior service cost		5			4			1			1			2			2
Actuarial loss								13			11			2			2
Net periodic pension and other postretirement benefit costs	$	9		$	9		$	6		$	3		$	11		$	10
PPL Energy Supply
Service cost	$	1		$	1		$	6		$	5
Interest cost		1			1			42			34
Expected return on plan assets		(2	)		(1	)		(56	)		(48	)
Amortization of:
Prior service cost								1			1
Actuarial loss								13			11
Net periodic pension and other postretirement benefit costs	$			$	1		$	6		$	3

10.   Commitments and Contingent Liabilities

Energy Purchases, Energy Sales and Other Commitments

Energy Purchase Commitments(PPL and PPL Energy Supply)

PPL and PPL Energy Supply enter into long-term purchase contracts to supply the fuel requirements for generation facilities. These include contracts to purchase coal, emission allowances, natural gas, oil and nuclear fuel. These contracts extend for terms through 2019. PPL and PPL Energy Supply also enter into long-term contracts for the storage and transportation of natural gas. These contracts extend through 2014 and 2032. Additionally, PPL and PPL Energy Supply have entered into long-term contracts to purchase power that extend for terms through 2017, excluding long-term power purchase agreements for full output of two windfarms. These windfarm contracts extend for terms through 2027.

In March 2007, PPL Montana entered into a long-term coal purchase and supply agreement, which commences in 2010, for Colstrip Units 1 and 2. The contract is expected to extend through 2019.

Energy Sales Commitments(PPL and PPL Energy Supply)

PPL Energy Supply had entered into long-term power sales contracts in connection with its marketing activities or associated with certain of its power plants. These power sales contracts extend for terms through 2017. All long-term contracts were executed at pricing that approximated market rates, including profit margin, at the time of execution.

In 2007, PPL Energy Supply has entered into full requirements contracts with various counterparties. These contracts commence in mid-2007, and the longest contracts extend through 2010. PPL Energy Supply's obligation to supply the load under these contracts is expected to reach approximately 1,340 MW.

Under these contracts, if PPL Energy Supply's credit rating falls below investment grade or PPL Energy Supply's contract exposure exceeds the established credit limit for the contract, then the counterparty has the right to request collateral from PPL Energy Supply.

PPL Montana Hydroelectric License Commitments(PPL and PPL Energy Supply)

PPL Montana has 11 hydroelectric facilities and one storage reservoir licensed by the FERC pursuant to the Federal Power Act under long-term licenses. Pursuant to Section 8(e) of the Federal Power Act, the FERC approved the transfer from Montana Power to PPL Montana of all pertinent licenses and any amendments in connection with the Montana Asset Purchase Agreement.

The Kerr Dam Project license was jointly issued by the FERC to Montana Power and the Confederated Salish and Kootenai Tribes of the Flathead Reservation in 1985, and required Montana Power to hold and operate the project for 30 years. The license required Montana Power, and subsequently PPL Montana as a result of the purchase of the Kerr Dam from Montana Power, to continue to implement a plan to mitigate the impact of the Kerr Dam on fish, wildlife and the habitat. Under this arrangement, PPL Montana has a remaining commitment to spend $18 million between 2007 and 2015, in addition to the annual rental it pays to the tribes. Between 2015 and 2025, the tribes have the option to purchase, hold and operate the project for the remainder of the license term of 2035.

PPL Montana entered into two Memoranda of Understanding (MOUs) with state, federal and private entities related to the issuance in 2000 of the FERC renewal license for the nine dams for the Missouri-Madison project. The MOUs require PPL Montana to implement plans to mitigate the impact of its projects on fish, wildlife and the habitat, and to increase recreational opportunities. The MOUs were created to maximize collaboration between the parties and enhance the possibility for matching funds from relevant federal agencies. Under this arrangement, PPL Montana has a remaining commitment to spend $30 million between 2007 and 2040.

Settlement of Enron Receivables (PPL and PPL Energy Supply)

PPL and PPL Energy Supply had significant specific reserves related to receivables from Enron Corporation (Enron), which filed for bankruptcy in 2001. The reserves related to Enron were for claims against Enron North America and Enron Power Marketing (Enron Subsidiaries), and against Enron, which had guaranteed the Enron Subsidiaries' performance (Enron Corporation Guarantees).

In March 2006, the U.S. Bankruptcy Court approved agreements between Enron and PPL Energy Supply that settled the litigation between PPL Energy Supply and Enron regarding the validity and enforceability of the Enron Corporation Guarantees. As a result of the Bankruptcy Court's approval of the settlement of the Enron Corporation Guarantees litigation and an assessment of current market price quotes for the purchase of Enron claims, PPL Energy Supply reduced the associated allowance for doubtful accounts for the three months ended March 31, 2006, by $15 million or $9 million after tax.

Legal Matters

(PPL, PPL Energy Supply and PPL Electric)

PPL and its subsidiaries are involved in legal proceedings, claims and litigation in the ordinary course of business. PPL and its subsidiaries cannot predict the 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, and thus that sale "was null and void ab initio." Among the remedies that the plaintiffs are seeking is the establishment of a "resulting and/or constructive trust" on both the generation assets and all profits earned by PPL Montana from the generation assets, plus interest on the amounts subject to the trust. This lawsuit has been pending in the U.S. District Court of Montana, Butte Division, and the judge has placed this proceeding on hold pending the outcome of certain motions currently before the U.S. Bankruptcy Court for the District of Delaware, the resolution of which may impact this proceeding. Recently, the judge in this case has indicated that he plans to hold a status conference for the purpose of resuming proceedings. PPL and PPL Energy Supply cannot predict the outcome of this matter.

Montana Hydroelectric Litigation(PPL and PPL Energy Supply)

In November 2004, PPL Montana, Avista Corporation and PacifiCorp commenced an action for declaratory judgment in Montana First Judicial District Court seeking a determination that no lease payments or other compensation for their hydropower facilities' use and occupancy of streambeds in Montana can be collected by the State of Montana. This request for declaratory judgment from the Montana state court was brought following the dismissal of the State of Montana's federal lawsuit seeking such payments or compensation in the U.S. District Court of Montana, Missoula Division, due to lack of diversity jurisdiction. The State's federal lawsuit was founded on allegations that the bed of Montana's navigable rivers became state-owned property upon Montana's admission to statehood, and that the use of them for placement of dam structures, affiliated structures and reservoirs should, under an existing regulatory scheme, trigger lease payments for use of land underneath. In July 2006, the Montana state court approved a stipulation by the State of Montana that it is not seeking any lease payments or other compensation from PPL Montana for the period prior to PPL Montana's acquisition of the hydropower facilities in December 1999. The trial for this state court proceeding has been scheduled to commence in October 2007. PPL and PPL Energy Supply cannot predict the outcome of this matter.

Regulatory Issues

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

Through its subsidiaries, PPL made $18 million of sales to the California ISO during the period from October 2000 through June 2001, 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. At March 31, 2007, PPL has fully reserved for 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, but the FERC has not yet ruled on the exact amounts that the sellers, including PPL Montana, would be required to refund. In decisions in September 2004 and August 2006, the U.S. Court of Appeals for the Ninth Circuit held that the FERC had the additional legal authority to order refunds for periods prior to October 2, 2000, and ordered the FERC to determine whether or not it would be appropriate to grant such additional refunds. As part of its August 2006 decision, the Court stayed the time to petition for rehearing of the decision and its mandate to the FERC in order to allow the parties time to conduct settlement discussions.

In June 2003, the FERC took several actions as a result of a number of related investigations. The FERC terminated proceedings to consider 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 also commenced additional investigations relating to "gaming" and bidding practices during 2000 and 2001, but, to their knowledge, neither PPL EnergyPlus nor PPL Montana is a subject of these investigations.

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 intervenors 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, one defendant in a consolidated court proceeding named PPL Montana in its cross-complaint; this defendant denied any unlawful conduct but asserted 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 July 2006, the Court dismissed this case as the result of a settlement under which PPL Montana was not required to make any payments or provide any compensation.

In February 2004, the Montana Public Service Commission (PSC) 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, including PPL Montana, as well as other entities that may possess relevant information. In June 2004, the Montana Attorney General served PPL Montana and more than 20 other companies with subpoenas requesting documents, and PPL Montana has provided responsive documents to the Montana Attorney General.

While PPL and its subsidiaries believe that they have not engaged in any improper trading or marketing practices affecting the California and western markets, PPL cannot predict the outcome of the above-described investigations, lawsuits and proceedings or whether any PPL subsidiaries will be the target of any additional governmental investigations or named in other lawsuits or refund proceedings.

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

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 alleged, 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 and certain breach of contract claims. These boroughs were wholesale customers of PPL Electric. In April 2006, the Court dismissed all of the federal antitrust claims and all of the breach of contract claims except for one breach of contract claim by one of the boroughs. PPL cannot predict the outcome related to the remaining open claim.

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.

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. PPL has responded to a data request of OMOI that indicated that PPL was not under suspicion of a regulatory violation, but that OMOI was conducting an initial investigation. PPL also has responded to data requests of ISO New England and data requests served by subpoena from the Connecticut Attorney General. Both OMOI and ISO New England have issued preliminary reports finding no regulatory or other violations concerning these matters. 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 December 2004, Exelon Corporation, on behalf of its subsidiary, PECO Energy, Inc. (PECO), filed a complaint against PJM and PPL Electric with the FERC alleging that PJM had overcharged PECO from April 1998 through May 2003 as a result of an error by PJM in the State Estimator Model used in connection with billing all PJM customers for certain transmission, spot market energy and ancillary services charges. Specifically, the complaint alleged that PJM mistakenly identified PPL Electric's Elroy substation transformer as belonging to PECO and that, as a consequence, during times of congestion, PECO's bills for transmission congestion from PJM erroneously reflected energy that PPL Electric took from the Elroy substation and used to serve PPL Electric's load. The complaint requested the FERC, among other things, to direct PPL Electric to refund to PJM $39 million, plus interest of $8 million, and for PJM to refund these same amounts to PECO.

In April 2005, the FERC determined that PECO was entitled to reimbursement for the transmission congestion charges that PECO asserts PJM erroneously billed to it at the Elroy substation. The FERC set for additional proceedings before a judge the determination of the amount of the overcharge to PECO and which PJM market participants were undercharged and therefore are responsible for reimbursement to PECO.

PPL Electric recognized an after-tax charge of $27 million in the first quarter of 2005 for a loss contingency related to this matter. The pre-tax accrual was $47 million, with $39 million included in "Energy purchases" on the Statement of Income, and $8 million in "Interest Expense."

In September 2005, PPL Electric and Exelon Corporation filed a proposed settlement agreement regarding this matter with the FERC. In March 2006, the FERC rejected the settlement agreement indicating that the agreement involves material issues of fact that it cannot decide without further information, and ordered the matter to be set for hearing.

Subsequently, in March 2006, PPL Electric and Exelon filed with the FERC a new proposed settlement agreement under which PPL Electric would have paid approximately $41 million over a five-year period to PJM through a new transmission charge. Pursuant to this proposed agreement, PJM would have forwarded the amounts collected under this new charge to PECO.

In November 2006, the FERC entered an order accepting the parties' March 2006 proposed settlement agreement, upon the condition that PPL Electric agree to certain modifications. The FERC's acceptance was conditioned upon reimbursement to PECO through a single credit to PECO's monthly PJM bill and a corresponding charge on PPL Electric's monthly PJM bill, rather than through a PJM Tariff transmission charge applicable only to PPL Electric. The FERC ordered PPL Electric to advise the FERC within 30 days as to whether it would accept or reject the proposed modifications.

In December 2006, PPL Electric and Exelon filed with the FERC, pursuant to the November 2006 order, a modified offer of settlement ("Compliance Filing"). Under the Compliance Filing, PPL Electric would make a single payment through its monthly PJM bill of $38 million, plus interest through the date of payment, and PJM would include a single credit for this amount in PECO's monthly PJM bill. Through December 31, 2006, the estimated interest on this payment was $4 million, for a total PPL Electric payment of $42 million.

Based on the terms of the Compliance Filing and the effective date and provisions of power supply agreements between PPL Electric and PPL EnergyPlus, PPL determined that PPL Electric was responsible for the claims prior to July 1, 2000 (totaling $12 million), and that PPL EnergyPlus was responsible for the claims subsequent to that date (totaling $30 million).

Based on the Compliance Filing, PPL and PPL Electric reduced the recorded loss accrual by $5 million at December 31, 2006. PPL Electric also recorded a receivable from PPL EnergyPlus of $30 million at December 31, 2006, for the portion of the claims allocated to PPL EnergyPlus. As a result of the reduction of the loss accrual and the allocation to PPL EnergyPlus, PPL Electric recorded credits to expense of $35 million on the Statement of Income, including $28 million of "Energy purchases" and $7 million of "Interest Expense."

PPL Energy Supply recorded a loss accrual of $30 million at December 31, 2006, for its share of the claims, and recorded a corresponding payable to PPL Electric. PPL EnergyPlus recorded $27 million of "Energy purchases" and $3 million of "Interest Expense" on the Statement of Income.

In March 2007, the FERC entered an order approving the Compliance Filing. In April 2007, PPL Electric paid PJM the full settlement amount of $43 million, including additional interest of $1 million recorded during the three months ended March 31, 2007. This proceeding is now terminated.

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. The most recent market-based rate filings with the FERC were made in November 2004 by PPL EnergyPlus, PPL Electric, PPL Montana and most of PPL Generation's subsidiaries. These filings consisted of a Western market-based rate filing for PPL Montana and an Eastern market-based rate filing for most of the other PPL subsidiaries in the PJM region.

In September 2005, the FERC issued an order conditionally approving the Eastern market-based rate filing, subject to PPL subsidiaries making a compliance filing providing further support that they cannot erect other non-transmission barriers to entry into the generation market. The PPL subsidiaries made this compliance filing in October 2005, which the FERC accepted.

In May 2006, the FERC issued an order rejecting the claims of the various parties in the proceeding regarding PPL's Western market-based rate filing and granting PPL Montana market-based rate authority in NorthWestern's control area. There are two outstanding requests for rehearing of the FERC's order, and the FERC has issued a routine order allowing more time to consider these rehearing requests. While PPL Montana continues to believe that it does not have market power in NorthWestern's control area and that it has no obligations to make additional sales of power to NorthWestern regardless of the outcome of this proceeding, it cannot predict the outcome of these proceedings.

Currently, if a seller is granted market-based rate authority by the FERC, it may enter into power contracts during the time period for which such authority has been granted. If the FERC determines that the market is not workably competitive or the seller possesses market power or is not charging just and reasonable rates, the FERC institutes prospective action. Any contracts entered into pursuant to the FERC's market-based rate authority remain in effect and are generally subject to a high standard of review before the FERC can order any changes. Recent court decisions by the U.S. Court of Appeals for the Ninth Circuit have raised issues that may make it more difficult for the FERC to continue its program of promoting wholesale electricity competition through market-based rate authority. These court decisions permit retroactive refunds and a lower standard of review by the FERC for changing power contracts, and could have the effect of requiring the FERC to review in advance most, if not all, power contracts. The FERC has not yet taken action in response to these recent court decisions, and the decisions have been or are expected to be appealed to the U.S. Supreme Court. At this time, PPL cannot predict the impact of these court decisions on the FERC's future market-based rate authority program or on PPL's business.

Illinois Auction Complaints(PPL and PPL Energy Supply)

As a result of the Electric Service Customer Choice and Rate Relief Law of 1997, the Illinois General Assembly provided the opportunity for power suppliers to compete to supply power to Illinois electric utilities to meet the full requirements of all non-shopping Illinois electricity customers. The Illinois Commerce Commission (ICC) conducted an auction for supply of up to 25,474 MW of peak load and hired an independent Auction Monitor for this purpose. PPL EnergyPlus submitted bids in this Illinois auction process and, as a result, in September 2006 entered into three agreements with Commonwealth Edison Company to supply a portion of its full requirements service. These agreements commenced in January 2007 and expire after 17, 29 and 41 months. During peak hours, PPL EnergyPlus' obligation to supply Commonwealth Edison may reach 700 MW. At the conclusion of the auction process, the Auction Monitor and the ICC Staff both concluded that the auction process was competitive.

In March 2007, the Illinois Attorney General filed a complaint at the FERC against all of the successful bidders in this auction process, including PPL EnergyPlus and fifteen other suppliers, alleging market manipulation and requesting that the FERC investigate such allegations, requesting refunds for sales at prices above just and reasonable rates and seeking revocation of the FERC market-based rate authority for certain of the suppliers. The redacted copy of the complaint served on PPL EnergyPlus does not identify which suppliers allegedly engaged in market manipulation or which suppliers allegedly should have their market-based rate authority revoked.

PPL EnergyPlus is reviewing the complaint and gathering information regarding the allegations. Subsequent to the Illinois Attorney General's complaint, two class actions were filed in Illinois State Court in Cook County against all successful bidders in the Illinois auction, including PPL EnergyPlus, alleging violations of unfair trade practices laws. The factual allegations appear similar to those in the Attorney General's complaint. While PPL and PPL Energy Supply do not currently believe that these matters will have a material adverse impact on the financial condition of PPL and PPL Energy Supply, they cannot predict the outcome of this matter.

Wallingford Cost-Based Rates (PPL and PPL Energy Supply)

In January 2003, PPL negotiated an agreement with ISO New England that would declare that four of the five units at PPL's Wallingford, Connecticut facility are "reliability must run" (RMR) units and put those units under cost-based rates. This RMR agreement and the cost-based rates are subject to approval by the FERC. In May 2003, the FERC denied PPL's request for approval of the RMR agreement and cost-based rates, but in August 2005, the U.S. Court of Appeals for the District of Columbia Circuit reversed the FERC's denial and remanded the case to the FERC for further consideration. In April 2006, the FERC conditionally approved the RMR agreement and the cost-based rates for the four Wallingford units, effective February 1, 2003, subject to refund, hearing and settlement procedures. The FERC ordered a hearing to determine whether the Wallingford units needed the RMR agreement, the proposed cost-based rates under the RMR agreement and the amounts to be recovered for past periods under the RMR agreement. Any rates collected under the RMR agreement prior to the completion of the hearing and/or settlement proceedings are subject to refund pending the outcome of the proceedings. The hearing has been held in abeyance pending the outcome of the settlement proceedings among the interested parties.

In September 2006, PPL and certain of the parties filed a written settlement with the FERC. The settlement is unopposed and resolves all issues in the pending proceeding, including payments to PPL for the past period and going forward. Under the terms of the settlement, PPL would receive a total of $44 million in settlement of amounts due under the RMR agreement for the period February 1, 2003 through May 31, 2006. This amount (plus interest) would be paid to PPL in approximately equal monthly installments over a two-year period. In addition, PPL would enter into a revised RMR Agreement effective as of June 1, 2006, under which it would be entitled to receive $2 million per month for its recovery of fixed costs while the agreement remains in effect. PPL has deferred $16 million of payments related to the pending RMR settlement as of March 31, 2007. In October 2006, the administrative law judge assigned to this matter certified the settlement to the FERC for its consideration as an uncontested settlement.

In March 2007, the FERC approved the settlement agreement, subject to the condition that the parties file revisions to provide that the FERC will be bound to the "just and reasonable" and not the "public interest" standard of review in its consideration of modifications to the agreement. In compliance with the March 2007 order, PPL and the other settling parties submitted a compliance filing to the FERC in April 2007, revising the settlement offer and the RMR agreement to accept this condition.

PPL and PPL Energy Supply currently expect that the four Wallingford RMR units will begin to participate in ISO New England's locational forward reserve market in June 2007, at which time the revised RMR Agreement would terminate in accordance with the settlement provided certain conditions are met. The ISO New England locational forward reserve market provides revenues to peaking generation units that can quickly come on line from reserve status to meet reliability requirements.

Montana Public Service Commissioner's Litigation(PPL and PPL Energy Supply)

In May 2006, one of the commissioners of the Montana PSC commenced an action in Montana First Judicial District Court against PPL Montana and the Montana PSC seeking to cause the Montana PSC to reverse its 1999 order consenting to EWG status for PPL Montana's power plants. In 1999, the FERC had granted the plants EWG status and the authority to sell electricity produced at market-based rates, and the Montana PSC consented to this status for PPL Montana's plants under a provision of federal law. In September 2006, the Court granted PPL Montana's and the Montana PSC's motions to dismiss this action. The plaintiff has appealed the dismissal of the lawsuit to the Montana Supreme Court. PPL and PPL Energy Supply continue to believe that this lawsuit is groundless and beyond the statute of limitations period, but 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 located in Kentucky. PPL receives tax credits pursuant to Section 29/45K of the Internal Revenue Code based on the sale of synthetic fuel from these facilities. Section 29/45K tax credits are currently scheduled to expire at the end of 2007.

To qualify for the Section 29/45K 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.

In addition, Section 29/45K provides for the synthetic fuel tax credit to begin to phase out when the relevant annual reference price for crude oil, which is the domestic first purchase price (DFPP), falls within a designated range and to be eliminated when the DFPP exceeds the range. The phase-out range is adjusted annually for inflation. Currently, the DFPP is published by the IRS annually in April for the prior year and is calculated based on the annual average wellhead price per barrel for all unregulated domestic crude oil. At December 31, 2006, PPL had estimated a phase-out of approximately 35% of the gross-tax credits in 2006. Based on the final published DFPP reference price for 2006, the phase-out percentage is now expected to be approximately 33%. A final calculation of the related 2006 tax credits net of the revised phase-out will be calculated upon receipt of all relevant tax information. PPL does not expect the actual net tax credits to be materially different than those estimated at December 31, 2006.

PPL currently estimates the phase-out range for 2007 to begin at about $57 per barrel (DFPP) and the tax credits to be totally eliminated at about $71 per barrel (DFPP). PPL currently expects a phase-out of approximately 10% of the gross tax credits produced in 2007, based on its estimate of the DFPP reference price and the phase-out range applicable for 2007. If the price of crude oil increases above current price levels in 2007, PPL's synthetic fuel tax credits for 2007 could be significantly reduced or eliminated. PPL cannot predict or estimate with any certainty the final DFPP reference price for crude oil or the phase-out range for 2007.

Since PPL began the synthetic fuel operations, the synthetic fuel produced at the Somerset and Tyrone facilities has resulted in an aggregate recognition of tax credits of an estimated $305 million for Somerset and $105 million for Tyrone as of March 31, 2007, including estimated amounts for the first quarter of 2007. After considering the estimated 2007 phase-out of approximately 10%, PPL recognized $14 million of tax credits for Somerset and $12 million of tax credits for Tyrone for the quarter ending March 31, 2007. An estimated $2 million of the gross tax credits for Somerset and $1 million for Tyrone were not recognized for the three months ended March 31, 2007, due to the phase-out range and the estimated DFPP reference price.

PPL has economic hedge transactions for 2007 that are expected to mitigate PPL's tax credit phase-out risk due to an increase of the DFPP reference price in 2007. The mark-to-market value of these hedges is reflected in "Energy-related businesses" revenues on the Statement of Income. Such hedge transactions do not mitigate any ongoing operational or production risks associated with the Tyrone and Somerset facilities.

PPL performed impairment reviews of both its synthetic fuel production facilities during the second quarter of 2006. The reviews were prompted by the temporary suspension of operations at Somerset in April 2006, the uncertainty surrounding the future operations of each of the facilities and continued observed and forecasted high crude oil prices at that time. PPL determined that the net book value of the facilities exceeded the projected undiscounted cash flows. Therefore, in the second quarter of 2006, PPL recorded charges totaling $10 million ($6 million after tax) to fully impair its synfuel-related assets based on an internal model and other analysis. The impairment charges were reflected in "Energy-related businesses" expenses on the Statements of Income. The assets of the facilities are a component of the Supply segment.

PPL also purchases synthetic fuel from unaffiliated third parties, at prices below the market price of coal, for use at its coal-fired power plants. Fuel cost savings for the first quarter of 2007 were $5 million. PPL estimates that, unless these third parties discontinue their synthetic fuel operations and sales to PPL due to the impact of projected DFPP oil prices or otherwise, its purchases from these parties will result in fuel cost savings for the remainder of 2007 of $20 million assuming full production throughout the year.

In October 2003, 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.

Energy Policy Act of 2005(PPL, PPL Energy Supply and PPL Electric)

In August 2005, President Bush signed into law the Energy Policy Act of 2005 (the 2005 Energy Act). The 2005 Energy Act is comprehensive legislation that will substantially affect the regulation of energy companies. The Act amends federal energy laws and provides the FERC with new oversight responsibilities. Among the important changes that have been or will be implemented as a result of this legislation are:

· The Public Utility Holding Company Act of 1935 has been repealed. PUHCA significantly restricted mergers and acquisitions in the electric utility sector.

· The FERC has appointed the North American Electric Reliability Council as the electric reliability organization to establish and enforce mandatory reliability standards ("Reliability Standards") regarding the bulk power system, and the FERC will oversee this process and independently enforce the Reliability Standards, as further described below.

· The FERC will establish incentives for transmission companies, such as performance-based rates, recovery of the costs to comply with reliability rules and accelerated depreciation for investments in transmission infrastructure.

· The Price-Anderson Amendments Act of 1988, which provides the framework for nuclear liability protection, was extended to 2025.

· Federal support will be available for certain clean coal power initiatives, nuclear power projects and renewable energy technologies.

The implementation of the 2005 Energy Act requires proceedings at the state level and the development of regulations, some of which have not been finalized, by the FERC, the DOE and other federal agencies. PPL cannot predict when all of these proceedings and regulations will be finalized.

Upon implementation, the Reliability Standards will have the force and effect of law, and will apply to all users of the bulk power electricity system, including electric utility companies, generators and marketers. The FERC has indicated that it intends to vigorously enforce the Reliability Standards using, among other means, civil penalty authority. At this time, PPL cannot predict the impact that compliance with the Reliability Standards will have on PPL, including its capital and operating expenditures, but such compliance costs could be significant.

PPL also cannot predict with certainty the impact of the other provisions of the 2005 Energy Act and any related regulations on PPL and its subsidiaries.

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 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, particulate matter standards and toxic air emissions and visibility in the U.S. Amendments to the Clean Air Act requiring additional emission reductions are likely to continue to be brought up for consideration in the U.S. Congress. The Clean Air Act allows states to develop more stringent regulations and in some instances, as further discussed below, Pennsylvania and Montana have chosen to do so.

Citing its authority under the Clean Air Act, the EPA has 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 promulgated the Clean Air Interstate Rule (CAIR) for 28 midwestern and eastern states, including Pennsylvania, to reduce sulfur dioxide emissions by about 50% by 2010 and to extend the current seasonal program for reduction in emissions of nitrogen oxides to a year-round program starting in 2009. The CAIR requires further reductions, starting in 2015, in sulfur dioxide and nitrogen oxides of 30% and 20%, respectively, from 2010 levels. The CAIR allows these reductions to be achieved through cap-and-trade programs. Pennsylvania has not challenged the CAIR, but the rule has been challenged by several states and environmental groups as not being sufficiently strict, and by industry petitioners as being too strict. In addition, several Canadian environmental groups have petitioned the EPA under the Clean Air Act to revise the CAIR to require deeper reductions in sulfur dioxide and mercury emissions, and the Ozone Transport Commission (consisting of Pennsylvania and 11 other states and the District of Columbia) has passed a resolution calling for reductions in sulfur dioxide and nitrogen oxides that are more stringent than those under CAIR. The Pennsylvania DEP, which represents Pennsylvania on the Ozone Transport Commission, has indicated its support for developing regulations for reductions in sulfur dioxide and nitrogen oxides that are more stringent than those under CAIR.

In order to continue meeting existing sulfur dioxide reduction requirements of the Clean Air Act, including CAIR, PPL is installing sulfur dioxide scrubbers at its Montour Units 1 and 2 and Brunner Island Unit 3, and a scrubber at Brunner Island Units 1 and 2. The scrubbers for both Montour units and Unit 3 at Brunner Island are expected to be in-service during 2008 and the scrubber for Units 1 and 2 at Brunner Island is expected to be in-service during 2009. Based on expected levels of generation and projected emission allowance prices, PPL has determined that it is more economic to install these scrubbers than to purchase significant additional emission allowances to make up the emission allowance shortfalls that would otherwise occur. In order to meet the year-round reductions in nitrogen oxides under CAIR, PPL's current plan is to operate the SCRs at Montour Units 1 and 2 year-round, optimize emission reductions from the existing combustion controls and purchase any needed emission allowances on the open market. PPL's current installation plan for the scrubbers and other pollution control equipment (primarily aimed at sulfur dioxide, particulate, nitrogen oxides and mercury emissions reduction) through 2011 reflects a total cost of approximately $1.5 billion. PPL expects a 30 MW reduction in net generation capability at each of the Brunner Island and Montour plants, due to the estimated increases in station service usage during the scrubber operation.

Also citing its authority under the Clean Air Act, the EPA has finalized Clean Air Mercury Regulations (CAMR) that affect coal-fired plants. These regulations establish a cap-and-trade program to take effect in two phases, with a first phase to begin in January 2010, and a second phase with more stringent caps to begin in January 2018. Under CAMR, each state is allocated a mercury emissions cap and is required to develop state implementing regulations that can follow the federal requirements or be more restrictive. Several states, including Pennsylvania, have challenged CAMR in the U.S. Court of Appeals for the District of Columbia Circuit as not being sufficiently strict. PPL cannot predict the outcome and impact of that challenge.

Pennsylvania has adopted its own, more stringent mercury rules. Pennsylvania's rules will require that mercury controls be installed on each coal-fired generating unit; that the EPA's CAMR caps be met at each unit without the benefit of an emissions trading program; and that the second phase of CAMR be accelerated to begin in 2015.

PPL expects that it can achieve the 2010 requirements under Pennsylvania's more stringent mercury rules with only the addition of chemical injection systems. This expectation is based on the co-benefits of mercury removal from the scrubbers expected to be in place at its Pennsylvania plants as of 2010, and the SCRs already in place at Montour. PPL currently estimates that the capital cost of such chemical injection systems at its Pennsylvania plants will be approximately $20 million.

Because an emissions trading program is not allowed under Pennsylvania's mercury rules, adsorption/absorption technology with fabric filters may be required at most of PPL's Pennsylvania coal-fired generating units to meet Pennsylvania's second-phase caps beginning in 2015. Based on current analysis and industry estimates, PPL estimates that if this technology were required at every one of its Pennsylvania units the aggregate capital cost of compliance would be approximately $530 million.

Montana also has finalized its own more stringent rules that would require every coal-fired generating plant in the state to achieve by 2010 reduction levels more stringent than CAMR's 2018 cap. Because enhanced chemical injection technologies may not be sufficiently developed to meet this level of reductions by 2010, there is a risk that adsorption/absorption technology with fabric filters at both Colstrip and Corette would be required. Based on current analysis and industry estimates, PPL estimates that its capital cost to achieve compliance at its Montana units would be approximately $140 million.

PPL expects both Pennsylvania's and Montana's mercury rules to be challenged in court. If those rules are overturned and PPL is instead required to comply with CAMR, PPL expects that it could achieve the 2010 requirements under CAMR in both Pennsylvania and Montana with only the addition of chemical injection systems and allowance purchases. In addition to the capital cost for the chemical injection systems in Pennsylvania noted above, PPL estimates that its share of the capital cost for such systems in Montana would be approximately $5 million. With respect to the 2018 requirements under CAMR, PPL currently expects that it would be able to comply in Pennsylvania by installing adsorption/absorption technology with fabric filters on half of its generating capacity at a capital cost of approximately $265 million. In Montana, PPL currently expects that it could achieve the 2018 CAMR requirements with enhanced chemical injection at modest cost.

In addition to the above rules, the Clean Air Visibility Rule was issued by the EPA on June 15, 2005, to address regional haze or regionally-impaired visibility caused by multiple sources over a wide area. The rule defines Best Available Retrofit Technology (BART) requirements for electric generating units, including presumptive limits for sulfur dioxide and nitrogen oxides controls for large units. In 2007, PPL must submit to the Pennsylvania DEP and to the Montana DEQ its analyses of the visibility impacts of plants covered by the BART rule in each state. In Pennsylvania, this would include Martins Creek Units 3 and 4, Brunner Island Units 2 and 3 and Montour Units 1 and 2. In Montana, this would include Colstrip Units 1 and 2 and Corette. PPL has completed the BART analysis for the Pennsylvania plants and has submitted the analysis to the Pennsylvania DEP.

The EPA has stated that the BART rule will not require states to make reductions in sulfur dioxide or nitrogen oxides beyond those required by CAIR, although states can establish more stringent rules. At this time, PPL cannot predict whether the Pennsylvania DEP will require any such additional reductions. In states like Montana that are not within the CAIR region, the need for and cost of additional controls as a result of this new rule are 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 significantly increased their emissions and subjected them to more stringent "New Source" requirements under the Clean Air Act. The EPA subsequently issued notices of violation and commenced enforcement activities against other utilities. In April 2007, the U.S. Supreme Court upheld the annual emissions test under which the EPA had found emissions increases at the plants included in its enforcement initiative.

In the past several years, the EPA has shifted its position on New Source Review. In 2003, the EPA issued changes to its regulations that clarified what projects are exempt from "New Source" requirements as routine maintenance and repair. However, these regulations were stayed and subsequently struck down 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 2003 clarifications.

In October 2005, the EPA proposed changing its rules on how to determine whether a project results in an emissions increase and is therefore subject to review under the "New Source" regulations. The EPA's proposed tests are consistent with the position of energy companies and industry groups and, if adopted, would substantially reduce the uncertainties under the current regulations. PPL cannot predict whether these proposed new tests will be adopted. In addition to proposing these new tests, the EPA also announced in October 2005 that it will not bring new enforcement actions with respect to projects that would satisfy the proposed new tests or the EPA's 2003 clarifications referenced above. Accordingly, PPL believes that it is unlikely that the EPA will follow up on the information requests that had been issued to PPL Montana's Corette and Colstrip plants by EPA Region VIII in 2000 and 2003, respectively, and to PPL Generation's Martins Creek plant by EPA Region III in 2002. However, states and environmental groups also have been bringing enforcement actions alleging violations of "New Source" requirements by coal-fired plants, and PPL is unable to predict whether such state or citizens enforcement actions will be brought with respect to any of its affiliates' plants.

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 PPL's Lower Mt. Bethel generating plant. In October 2003, PPL finalized an agreement with the New Jersey DEP and the Pennsylvania DEP. Under the agreement, PPL Martins Creek will shut down the plant's two 150 MW coal-fired generating units in September 2007 and may repower them any time after shutting them down so long as it follows all applicable state and federal requirements. Pursuant to 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 oil-fired units at the Martins Creek plant. Similar issues also are being raised by the Pennsylvania DEP. PPL is currently negotiating the matter with the Pennsylvania DEP. 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 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 oxides to address visibility concerns upon the occurrence of certain triggering events. The EPA asserted that regulations it promulgated in 1980 triggered this requirement. PPL believes that the ACO is unfounded. A settlement in this matter has been reached by the parties and is awaiting entry by the U.S. District Court for the District of Montana. The agreement calls for installation of low nitrogen oxides emissions equipment on Colstrip Units 3 and 4, payment of a non-material penalty and financing of an energy efficient project. PPL Montana's cost of this settlement is anticipated to be approximately $4 million.

There is a growing concern nationally and internationally about global climate change and the contribution of emissions of greenhouse gases, including most significantly, carbon dioxide. This concern has led to increased interest in legislation at the federal level, actions at the state level, as well as litigation relating to greenhouse gas emissions, including the recent Supreme Court decision holding that the EPA has the authority to regulate carbon dioxide emissions from motor vehicles under the Clean Air Act. Increased pressure for carbon dioxide emissions reduction also is coming from investor organizations and the international community.

On the legislative front, in June 2005, the U.S. Senate adopted a resolution declaring that mandatory reductions in greenhouse gases are needed. Several bills that would cap or tax greenhouse gases from electric utilities are being considered by Congress, and the concept of such regulation has received support from the majority leadership in both the U.S. Senate and U.S. House of Representatives.  President Bush has opposed such regulation, promoting instead a voluntary greenhouse gas reduction program, called the Climate VISION program.

At the state level, seven northeastern states signed an MOU in 2005, agreeing to establish a cap and trade program, called the Regional Greenhouse Gas Initiative (RGGI), commencing in January 2009 for stabilization of carbon dioxide emissions, at base levels established in 2005, from electric power plants larger than 25 MW in capacity. The MOU also provides for a 10% reduction in carbon dioxide emissions from the base levels by the end of 2018. In August 2006, a Model Rule was developed by these seven states that will form the basis for participants to adopt individual state laws and regulations for program implementation. Three other states have subsequently joined RGGI, and several other states are considering joining. A similar effort is under way in the western part of the country with California and several other states also having announced their intention to develop a cap-and-trade program for carbon dioxide.

Pennsylvania and Montana have not, at this time, established any mandatory programs to regulate carbon dioxide and other greenhouse gases. However, government officials in each state have declared support for state action on climate change issues. PPL has conducted an inventory of its carbon dioxide emissions and is continuing to evaluate various options for reducing, avoiding, off-setting or sequestering its carbon dioxide emissions. If legislation or regulations are passed at the federal or state levels imposing mandatory reductions of carbon dioxide and other greenhouse gases on generation facilities, the cost to PPL of such reductions could be significant.

Water/Waste (PPL and PPL Energy Supply)

In August 2005, there was a release of approximately 100 million gallons of water containing fly ash from a disposal basin at the Martins Creek plant used in connection with the operation of the two 150 MW coal-fired generating units at the plant. This resulted in ash being deposited onto adjacent roadways and fields, and into a nearby creek and the Delaware River. The leak was stopped, and PPL has determined that the problem was caused by a failure in the disposal basin's discharge structure. PPL has conducted extensive clean-up and is continuing to work with the Pennsylvania DEP and other appropriate agencies and consultants to assess whether the leak caused any environmental damage. PPL shut down the two units in September 2005 and placed the units back in service in December 2005 after completing the repairs and upgrades to the basin and obtaining the Pennsylvania DEP's approval.

The Pennsylvania DEP filed a complaint in Commonwealth Court against PPL Martins Creek and PPL Generation, alleging violations of various state laws and regulations and seeking penalties and injunctive relief. The Delaware Riverside Conservancy and several citizens have been granted the right, without objection from PPL, to intervene in the Pennsylvania DEP's action. PPL and the Pennsylvania DEP have reached a tentative settlement for the alleged violations. The proposed settlement requires PPL to pay $1.5 million in penalties and reimbursement of the DEP's costs, and requires PPL to submit a report on the completed studies of possible natural resource damages. PPL has been doing the studies in conjunction with a group of natural resource trustees, along with the Delaware River Basin Commission. PPL expects the trustees and the Delaware River Basin Commission to seek to recover their costs and/or any damages they determine were caused by the leak. PPL is implementing a study plan under which the assessment will be completed and reported to the agencies by May 2007. Studies to date do not show damages attributable to the leak. However, the agencies may require additional studies.

In March 2006, several citizens (including some that have intervened in the Pennsylvania DEP's lawsuit) and two businesses filed a lawsuit in the Superior Court of New Jersey, Warren County, alleging that the fly ash leak caused damage to property along a 40-mile stretch of the Delaware River and asserting that the named plaintiffs are representative of a class of citizens and businesses along the 40-mile stretch of the Delaware River. PPL moved this lawsuit to federal court in New Jersey and the plaintiffs thereafter voluntarily withdrew their action without prejudice to bring an action in state court that is not a class action.

During 2005, PPL Energy Supply recognized a $48 million pre-tax charge ($31 million after tax) in connection with the then-expected on-site and off-site costs relating to the remediation. Based on its ongoing assessment of the expected remediation costs, in the first quarter of 2006 PPL Energy Supply reduced the estimate in connection with the current expected costs of the leak by $3 million, of which $2 million relates to off-site costs and the remainder to on-site costs. This reduction was included in "Other operation and maintenance" on the Statement of Income. During the remainder of 2006, PPL Energy Supply further reduced its estimate in connection with the current expected costs of the leak by $8 million. At March 31, 2007, management's best estimate of the probable loss associated with the Martins Creek ash basin leak remains at $37 million, of which $31 million relates to off-site costs, and the balance to on-site costs. At March 31, 2007, the remaining contingency for this remediation was $9 million. PPL and PPL Energy Supply cannot be certain of the outcome of the action initiated by the Pennsylvania DEP, the outcome of the natural resource damage assessment, the outcome of any lawsuit brought by the citizens and businesses and the exact nature of any other regulatory or other legal actions that may be initiated against PPL, PPL Energy Supply or their subsidiaries as a result of the disposal basin leak.

Seepages have been detected at active and retired wastewater basins at various PPL plants, including the Montour, Brunner Island and Martins Creek generating facilities. PPL has completed an assessment of some of the seepages at the Montour and Brunner Island facilities and is working with the Pennsylvania DEP to implement abatement measures for those seepages. PPL is continuing to conduct assessments of other seepages at the Montour and Brunner Island facilities as well as seepages at the Martins Creek facility to determine the appropriate abatement actions. PPL plans to comprehensively address issues related to wastewater basins at all of its Pennsylvania plants, as part of the process to renew the residual waste permits for these basins that expire within the next two years. PPL has a remaining contingency of $1 million to assess and/or abate seepage from certain facilities and has $5 million in the 2007 capital budget to upgrade and/or replace certain waste water facilities in response to the seepage and other facility changes. The potential cost to address other seepages or to replace existing wastewater basins at PPL's Pennsylvania plants is not now determinable, but could be significant.

PPL has reached a settlement with the Pennsylvania DEP concerning the thermal discharge from its Brunner Island plant into the Susquehanna River. The settlement commits PPL to install mechanical draft cooling towers at the plant. PPL expects construction of the cooling towers to begin by the end of 2007 and for the towers to be in service in the spring of 2010. The expected capital cost of the installation of the towers is $125 million.

In May 2003, approximately 50 plaintiffs brought an action now pending at the Montana Sixteenth Judicial District Court, Rosebud County, against PPL Montana and the other owners of the Colstrip plant alleging property damage from seepage from the freshwater and wastewater ponds at Colstrip. In February 2007, six plaintiffs filed a separate lawsuit in the same court against the Colstrip plant owners asserting similar claims. PPL Montana has undertaken certain groundwater investigation and remediation measures at the Colstrip plant to address groundwater contamination alleged by the plaintiffs as well as other groundwater contamination at the plant. These measures include proceeding with extending city water to certain residents who live near the plant, some of whom are plaintiffs in the original litigation. Beyond the original estimated reserve of $1 million recorded by PPL Montana in 2004 (of which only an insignificant amount remains at March 31, 2007) for a proposed settlement of the property damage claims raised in the original litigation, for extending city water and for a portion of the remedial investigation costs, PPL Montana may incur further costs based on its additional groundwater investigations and any related remedial measures, which costs are not now determinable, but could be significant.

The EPA has significantly tightened the water quality standard for arsenic. The revised standard became effective in January 2006 and at this time applies only to drinking water. The revised standard may result in action by individual states that could require several PPL subsidiaries to either further treat wastewater or take abatement action at their power plants, or both. The cost of complying with any such requirements is not now determinable, but could be significant.

The EPA finalized requirements in 2004 for new or modified cooling 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 rule that was finalized in 2004 addresses existing structures. Six northeastern states challenged the new rules for existing structures as being inadequate. In January 2007, the U.S. Court of Appeals for the Second Circuit remanded to the EPA all of the main requirements of the rule for further analysis and rulemaking. Depending on what changes the EPA makes to the rule in accordance with this decision, and/or what actions the states may take on their own, the impacts of the actions could result in stricter standards for existing structures that could impose significant costs on PPL subsidiaries.

Superfund and Other Remediation

(PPL, PPL Energy Supply and PPL Electric)

PPL Electric is a potentially responsible party at several sites listed by the EPA under the federal Superfund program, including the Columbia Gas Plant Site. Clean-up actions have been or are being undertaken at all of these sites, the costs of which have not been significant. However, should the EPA require significantly different or additional measures in the future, the costs of such measures are not determinable but could be significant.

In 1995, PPL Electric and PPL Generation and, in 1996, PPL Gas Utilities entered into consent orders 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, PPL Generation or PPL Gas Utilities may be liable for remediation. These agreements have now been combined into a single agreement for the companies. The Consent Order and Agreement (COA) includes 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 that may exist at some of PPL Electric's former generating facilities; and potential contamination at abandoned power plant sites owned by PPL Generation. This also includes former coal gas manufacturing facilities and potential mercury contamination from gas meters and regulators at PPL Gas Utilities' sites.

As of March 31, 2007, PPL Electric and PPL Gas Utilities have 118 sites (97 well-plugging sites and 21 sites requiring remediation as discussed above) to address under the new combined COA, and currently no PPL Generation sites are included on the COA site list. Additional sites formerly owned or operated by PPL Electric, PPL Generation or PPL Gas Utilities are added to the COA on a case-by-case basis.

At March 31, 2007, PPL Electric and PPL Gas Utilities had accrued $3 million and $9 million, respectively, representing the estimated amounts each will have to spend for site remediation, including those sites covered by the COA noted 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 and its subsidiaries also could incur other non-remediation costs at sites included in the consent orders or other contaminated sites, the costs of which are not now determinable, but could be significant.

There continues to be an issue with natural gas observed in several drinking water wells in and around Tioga County, Pennsylvania, that the Pennsylvania DEP has been working to address. The Pennsylvania DEP has raised concerns that potential leakage of natural gas from the Tioga gas storage field partially owned by PPL Gas Utilities could be contributing to this issue. PPL Gas Utilities continues to work with the Pennsylvania DEP and to discuss the matter with the co-owner and operator of the field. The costs to resolve this issue are not now determinable, but could be significant.

The EPA is evaluating the risks associated with naphthalene, a chemical by-product of coal gas manufacturing operations. As a result of the EPA's evaluation, individual states may establish stricter standards for water quality and soil clean-up. This could require several PPL subsidiaries to take more extensive assessment and remedial actions at former coal gas manufacturing facilities. The costs to PPL of complying with any such requirements are not now determinable, but could be significant.

(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 mine water at two mine sites, and treating water at one of these sites. Another PPL Generation subsidiary has installed a passive wetlands treatment system at a third site. At March 31, 2007, PPL Energy Supply had accrued a discounted liability of $30 million to cover the costs of pumping and treating groundwater at the two mine sites for 50 years and for operating and maintaining passive wetlands treatment at the third site. PPL Energy Supply discounted this liability at a rate of 5.82%. Expected undiscounted payments are estimated at $1 million for each of the years from 2007 through 2011, and the expected payments for the work after 2011 are $116 million.

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. Currently pending before the Court are three cases relating to the manner in which this fundamental right may be exercised and the proper measurement of damages for environmental impacts to property. These cases were consolidated for purposes of arguments before the Court. The Court's ruling on this consolidated litigation could result in significantly more lawsuits under Montana's environmental laws. The effect on PPL Montana of any such increase in legal actions is not currently determinable, but could be significant.

(PPL, PPL Energy Supply and PPL Electric)

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.

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

Concerns have been expressed by some members of the public regarding potential health effects of power frequency EMFs, which 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 reviewed this issue. The U.S. National Institute of Environmental Health Sciences concluded in 2002 that, for most health outcomes, there is no evidence of EMFs causing adverse effects. The agency further noted that there is some epidemiological evidence of an association with childhood leukemia, but that this evidence is difficult to interpret without supporting laboratory evidence. The U.K. National Radiological Protection Board (now part of the U.K. Health Protection Agency) concluded in 2004 that, while the research on EMFs does not provide a basis to find that EMFs cause any illness, there is a basis to consider precautionary measures beyond existing exposure guidelines. PPL and its subsidiaries believe the current efforts to determine whether EMFs cause adverse health effects should continue and are taking steps to reduce EMFs, where practical, in the design of new transmission and distribution facilities. PPL and its subsidiaries are unable to predict what effect, if any, the EMF issue might have on their operations and facilities either in the U.S. or abroad, and the associated cost, or what, if any, liabilities they might incur related to the EMF issue.

Environmental Matters - International (PPL and PPL Energy Supply)

U.K.

WPD's distribution businesses are subject to 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 that 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 that 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, 2007, this maximum assessment was about $38 million.

In the event of a nuclear incident at the Susquehanna station, PPL Susquehanna's public liability for claims resulting from such incident would be limited to about $10.8 billion under provisions of The Price-Anderson Act Amendments under the Energy Policy Act of 2005. 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 Act Amendments under the Energy Policy Act of 2005, PPL Susquehanna could be assessed up to $201 million per incident, payable at $30 million per year.

Guarantees and Other Assurances

(PPL)

PPL fully and unconditionally guarantees all of the debt securities of PPL Capital Funding.

(PPL, PPL Energy Supply and PPL Electric)

The table below provides an update to those guarantees that are within the scope of FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34," and are specifically disclosed in Note 15 to the Financial Statements contained in each Registrant's 2006 Form 10-K.

		Recorded Liability at			Exposure at
		March 31, 2007	December 31, 2006		March 31, 2007 (a)			Expiration Date
PPL Energy Supply (b)
WPD LLP guarantee of obligations under SIUK Capital Trust I preferred securities (c)
Letters of credit issued on behalf of affiliates					$	8	(d)	2008
Support agreements to guarantee partnerships' obligations for the sale of coal						6		2007
Retroactive premiums under nuclear insurance programs						38
Nuclear claims under The Price-Anderson Act Amendments under The Energy Policy Act of 2005						201	(e)
Contingent purchase price payments to former owners of synfuel projects						14	(g)	2007
Indemnifications for entities in liquidation and sales of assets			$	1		309	(h)	2008 to 2012
Assignment of Enron claims						11	(i)		(i)
WPD guarantee of pension and other obligations of unconsolidated entities	$	4		4		33	(f)	2017
Tax indemnification related to unconsolidated WPD affiliates						10	(j)	2012
PPL Electric(b)
Guarantee of a portion of an unconsolidated entity's debt						7	(k)	2008

(a)	Represents the estimated maximum potential amount of future payments that could be required to be made under the guarantee.
(b)	Other than the exceptions noted in (d) below, all guarantees of PPL Energy Supply and PPL Electric also apply to PPL on a consolidated basis.
(c)	These securities were redeemed during February 2007 and, as a result, the guarantee no longer exists. See Note 7 for additional information on the redemption.
(d)	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.
(e)	Amount is per incident.
(f)	Neither the expiration date nor the maximum amount of potential payments for certain obligations is explicitly stated in the related agreements. Therefore, they have been estimated based on the types of obligations.
(g)	Actual payments are based primarily upon production levels of the synfuel projects. See "IRS Synthetic Fuels Tax Credits" within this note for further discussion.
(h)	PPL Energy Supply's maximum exposure with respect to certain indemnifications and the expiration of the indemnifications cannot be estimated because, in the case of certain of the indemnification provisions, the maximum potential liability is not capped by the transaction documents and the expiration date is based on the applicable statute of limitations. The exposure noted is only for those cases in which the agreements provide for a specific limit on the amount of the indemnification. In connection with the liquidation of wholly owned subsidiaries that have been deconsolidated upon turning the entities over to the liquidators, certain affiliates of PPL Global have agreed to indemnify the liquidators, directors and/or the entities themselves for any liabilities or expenses arising during the liquidation process, including liabilities and expenses of the entities placed into liquidation. In some cases, the indemnifications are limited to a maximum amount that is based on distributions made from the subsidiary to its parent either prior or subsequent to being placed into liquidation. In other cases, the maximum amount of the indemnifications is not explicitly stated in the agreements. The indemnifications generally expire two to seven years subsequent to the date of dissolution of the entities. The exposure noted only includes those cases in which the agreements provide for a specific limit on the amount of the indemnification, and the expiration date was based on an estimate of the dissolution date of the entities. Certain of the indemnifications provided to the purchaser of the Sundance plant are triggered only if the purchaser's losses reach $1 million in the aggregate, are capped at 50% of the purchase price (or $95 million), and survive for a period of only 24 months after the May 13, 2005, transaction closing. The indemnification provision for unknown environmental and tort liabilities related to periods prior to the ownership by PPL Sundance Energy, LLC of the real property on which the Sundance plant is located are capped at $4 million in the aggregate and survive for a maximum period of five years after the transaction closing. Certain of the indemnifications provided to the purchaser of the interest of PPL Southwest Generation Holdings, LLC in the Griffith plant are triggered only if the purchaser's losses reach $750,000 in the aggregate, are capped at 35% of the purchase price (or $41 million), and survive for a period of only 18 months after the June 30, 2006, transaction closing. In the case of most such indemnification obligations, the purchaser's existing 50% ownership of the Griffith plant prior to closing is taken into account for purposes of determining and calculating the purchaser's losses, and such indemnification obligations are therefore limited to 50% of any such purchaser losses.
(i)	In July 2006, two subsidiaries of PPL Energy Supply assigned their Enron claims to an independent third party (claims purchaser). In connection with the assignment, the subsidiaries agreed to repay a pro rata share of the purchase price paid by the claims purchaser, plus interest, in the event that any of the assigned claims are disallowed under certain circumstances. The bankruptcy court overseeing the Enron bankruptcy approved the assigned claims prior to their assignment to the claims purchaser. The subsidiaries' repayment obligations will remain in effect until the claims purchaser has received all distributions with respect to the assigned claims.
(j)	Two WPD unconsolidated affiliates were refinanced during 2005. Under the terms of the refinancing, WPD has indemnified the lender against certain tax and other liabilities. At this time, WPD believes that the likelihood of such liabilities arising is remote.
(k)	Reflects principal payments only.

PPL, PPL Energy Supply and PPL Electric and their subsidiaries provide other miscellaneous guarantees through contracts entered into in the normal course of business. These guarantees are primarily in the form of various indemnifications or warranties related to services or equipment and vary in duration. The obligated amounts of these guarantees often are not explicitly stated, and the overall maximum amount of the obligation under such guarantees cannot be reasonably estimated. Historically, PPL, PPL Energy Supply and PPL Electric and their subsidiaries have not made any significant payments with respect to these types of guarantees. As of March 31, 2007, the aggregate fair value of these indemnifications related to arrangements entered into subsequent to December 31, 2002, was insignificant.

11.   Related Party Transactions

Affiliate Trust (PPL and PPL Energy Supply)

At December 31, 2006, PPL's and PPL Energy Supply's Balance Sheets reflected $89 million of "Long-term debt with affiliate trust." This debt represented obligations of WPD LLP under 8.23% Subordinated Debentures maturing in February 2027 that were held by SIUK Capital Trust I, a variable interest entity whose common securities were owned by WPD LLP but which was not consolidated by WPD LLP. In February 2007, WPD LLP redeemed all of the 8.23% Subordinated Debentures that were held by SIUK Capital Trust I. See Note 7 for further discussion of the redemption. Interest expense on this obligation was $2 million and $3 million for the three months ended March 31, 2007 and 2006, and is reflected in "Interest Expense" for PPL and "Interest Expense with Affiliates" for PPL Energy Supply on the Statements of Income. The redemption resulted in a loss of $2 million being recorded during the three months ended March 31, 2007. This loss is reflected in "Interest Expense" for PPL and "Interest Expense with Affiliates" for PPL Energy Supply on the Statement of Income. See Note 22 in each Registrant's 2006 Form 10-K for additional information on the trust.

PLR Contracts (PPL Energy Supply and PPL Electric)

PPL Electric has power sales agreements with PPL EnergyPlus, effective July 2000 and January 2002, to supply all of PPL Electric's PLR load through December 31, 2009. Under these contracts, PPL EnergyPlus provides electricity at the predetermined capped prices that PPL Electric is authorized to charge its PLR customers. For the three months ended March 31, 2007 and 2006, these purchases totaled $481 million and $446 million. These purchases include nuclear decommissioning recovery and amortization of an up-front contract payment and are included in the Statements of Income as "Energy purchases from affiliate" by PPL Electric, and as "Wholesale energy marketing to affiliate" by PPL Energy Supply.

Under one of 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. PPL Electric estimated that, at March 31, 2007, the market price of electricity would exceed the contract price by $2.4 billion. Accordingly, at March 31, 2007, 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's deposit with PPL Electric was $300 million at both March 31, 2007 and December 31, 2006. This deposit is shown on the Balance Sheets as "Collateral on PLR energy supply to/from affiliate," a current asset of PPL Energy Supply and a current liability of PPL Electric. PPL Electric pays interest equal to the one-month LIBOR plus 0.5% on this deposit, which is included in "Interest Expense with Affiliate" on the Statements of Income. PPL Energy Supply records this as affiliated interest income, which is included in "Other Income - net" on the Statements of Income.

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 $32 million at March 31, 2007 and $35 million at December 31, 2006. These current and noncurrent balances are reported on the Balance Sheets 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, 2007 and 2006, these NUG purchases totaled $37 million and $39 million. These amounts are included in the Statements of Income as "Wholesale electric to affiliate" by PPL Electric, and as "Energy purchases from affiliate" 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 subsidiaries based on an average of the subsidiaries' relative invested capital, operation and maintenance expenses, and number of employees. PPL Services allocated the following amounts, which PPL management believes are reasonable, to PPL Energy Supply and PPL Electric, including amounts applied to accounts that are further distributed between capital and expense.

	Three Months Ended March 31,
	2007		2006
PPL Energy Supply	$	59	$	61
PPL Electric		32		32

Divestiture of Latin American Businesses(PPL and PPL Energy Supply)

See Note 8 for details about an agreement reached in April 2007, whereby PPL would sell its Bolivian businesses to a group organized by their local management and employees of the companies.

Intercompany Borrowings

(PPL Energy Supply)

PPL Energy Supply had no notes receivable from affiliates at March 31, 2007 and December 31, 2006. Interest earned on cash collateral and loans to affiliates, included in "Other Income - net" on the Statements of Income, was $5 million for both of the three months ended March 31, 2007 and 2006.

(PPL Electric)

In August 2004, a PPL Electric subsidiary issued a $300 million demand note to an affiliate. In February 2006, the demand note was amended to increase the maximum amount of the note to $450 million. In April 2006, the note was amended back to a maximum amount of $300 million. There was a balance of $300 million outstanding at March 31, 2007 and December 31, 2006. Interest is due quarterly at a rate equal to the 3-month LIBOR plus 1% in 2007 and 1.25% in 2006. This note is shown on the Balance Sheets as "Note receivable from affiliate." Interest earned on the note is included in "Other Income - net" on the Statements of Income, and was $5 million for both of the three months ended March 31, 2007 and 2006.

Intercompany Derivatives (PPL Energy Supply)

PPL Energy Supply has entered into a combination of average rate forwards and average rate options to sell British pounds sterling with PPL. These hedging instruments have terms identical to average rate forwards and average rate options entered into by PPL with third parties to protect expected income denominated in British pounds sterling. At March 31, 2007, the total notional amount of these hedging instruments was £82.9 million (approximately $161 million) and the market value of these positions, representing the amount PPL Energy Supply would pay to PPL and PPL would pay to third parties upon their termination, was $1 million and is reflected in "Other Income - net" on the Statement of Income and "Price risk management liabilities" on the Balance Sheet. The market value of the average rate forwards and average rate options that existed at March 31, 2006 was $2 million, representing the amount PPL would receive from third parties and PPL Energy Supply would receive from PPL upon their termination, and is reflected in "Other income - net" on the Statement of Income for the three months ended March 31, 2006.

PPL Energy Supply has entered into forward contracts to sell Chilean pesos with PPL. These hedging instruments have terms identical to forward sales contracts entered into by PPL with third parties. At March 31, 2007, the total notional amount of these contracts was 175 billion Chilean pesos (approximately $325 million). Of these forward sale contracts, 161 billion Chilean pesos (approximately $300 million) are to hedge the net investment in Emel and is reflected in accumulated other comprehensive loss and "Price risk management assets" on the Balance Sheet. The market value of these positions, representing the amount PPL Energy Supply would receive from PPL and PPL would receive from third parties upon termination, was $1 million.

Trademark Royalties (PPL Energy Supply)

A PPL subsidiary owns PPL trademarks and bills certain affiliates for their use. PPL Energy Supply was allocated $9 million of this license fee for the three months ended March 31, 2007 and 2006. These allocations of the license fee are primarily included in "Other operation and maintenance" on the Statements of Income.

12.   Other Income - net

(PPL, PPL Energy Supply and PPL Electric)

The breakdown of "Other Income - net" was:

	Three Months Ended March 31,
PPL	2007		2006
Other Income
Interest income	$	12	$	6
Equity earnings		1		1
Earnings on nuclear decommissioning trust		2		3
Gain on sale of real estate		5
Gain on sale of investment in an unconsolidated affiliate (Note 8)				4
Hyder liquidation distribution (Note 8)		4
Gain on transfer of international equity investment (Note 8)		5
Miscellaneous - International				2
Miscellaneous - Domestic		3		4
Total		32		20
Other Deductions
Impairment of investment in U.K. real estate (Note 8)				8
Charitable contributions		2		1
Miscellaneous - International		1
Miscellaneous - Domestic		3		3
Other Income - net	$	26	$	8
PPL Energy Supply
Other Income
Interest income	$	8	$	2
Affiliated interest income (Note 11)		5		5
Equity earnings		1		1
Earnings on nuclear decommissioning trust		2		3
Gain on sale of real estate		1
Gain on sale of investment in an unconsolidated affiliate (Note 8)				4
Hyder liquidation distribution (Note 8)		4
Gain on transfer of international equity investment (Note 8)		5
Miscellaneous - International				2
Miscellaneous - Domestic		2		2
Total		28		19

Other Deductions
Impairment of investment in U.K. real estate (Note 8)				8
Miscellaneous - International		1
Miscellaneous - Domestic		3		3
Other Income - net	$	24	$	8
PPL Electric
Other Income
Interest income	$	3	$	3
Affiliated interest income (Note 11)		5		5
Gain on sale of real estate		4
Miscellaneous				1
Total		12		9
Other Deductions
Other Income - net	$	12	$	9

13.   Derivative Instruments and Hedging Activities

(PPL and PPL Energy Supply)

Fair Value Hedges

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 and emission allowance positions. These contracts range in maturity through 2007. Additionally, PPL and PPL Energy Supply enter into financial contracts to hedge fluctuations in the market value of existing debt issuances. These contracts range in maturity through 2046. PPL and PPL Energy Supply also enter into foreign currency forward contracts to hedge the exchange rates associated with firm commitments denominated in foreign currencies. These forward contracts range in maturity through 2008.

PPL and PPL Energy Supply did not recognize significant gains or losses resulting from hedges of firm commitments that no longer qualified as fair value hedges for the three months ended March 31, 2007 and 2006. PPL and PPL Energy Supply also did not recognize any gains or losses resulting from the ineffective portion of fair value hedges in these periods.

Cash Flow Hedges

PPL and PPL Energy Supply enter into financial and physical contracts, including forwards, futures, swaps and options, to hedge the price risk associated with electric, gas, oil and other commodities. These contracts range in maturity through 2017. 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 interest rate swap contracts range in maturity through 2018. PPL and PPL Energy Supply also enter into foreign currency contracts to hedge the cash flows associated with foreign currency-denominated debt, the exchange rates associated with firm commitments denominated in foreign currencies and the net investment of foreign operations. These contracts range in maturity through 2028.

Net investment hedge activity is reported in the foreign currency translation adjustments component of other comprehensive income. PPL's cumulative net investment hedge losses, after tax, were $5 million as of March 31, 2007, and $6 million as of December 31, 2006. During the three months ended March 31, 2007 and 2006, PPL and PPL Energy Supply recognized insignificant amounts in accumulated other comprehensive loss.

Cash flow hedges may be discontinued if it is probable that the original forecasted transaction will not occur by the end of the originally specified time period. During the three months ended March 31, 2007, an insignificant amount was reclassified from accumulated other comprehensive loss. There were no such events for the three months ended March 31, 2006.

For the three months ended March 31, 2007 and 2006, hedging ineffectiveness associated with energy derivatives was, after tax, a loss of $3 million and a gain of $2 million.

Ineffectiveness associated with interest rate and foreign currency derivatives was not significant for the three months ended March 31, 2007 and 2006.

As of March 31, 2007, 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 is a loss of $1 million for PPL and a gain of $3 million for PPL Energy Supply. Amounts are reclassified as the energy contracts go to delivery and as interest payments are made.

This table shows the accumulated net unrealized losses on qualifying derivatives (excluding net investment hedges), after tax, which are included in accumulated other comprehensive loss.

	Three Months Ended March 31,
	2007			2006
PPL
Beginning of period	$	(51	)	$	(246	)
Net change associated with current period hedging activities and other		26			77
Net change from reclassification into earnings		6			25
End of period	$	(19	)	$	(144	)

PPL Energy Supply
Beginning of period	$	(52	)	$	(237	)
Net change associated with current period hedging activities and other		29			70
Net change from reclassification into earnings		4			24
End of period	$	(19	)	$	(143	)

Normal Purchase / Normal Sale Exception

PPL's and PPL Energy Supply's "normal" portfolio includes derivative contracts for full requirements energy, emission allowances, gas and capacity; these contracts range in maturity through 2026. Due to the "normal" election permitted by SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted, these contracts receive accrual accounting. The net fair value of these contracts that would have been recorded on the Balance Sheets, had they not received accrual accounting treatment, are:

	Gains (Losses)
	March 31, 2007			December 31, 2006
PPL	$	(94	)	$	146
PPL Energy Supply		(94	)		154

Economic Hedging Activity

PPL and PPL Energy Supply have entered into energy derivative transactions that economically hedge a specific risk, but do not qualify for hedge accounting under SFAS 133. The unrealized gains and losses on these transactions are considered non-trading activities and are reflected on the Statements of Income in "Wholesale energy marketing" or "Energy-related businesses" revenues, or "Fuel" or "Energy purchases" expenses.

Credit Concentration

PPL and PPL Energy Supply enter into contracts with many entities for the purchase and sale of energy. Many 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 fair 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 is the fair value of multi-year contracts for energy sales and purchases. Therefore, if these counterparties fail to perform their obligations under such contracts, PPL and PPL Energy Supply would not experience an immediate financial loss but would experience lower revenues or higher costs in future years to the extent that replacement sales or purchases could not be made at the same prices as those under the defaulted contracts.

PPL and PPL Energy Supply generally have the right to request collateral from their counterparties in the event that the counterparties' credit ratings fall below investment grade or their exposure exceeds an established credit limit. It is also the policy of PPL and PPL Energy Supply to enter into netting agreements with all of their counterparties to limit credit exposure.

At March 31, 2007, both PPL and PPL Energy Supply had a credit exposure of $378 million to energy trading partners, excluding the effects of netting arrangements. No individual counterparty accounted for more than 12% of the exposure. Ten counterparties accounted for $260 million, or 69%, of the total exposure. Eight of these counterparties had an investment grade credit rating from S&P and accounted for 87% of the top 10 exposure. As a result of netting arrangements and forward market prices, PPL's and PPL Energy Supply's credit exposure was reduced to zero.

(PPL Electric)

PPL Electric has an exposure to PPL Energy Supply under the long-term contract for PPL EnergyPlus to supply PPL Electric's PLR load, as described in Note 11. 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.

14.   Restricted Cash

(PPL, PPL Energy Supply and PPL Electric)

The following table details the components of restricted cash by reporting entity and by type.

	March 31, 2007
	PPL		PPL Energy Supply		PPL Electric
Current:
Collateral for letters of credit (a)	$	41			$	41
Deposits for trading purposes with NYMEX broker		48	$	48
Client deposits		6
Miscellaneous		1		1		1
Restricted cash - current		96		49		42
Noncurrent:
Required deposits of WPD (b)		19		19
PPL Transition Bond Company Indenture reserves (c)		29				29
Restricted cash - noncurrent		48		19		29
Total restricted cash	$	144	$	68	$	71

	December 31, 2006
	PPL		PPL Energy Supply		PPL Electric
Current:
Collateral for letters of credit (a)	$	42			$	42
Deposits for trading purposes with NYMEX broker		42	$	42
Counterparty collateral		6		6
Client deposits		9
Miscellaneous		3		3		1
Restricted cash - current		102		51		43
Noncurrent:
Required deposits of WPD (b)		20		20
PPL Transition Bond Company Indenture reserves (c)		33				33
Restricted cash - noncurrent		53		20		33
Total restricted cash	$	155	$	71	$	76

(a)	A deposit with a financial institution of funds from the asset-backed commercial paper program to fully collateralize letters of credit. See Note 7 for further discussion on the asset-backed commercial paper program.
(b)	Includes insurance reserves of $18 million and $19 million at March 31, 2007 and December 31, 2006.
(c)	Credit enhancement for PPL Transition Bond Company's $2.4 billion Series 1999-1 Bonds to protect against losses or delays in scheduled payments.

15.   Goodwill

(PPL and PPL Energy Supply)

The changes in the carrying amounts of goodwill by segment were:

	PPL Energy Supply										PPL
	Supply		International Delivery			Total			Pennsylvania Delivery		Total
Balance at December 31, 2006	$	94	$	1,005		$	1,099		$	55	$	1,154
Effect of foreign currency exchange rates				(7	)		(7	)				(7	)
Reclassification (a)				(144	)		(144	)				(144	)
Other				1			1					1
Balance at March 31, 2007	$	94	$	855		$	949		$	55	$	1,004

(a) This amount relates to Latin American businesses and has been transferred to "Assets held for sale" as a result of the anticipated sale of these businesses. See Note 8 for additional information.

16.   Asset Retirement Obligations

(PPL and PPL Energy Supply)

The change in the carrying amounts of the AROs was:

AROs at December 31, 2006	$	336
Accretion expense		7
Obligations settled		(1	)
AROs at March 31, 2007	$	342

Changes in ARO costs and settlement dates, which affect the carrying value of various AROs, are reviewed periodically to ensure that any material changes are incorporated into the latest estimates of the obligation.

Funds in the nuclear decommissioning trust are legally restricted for purposes of settling PPL's and PPL Energy Supply's ARO related to the decommissioning of the Susquehanna station. PPL Electric collects authorized nuclear decommissioning costs through the CTC. These revenues are passed on to PPL EnergyPlus under the power supply agreements between PPL Electric and PPL EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues, less applicable taxes, are used to fund the nuclear plant decommissioning trust funds and can only be used for future decommissioning costs. The aggregate fair value of the nuclear plant decommissioning trust funds was $520 million as of March 31, 2007, and $510 million as of December 31, 2006.

17.   New Accounting Standards

(PPL, PPL Energy Supply and PPL Electric)

FIN 48

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. See Note 5 for the disclosures required by FIN 48. 

SFAS 155

In February 2006, the FASB issued SFAS 155, "Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140." Among other things, SFAS 155 addresses certain accounting issues surrounding securitized financial assets and hybrid financial instruments with embedded derivatives that require bifurcation. PPL and its subsidiaries adopted SFAS 155 effective January 1, 2007. The adoption of SFAS 155 did not have an impact on PPL and its subsidiaries.

SFAS 157

In September 2006, the FASB issued SFAS 157, "Fair Value Measurements." SFAS 157 provides a definition of fair value as well as a framework for measuring fair value. In addition, SFAS 157 expands the fair value measurement disclosure requirements of other accounting pronouncements to require, among other things, disclosure of the methods and assumptions used to measure fair value as well as the earnings impact of certain fair value measurement techniques. SFAS 157 does not expand the use of fair value measurements in existing accounting pronouncements. PPL and its subsidiaries will adopt SFAS 157 prospectively, effective January 1, 2008, except for certain items such as financial instruments that were previously measured at fair value in accordance with footnote 3 of EITF Issue No. 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities," which require a limited form of retrospective application. PPL and its subsidiaries are in the process of evaluating the impact of adopting SFAS 157. The potential impact of adoption is not yet determinable, but it could be material.

SFAS 159

In February 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115." SFAS 159 provides entities with an option to measure, upon adoption of this pronouncement and at specified election dates, certain financial assets and liabilities at fair value, including available-for-sale and held-to-maturity securities, as well as other eligible items. The fair value option (i) may be applied on an instrument-by-instrument basis, with a few exceptions, (ii) is irrevocable (unless a new election date occurs), and (iii) is applied to an entire instrument and not to only specified risks, cash flows, or portions of that instrument. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date.

SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between similar assets and liabilities measured using different attributes. Upon adoption of SFAS 159, an entity may elect the fair value option for eligible items that exist at that date, and must report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings.

PPL and its subsidiaries will adopt SFAS 159 effective January 1, 2008. PPL and its subsidiaries are in the process of evaluating the impact of adopting SFAS 159. The potential impact of adoption is not yet determinable, but it could be material.

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. In PPL's 2006 Form 10-K, descriptions of its domestic and international businesses are found in "Item 1. Business - Background." 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. In March 2007, PPL announced its intention to sell its regulated electricity delivery businesses in Latin America. PPL's reportable segments are Supply, International Delivery and Pennsylvania Delivery. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" in PPL's 2006 Form 10-K for an overview of PPL's strategy and the risks and the challenges that it faces in its business. See "Forward-Looking Information," Note 10 to the Financial Statements and the rest of this Item 2 in this Form 10-Q and "Item 1A. Risk Factors" and the rest of Item 7 in PPL's 2006 Form 10-K for more information concerning the material risks and uncertainties that PPL faces in its businesses and with respect to its future earnings.

The following information should be read in conjunction with PPL's Condensed Consolidated Financial Statements and the accompanying Notes and in conjunction with PPL's 2006 Form 10-K.

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

Results of Operations

The following discussion begins with a summary of PPL's earnings. "Results of Operations" continues with a review of results by reportable segment and a description of key factors by segment that management expects may impact future earnings. This section ends with explanations of significant changes in principal items on PPL's Statements of Income, comparing the three months ended March 31, 2007, with the same period in 2006.

Earnings

Net income and the related EPS were:

	Three Months Ended March 31,
	2007		2006
Net income	$	203	$	280
EPS - basic	$	0.53	$	0.74
EPS - diluted	$	0.52	$	0.73

The changes in net income from period to period were, in part, attributable to several special items that management considers significant. Details of these special items are provided within the review of each segment's earnings.

The period-to-period changes in significant earnings components, including domestic gross energy margins by region and significant income statement line items, are explained in the "Statement of Income Analysis."

The Statements of Income reflect the results of past operations and are 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.

Segment Results

Net income by segment was:

	Three Months Ended March 31,
	2007		2006
Supply	$	117	$	143
International Delivery		28		81
Pennsylvania Delivery		58		56
Total	$	203	$	280

Supply Segment

The Supply segment primarily consists of the domestic energy marketing, domestic generation and domestic development operations of PPL Energy Supply.

The Supply segment results in 2006 reflect the reclassification of PPL's interest in the Griffith plant's operating revenues and expenses from certain income statement line items to "(Loss) Income from Discontinued Operations." See Note 8 to the Financial Statements for further discussion.

Supply segment net income was:

	Three Months Ended March 31,
	2007		2006
Energy revenues
External	$	278	$	370
Intersegment		481		446
Energy-related businesses		175		158
Total operating revenues		934		974
Fuel and energy purchases
External		301		338
Intersegment		37		41
Other operation and maintenance		175		164
Depreciation		41		37
Taxes, other than income		9		9
Energy-related businesses		197		154
Total operating expenses		760		743
Other Income - net		3
Interest Expense		35		27
Income Taxes		24		60
Minority Interest		1
Loss from Discontinued Operations				(1	)
Net income	$	117	$	143

The after-tax change in net income between these periods was due to the following factors, including discontinued operations.

Eastern U.S. non-trading margins	$	(3	)
Western U.S. non-trading margins		(5	)
Other operation and maintenance expenses		(1	)
Depreciation		(2	)
Earnings from synfuel projects		11
Interest expense		(3	)
Other		2
Special items		(25	)
	$	(26	)

· See "Domestic Gross Energy Margins" for an explanation of non-trading margins by geographic region and for an explanation of net energy trading margins.

· The improved earnings contribution from synfuel projects was primarily the result of lower assumed phase-out of synthetic fuel tax credits for the three months ended March 31, 2007, compared with the same period in 2006.

The following after-tax amounts, which management considers special items, also had a significant impact on the Supply segment earnings. See the indicated Notes to the Financial Statements for additional information.

	Three Months Ended March 31,
	2007			2006
Mark-to-market adjustments from certain economic, non-trading hedges	$	10		$	7
Impairment of telecommunications assets (Note 8)		(18	)
Reduction in Enron reserve (Note 10)					9
Off-site remediation of ash basin leak (Note 10)					1
Total	$	(8	)	$	17

2007 Outlook

PPL projects significantly higher earnings in its Supply business segment in 2007 compared with 2006. Based on current forward energy prices and hedges already in place, PPL is projecting higher energy margins for the balance of 2007, driven primarily by the replacement of expiring supply obligations with higher-margin wholesale energy contracts, such as the contract with NorthWestern in Montana, as well as new full-requirements contracts in the Mid-Atlantic region.

While PPL expects improved baseload power plant performance in 2007, this performance will be offset by the retirement in September of two small coal-fired units in Pennsylvania and by planned outages, including the Susquehanna Unit 1 outage, which is expected to conclude the control rod friction issues that have affected plant operations over the past several years. PPL believes these planned outages will improve the overall long-term reliability of its generation fleet. PPL also expects a modest increase in fuel-related expenses and increased operation and maintenance expenses.

International Delivery Segment

The International Delivery segment includes operations of the international energy businesses of PPL Global that are primarily focused on the distribution of electricity. Substantially all of PPL Global's international businesses are located in the U.K., Chile, El Salvador and Bolivia.

The International Delivery segment results in the first quarter of 2007 and 2006 reflect the reclassification of Latin American revenues and expenses to "(Loss) Income From Discontinued Operations." See Note 8 to the Financial Statements for further discussion.

International Delivery segment net income was:

	Three Months Ended March 31,
	2007			2006
Utility revenues	$	216		$	203
Energy-related businesses		10			10
Total operating revenues		226			213
Other operation and maintenance		56			45
Depreciation		43			35
Taxes, other than income		16			11
Energy-related businesses		5			4
Total operating expenses		120			95
Other Income - net		11			(1	)
Interest Expense		49			43
Income Taxes		15			3
(Loss) Income from Discontinued Operations		(25	)		10
Net income	$	28		$	81

The after-tax change in net income between these periods was due to the following factors, including discontinued operations.

U.K.:
Delivery margins	$	(7	)
Depreciation		(3	)
Operating expenses		(3	)
Interest expense		(3	)
Income taxes		(20	)
Impact of changes in foreign currency exchange rates		7
Hyder liquidation distributions (Note 8)		4
Gain on transfer of equity investment (Note 8)		5
Impairment of investment in U.K. real estate (Note 8)		6
Other		(2	)
Latin American results of operations excluding special items (Note 8)		6
Other		(2	)
Special items		(41	)
	$	(53	)

· The U.K.'s earnings were negatively impacted by lower delivery margins, primarily due to a 4% decrease in sales volumes as a result of milder weather in 2007.

· Higher U.K. income taxes were due to the transfer of WPD tax items in the first quarter of 2006. See Note 5 to the Financial Statements for additional information.

· Changes in foreign exchange rates increased WPD's portion of revenue and expense line items by 12% in the three months ended March 31, 2007, compared with the same period in 2006, which resulted in $7 million of additional earnings in 2007.

The following after-tax amounts, which management considers special items, also had a significant impact on the International Delivery segment earnings. See the indicated Notes to the Financial Statements for additional information.

	Three Months Ended March 31,
	2007			2006
Divestiture of Latin American businesses (Note 8)	$	(40	)
Reduction in Enron reserve				$	1
Total	$	(40	)	$	1

2007 Outlook

PPL projects the earnings from its International Delivery business segment to decline in 2007 compared with 2006. Higher delivery margins in the U.K., due to higher unit prices, are expected to be more than offset by increased operating expenses and higher income taxes in the U.K. in 2007, due to the favorable resolution of several tax-related items in 2006. In addition, gains from the sale or liquidation of U.K. non-electricity delivery businesses are not expected to continue at the same level in 2007 as occurred in 2006.

In March 2007, the U.K. government outlined proposed changes to various U.K. taxes and allowances. This included a reduction in the rate of corporation tax from 30% to 28% effective April 1, 2008, and changes to allowances for PP&E. The proposal is expected to pass into law in July 2007. WPD is currently assessing the impact of the proposed changes, which could result in lower U.K. income taxes for 2007 than currently forecasted by PPL.

Pennsylvania Delivery Segment

The Pennsylvania Delivery segment includes the regulated electric and gas delivery operations of PPL Electric and PPL Gas Utilities.

Pennsylvania Delivery segment net income was:

	Three Months Ended March 31,
	2007		2006
Operating revenues
External	$	959	$	909
Intersegment		37		41
Total operating revenues		996		950
Fuel and energy purchases
External		118		126
Intersegment		481		446
Other operation and maintenance		105		102
Amortization of recoverable transition costs		81		72
Depreciation		34		30
Taxes, other than income		54		50
Total operating expenses		873		826
Other Income - net		12		9
Interest Expense		37		44
Income Taxes		35		32
Dividends on Preferred Securities		5		1
Net income	$	58	$	56

The after-tax change in net income between these periods was due to the following factors.

Delivery revenues (net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges)	$	5
Other operation and maintenance expenses		(2	)
Depreciation		(3	)
Other		2
	$	2

Higher delivery revenues were primarily due to a 4% increase in sales volume, due in part to the impact of colder weather in 2007 on residential and commercial sales and the return of customers previously served by alternate suppliers.

2007 Outlook

PPL expects the Pennsylvania Delivery segment to have flat earnings in 2007 compared with 2006, with modest load growth being offset by increased operation and maintenance expenses.

In March 2007, PPL Electric filed a request with the PUC to increase distribution rates by approximately $84 million. The PUC's review of the distribution rate request is expected to take about nine months. The proposed distribution rate increase would result in a 2.7% increase over PPL Electric's present rates and would be effective January 1, 2008. PPL Electric cannot predict the outcome of this proceeding.

Refer to PPL's 2006 Form 10-K for information about PPL Electric's plan detailing how it proposes to acquire its PLR electricity supply for non-shopping customers in 2010 after its PLR contract with PPL EnergyPlus expires, as well as the PUC's proposed PLR regulations and policy statement regarding interpretation and implementation of those regulations. Based on current forward market prices, PPL Electric estimated that under its proposed plan customer rates could increase by approximately 30% from 2009 to 2010.

Statement of Income Analysis --

Domestic Gross Energy Margins

The following table provides pre-tax changes in the income statement line items that comprise domestic gross energy margins.

	Three Months Ended March 31, 2007 vs. March 31, 2006
Utility		$	63
Unregulated retail electric and gas			(3	)
Wholesale energy marketing			(86	)
Net energy trading margins			(3	)
Other revenue adjustments (a)			(14	)
Total revenues			(43	)
Fuel			58
Energy purchases			(103	)
Other cost adjustments (a)			11
Total cost of sales			(34	)
Domestic gross energy margins		$	(9	)

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic gross energy margins, consistent with the way management reviews domestic gross energy margins internally. These exclusions include 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 the margins of the Griffith plant prior to its sale in June 2006, which are included in "(Loss) Income from Discontinued Operations," and gains or losses on sales of emission allowances, which are included in "Other operation and maintenance" expenses on the Statements of Income.

Changes in Domestic Gross Energy Margins By Region

Domestic gross energy margins are generated through PPL's non-trading and trading activities. PPL manages its non-trading energy business on a geographic basis that is aligned with its generation assets. Additionally, beginning in 2006, PPL further segregates non-trading activities into two categories: hedge activity and economic activity. Economic activity represents the net unrealized effect of derivative transactions that are entered into as economic hedges, but do not qualify for hedge accounting, or hedge accounting was not elected, under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted.

	Three Months Ended March 31, 2007 vs. March 31, 2006
Non-trading
Eastern U.S.		$	1
Western U.S.			(7	)
Net energy trading			(3	)
Domestic gross energy margins		$	(9	)

Eastern U.S.

Eastern U.S. non-trading margins were higher in the first quarter of 2007, compared with the same period in 2006, primarily because of a 1.3% increase in PLR sale prices in accordance with the schedule established by the PUC Final Order. Although supply costs were higher due to increased customer demand under the PLR Contract between PPL Electric and PPL EnergyPlus, these costs were offset by higher margins from new supply contracts and higher coal-fired generation volumes. Coal-fired generation volumes were up 4%.

Unrealized gains included in Eastern non-trading margins that resulted from transactions that did not qualify for hedge accounting treatment, or for which hedge accounting was not elected, and from hedge ineffectiveness, were $12 million in the first quarter of 2007, compared with $14 million in 2006.

Western U.S.

Western U.S. non-trading margins were lower in the first quarter of 2007, compared with the same period in 2006, primarily due to lower hydroelectric generation output, which was down 8%. Also contributing were higher coal prices, which were up 18%, and the sale of PPL's interest in the Griffith plant in 2006. See Note 8 to the Financial Statements for additional information.

Net Energy Trading

PPL enters into energy contracts to take advantage of market opportunities. As a result, PPL may at times create a net open position in its portfolio that could result in significant losses if prices do not move in the manner or direction anticipated. The margins from these trading activities are reflected in the Statements of Income as "Net energy trading margins." These physical and financial contracts cover trading activity associated with electricity, gas and oil.

The amount of energy trading margins from unrealized mark-to-market transactions was a $12 million loss in the first quarter of 2007, compared with a $4 million gain in the same period in 2006.

The realized physical volumes for electricity and gas associated with energy trading were:

	Three Months Ended March 31,
	2007		2006
GWh		2,788		2,085
Bcf		5.3		4.3

Utility Revenues

The increase in utility revenues was attributable to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Domestic:
Retail electric revenue (PPL Electric)
PLR electric generation supply		$	37
Electric delivery			14
Gas revenue (PPL Gas Utilities)			(2	)
Other			1
International:
U.K. retail electric delivery (PPL Global)			(10	)
Foreign currency exchange rates			23
		$	63

The increase in utility revenues, excluding foreign currency exchange rate impacts, was primarily due to:

· higher PLR revenues and electric delivery revenues primarily attributable to a 4% increase in sales volume, due in part to the impact of colder weather in 2007 on residential and commercial sales and the return of customers previously served by alternate suppliers; partially offset by

· lower U.K. revenues primarily due to a 4% decrease in sales volumes as a result of milder weather in 2007.

Energy-related Businesses

Energy-related businesses contributed $27 million less to operating income for the three months ended March 31, 2007, compared with the same period in 2006. The decrease was primarily attributable to a $31 million impairment of telecommunication assets (see Note 8), partially offset by $3 million of lower pre-tax losses from synfuel projects. This reflects $5 million of lower operation losses due to lower production levels; partially offset by a $2 million lower unrealized gain on options purchased to hedge a portion of the risk associated with the phase-out of the synthetic fuel tax credits.

See Note 10 to the Financial Statements for a detailed discussion of synthetic fuel tax credits.

Other Operation and Maintenance

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

	Three Months Ended March 31, 2007 vs. March 31, 2006
Reduction in Enron reserve in 2006 (Note 10)		$	15
Environmental remediation			6
Pension and other postretirement benefits			4
Change in foreign currency exchange rates			4
Martins Creek ash basin remediation adjustment in 2006 (Note 10)			3
Susquehanna nuclear station outage			2
Tree-trimming			2
Storm insurance premiums			2
Stock-based compensation			2
Western and Eastern U.S. fossil/hydro stations outages			(3	)
PUC reportable storms			(3	)
Regulatory asset in 2007 for PPL Gas Utilities rate case			(4	)
Higher gains on sales of emission allowances			(11	)
Other			6
		$	25

Depreciation

The increase in depreciation expense was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Additions to PP&E		$	9
Purchase of equipment previously leased			4
Foreign currency exchange rates			4
Reduction of useful lives of certain distribution assets			1
Favorable impact of not depreciating transport assets classified as held for sale (Note 8)			(2	)
		$	16

Taxes, Other Than Income

Taxes, other than income increased by $9 million during the three months ended March 31, 2007, compared with the same period in 2006. The increase was primarily due to a $5 million increase in domestic gross receipts tax expense and an increase in WPD property taxes, as the 2006 period included a credit of $2 million for a refund received.

Other Income - net

See Note 12 to the Financial Statements for details of other income.

Financing Costs

The increase in financing costs, which includes "Interest Expense" and "Dividends on Preferred Securities of a Subsidiary," was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Long-term debt interest expense		$	7
Foreign currency exchange rates			4
Dividends on 6.25% Series Preference Stock			4
Loss on redemption of 8.23% Subordinated Debentures due 2027			2
Hedging activities			1
Increase in capitalized interest			(7	)
		$	11

Income Taxes

The decrease in income taxes was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Lower pre-tax book income		$	(20	)
Change in tax benefits related to nonconventional fuel tax credits			(10	)
Change in tax expense on foreign earnings			(10	)
Transfer of WPD tax items in the first quarter of 2006 (Note 5)			20
Other			(1	)
		$	(21	)

See Note 5 to the Financial Statements for details on effective income tax rates.

Discontinued Operations

See "Discontinued Operations" in Note 8 to the Financial Statements for information related to the (loss) income from discontinued operations recorded during the three months ended March 31, 2007 and 2006, in connection with PPL's anticipated sale of its Latin American businesses, along with information regarding the operating loss recorded in the first quarter of 2006 prior to the sale of PPL's interest in the Griffith plant.

Financial Condition

Liquidity and Capital Resources

PPL had the following cash and cash equivalents, short-term investments and short-term debt as of the dates noted below:

	March 31, 2007			December 31, 2006
Cash and cash equivalents	$	965	(a)	$	794
Short-term investments		354			359
	$	1,319	(a)	$	1,153
Short-term debt	$	71		$	42

(a) Excludes $36 million of cash related to the Latin American businesses that is included in "Assets held for sale" on the Balance Sheet.

The $166 million increase in PPL's cash, cash equivalents and short-term investments position was primarily the net result of:

· proceeds of $505 million from the issuance of long-term debt;

· $286 million of cash provided by operating activities;

· a net increase in short-term debt of $29 million; and

· net proceeds of $26 million from the sale of emission allowances; offset by

· $341 million of capital expenditures;

· the retirement of $201 million of long-term debt (which includes a payment of $29 million to settle related cross-currency swaps);

· the payment of $105 million of common stock dividends; and

· the reclassification of $36 million of cash related to the Latin American businesses to "Assets held for sale."

Convertible Senior Notes

The terms of PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 include a market price trigger that permits holders to convert the notes during any fiscal quarter if the closing sale price of PPL's common stock exceeds $29.83 for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. Holders of the Convertible Senior Notes were entitled to convert their notes at any time during the first quarter of 2007 and are also entitled to convert their notes any time during the second quarter of 2007 as a result of the market price trigger being met. When holders elect to convert the Convertible Senior Notes, PPL Energy Supply is required to settle the principal amount in cash and any conversion premium in cash or PPL common stock. During the first quarter of 2007, an insignificant amount of Convertible Senior Notes were presented for conversion and settled with an insignificant amount of cash and PPL common stock. After such conversions, $102 million of Convertible Senior Notes remain outstanding and are eligible for conversion in the second quarter of 2007. PPL and PPL Energy Supply have, and expect to continue to have, access to sufficient liquidity sources to fund any such conversions.

Credit Facilities

In January 2007, WPD (South West) terminated its £150 million three-year committed credit facility, which was to expire in October 2008. This facility was replaced by a new £150 million five-year committed credit facility at WPDH Limited that expires in January 2012, with the option to extend the expiration date by a maximum of two years.

In March 2007, PPL Energy Supply extended the expiration date of its 364-day reimbursement agreement, under which it can cause the bank to issue up to $200 million of letters of credit, to March 2008.

In May 2007, PPL Energy Supply expects to increase the capacity of its $1.9 billion syndicated credit facility to $3.4 billion and extend the June 2011 expiration date of this facility by one year. The additional capacity is expected to support potential collateral requirements under contracts that PPL Energy Supply anticipates entering into in connection with expanding its wholesale marketing and trading business. In May 2007, PPL Electric also expects to extend the expiration date of its $200 million syndicated credit facility to May 2012.

Financings

In December 2006, Elfec issued $11 million of 6.05% UFV (inflation-adjusted bolivianos) denominated bonds with serial maturities from 2012 through 2014. Of these bonds, $5 million were issued in exchange for existing bonds with maturities in 2007 and 2008. Cash proceeds of $6 million were used in January 2007 to refinance bonds with maturities in 2007. These transactions were reflected in PPL's January 2007 financial statements due to the one-month lag in foreign subsidiary reporting.

In March 2007, PPL Capital Funding issued $500 million of 2007 Series A Junior Subordinated Notes due 2067 (Notes). The Notes are fully and unconditionally guaranteed by PPL as to payment of principal, interest and premium, if any. The Notes mature on March 30, 2067, and are callable at par value beginning March 30, 2017. Prior to such time, the Notes may be redeemed at PPL Capital Funding's option at make-whole redemption prices. The Notes bear interest at 6.70% from the date of issuance up to March 30, 2017. Beginning March 30, 2017, and continuing up to the maturity date, the Notes bear interest at three-month LIBOR plus 2.665%, reset quarterly. PPL Capital Funding may defer interest payments on the Notes, from time to time, on one or more occasions for up to ten consecutive years. Deferred interest payments will accumulate additional interest at a rate equal to the interest rate then applicable to the Notes. During any period in which PPL Capital Funding defers interest payments on the Notes, subject to certain exceptions, neither PPL Capital Funding nor PPL may (i) declare or pay any cash dividend or distribution on its capital stock, (ii) redeem, purchase, acquire or make a liquidation payment with respect to any of its capital stock, or (iii) make any payments on any debt or any guarantee of debt by PPL that is equal or junior in right of payment to the Notes or the related guarantee by PPL.

PPL Capital Funding received $493 million of proceeds, net of a discount and underwriting fees, from the issuance of the Notes. Approximately $280 million of the net proceeds from the sale of the Notes will be used to pay at maturity PPL Capital Funding's 8.375% Medium-Term Notes due June 15, 2007. The remainder of the net proceeds will be used for general corporate purposes, including capital expenditures relating to the installation of pollution control equipment by PPL Energy Supply.

In connection with the issuance of the Notes, PPL and PPL Capital Funding entered into a Replacement Capital Covenant, in which PPL and PPL Capital Funding agreed for the benefit of holders of a designated series of unsecured long-term indebtedness of PPL or PPL Capital Funding ranking senior to the Notes that (i) PPL Capital Funding will not redeem or purchase the Notes, or otherwise satisfy, discharge or defease the principal amount of the Notes and (ii) neither PPL nor any of its other subsidiaries will purchase the Notes on or before March 30, 2037, except, subject to certain limitations, to the extent that the applicable redemption or repurchase price or principal amount defeased does not exceed a specified amount of proceeds from the sale of qualifying replacement capital securities during the 180-day period prior to the date of that redemption, repurchase or defeasance. The designated series of covered debt to initially benefit from the Replacement Capital Covenant is PPL Capital Funding's 4.33% Notes Exchange Series A Due March 1, 2009.

Early Redemption of Debt

In February 2007, WPD LLP redeemed all of the 8.23% Subordinated Debentures due 2027 that were held by SIUK Capital Trust I. Upon redemption, WPD LLP paid a premium of 4.115%, or approximately $3 million, on the principal amount of $85 million of subordinated debentures. WPD LLP received $3 million when its investment in SIUK Capital Trust I was liquidated in connection with this redemption. Additionally, a payment of $29 million was made to settle related cross-currency swaps.

Proceeds from Anticipated Disposals

Proceeds from the anticipated sales of the Latin American and telecommunications businesses are expected to be used to invest in growth opportunities in PPL's core electricity supply and delivery businesses and/or for the repurchase of securities, including PPL common stock. See Note 8 for additional information.

Rating Agency Decisions

Moody's, S&P and Fitch periodically review the credit ratings on the debt and preferred securities of PPL and its subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.

A credit rating reflects an assessment by the rating agency of the creditworthiness associated with an issuer and particular securities that it issues. The credit ratings of PPL and its subsidiaries are based on information provided by PPL and other sources. The ratings of Moody's, S&P 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 the securities. A downgrade in PPL's or its subsidiaries' credit ratings could result in higher borrowing costs and reduced access to capital markets.

The rating agencies took the following actions related to PPL and its rated subsidiaries during the first quarter of 2007:

· In connection with PPL Capital Funding's issuance in March 2007 of the 2007 Series A Junior Subordinated Notes due 2067, Moody's, S&P and Fitch assigned ratings of Baa3, BB+ and BBB- to the junior subordinated debt of PPL Capital Funding.

· Also in March 2007, Fitch affirmed its BBB rating of PPL Montana's 8.903% Pass Through Certificates due 2020.

For additional information on PPL's liquidity and capital resources, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL's 2006 Form 10-K.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Commodity Price Risk (Non-trading)

PPL's non-trading commodity derivative contracts mature at various times through 2017. PPL segregates its non-trading activities as either hedge or economic. Transactions that are accounted for as hedge activity qualify for hedge accounting treatment under SFAS 133. The majority of PPL's energy transactions qualify for accrual or hedge accounting. The non-trading economic category includes transactions that address a specific risk, but are not eligible for hedge accounting or hedge accounting is not elected. Included in the non-trading economic category are certain load-following energy obligations and related supply contracts, FTRs, crude oil swaps to hedge rail transportation charges and hedges of synthetic fuel tax credits. Although they do not receive hedge accounting treatment, these contracts are considered non-trading. The fair value of the non-trading economic contracts that do not qualify for accrual or hedge accounting treatment as of March 31, 2007, including net premiums on options, was $88 million. The following chart sets forth PPL's net fair market value of all non-trading commodity derivative contracts.

	Three Months Ended March 31,
	2007			2006
Fair value of contracts outstanding at the beginning of the period	$	(111	)	$	(284	)
Contracts realized or otherwise settled during the period		23			11
Fair value of new contracts at inception		23
Other changes in fair values		52			162
Fair value of contracts outstanding at the end of the period	$	(13	)	$	(111	)

The following chart segregates estimated fair values of PPL's non-trading commodity derivative contracts at March 31, 2007, 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	$	15	$	5		$	(6	)				$	14
Prices provided by other external sources		14		(143	)		(16	)	$	(2	)		(147	)
Prices based on models and other valuation methods		60		12						48			120
Fair value of contracts outstanding at the end of the period	$	89	$	(126	)	$	(22	)	$	46		$	(13	)

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the NYMEX, which has quoted prices through 2011.

The "Prices provided by other external sources" category includes PPL's forward positions and options in natural gas and electricity and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available.

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. This category includes the fair value of transactions completed in auction markets, where contract prices represent the market value for load-following bundled energy prices delivered at illiquid delivery points. The transaction prices associated with the contracts did not equal the wholesale bilateral market prices at inception (Day 1). However, EITF 02-3 does not generally permit Day 1 gains and losses to be recognized unless the fair value is derived principally from observable market inputs. Therefore, PPL recorded a reserve for the modeled Day 1 gain, which is netted against the above fair values.

Because of PPL's efforts to hedge the value of the energy from its generation assets, PPL sells electricity, capacity and related services and buys fuel on a forward basis, resulting in open contractual positions. If PPL is unable to deliver firm capacity and energy or to accept the delivery of fuel under its agreements, under certain circumstances it could be required to pay damages. These damages would be based on the difference between the market price and the contract price of the commodity. Depending on price volatility in the wholesale energy markets, such damages could be significant. Extreme weather conditions, unplanned power plant outages, transmission disruptions, non-performance by counterparties (or their own counterparties) with which it has energy contracts and other factors could affect PPL's ability to meet its obligations, or cause significant increases in the market price of replacement energy. Although PPL attempts to mitigate these risks, there can be no assurance that it will be able to fully meet its firm obligations, that it will not be required to pay damages for failure to perform, or that it will not experience counterparty non-performance in the future.

As of March 31, 2007, 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 $373 million, compared to $263 million as of March 31, 2006. For purposes of this calculation, an increase in the market price for electricity is considered an adverse movement because PPL's electricity portfolio is generally in a net sales position, and the decrease in the market price for fuel is considered an adverse movement because PPL's commodity fuels portfolio is generally in a net purchase position. PPL enters into those commodity contracts to reduce the market risk inherent in the generation of electricity.

Starting in 2007, PPL elected to use an alternative method for disclosing quantitative information about certain market risk sensitive instruments. This method utilizes a VaR model to measure commodity price risk in its non-trading and trading portfolios. This approach is consistent with how PPL's Risk Manager assesses the market risk of its commodity business. VaR is a statistical model that attempts to predict risk of loss, under normal market conditions, based on historical market price volatility. PPL calculates VaR using a Monte Carlo simulation technique, which uses historical data from the past 12 month period. The VaR is the estimated nominal loss of earnings based on a one-day holding period at a 95% confidence interval. As of March 31, 2007, the VaR for PPL's non-trading portfolio was $16 million. This excludes the activity for PPL's synthetic fuel tax credit hedges. Additional information regarding these hedges can be found in the "Synthetic Fuel Tax Credit Risk" section below.

Commodity Price Risk (Trading)

PPL's trading contracts mature at various times through 2011. The following chart sets forth PPL's net fair market value of trading contracts.

	Three Months Ended March 31,
	2007			2006
Fair value of contracts outstanding at the beginning of the period	$	41		$	5
Contracts realized or otherwise settled during the period		(13	)		(11	)
Fair value of new contracts at inception		16			4
Other changes in fair values		1			14
Fair value of contracts outstanding at the end of the period	$	45		$	12

PPL will reverse a gain of approximately $8 million of the $45 million unrealized trading gains over the next three months as the transactions are realized.

The following chart segregates estimated fair values of PPL's trading portfolio at March 31, 2007, 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	$	(3	)	$	2	$	1
Prices provided by other external sources		4			1				$	5
Prices based on models and other valuation methods		18			22					40
Fair value of contracts outstanding at the end of the period	$	19		$	25	$	1		$	45

See "Commodity Price Risk (Non-trading)" for information on the various sources of fair value.

As of March 31, 2007, 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 $35 million, compared to $20 million as of March 31, 2006.

As of March 31, 2007, the VaR for PPL Energy Supply's trading portfolio was $4 million. This excludes the activity for PPL Energy Supply's synthetic fuel tax credit hedges. Additional information regarding these hedges can be found in the "Synthetic Fuel Tax Credit Risk" section below.

Synthetic Fuel Tax Credit Risk

At this time, PPL expects that the high level and the volatility of crude oil prices will reduce the amount of synthetic fuel tax credits that PPL receives through its synthetic fuel production. The tax credits are reduced if the annual average wellhead price of domestic crude oil falls within a phase-out range. The tax credits are eliminated if this reference price exceeds the phase-out range. See "Regulatory Issues - IRS Synthetic Fuels Tax Credits" in Note 10 to the Financial Statements for more information regarding the phase-out of the tax credits.

PPL implemented a risk management strategy to hedge a portion of the variability of cash flows associated with its 2006 and 2007 synthetic fuel tax credits by hedging the risk that the 2006 and 2007 annual average wellhead price for domestic crude oil will be within the phase-out range.

PPL has net purchased options for 2007 that are expected to mitigate PPL's tax credit phase-out risk due to an increase of the average wellhead price in 2007. These positions did not qualify for hedge accounting treatment. The mark-to-market value of these positions at March 31, 2007, was a gain of $29 million.

As of March 31, 2007, PPL estimated that a 10% adverse movement in market prices of crude oil would have decreased the value of the synthetic fuel hedges by $26 million. For purposes of this calculation, a decrease in the market price for crude oil is considered an adverse movement.

Commodity Price Risk Summary

In accordance with its marketing strategy, PPL elects not to fully hedge its generation output or fuel requirements. PPL estimates that for its entire portfolio, including all generation, emissions and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods would decrease expected 2007 gross margins by $7 million. A 10% adverse movement in all fossil fuel prices would not have a material effect on expected 2007 gross margins.

Interest Rate Risk

PPL and its subsidiaries have issued debt to finance their operations, which exposes them to interest rate risk. 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 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, 2007, PPL's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was $10 million.

PPL is also exposed to changes in the fair value of its domestic and international debt portfolios. At March 31, 2007, 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 $342 million.

PPL utilizes various risk management instruments to reduce its exposure to the expected future cash flow variability of its debt instruments. These risks include exposure to adverse interest rate movements for outstanding variable rate debt and for future anticipated financing. While PPL is exposed to changes in the fair value of these instruments, any changes in the fair value of these instruments are recorded in equity and then reclassified into earnings in the same period during which the item being hedged affects earnings. At March 31, 2007, the market value of these instruments, representing the amount PPL would pay upon their termination, was $2 million. At March 31, 2007, PPL estimated that its potential exposure to a change in the fair value of these instruments, through a 10% adverse movement in the hedged exposure, was $10 million.

PPL also utilizes various risk management instruments to adjust the mix of fixed and floating interest rates in its debt portfolio. While PPL is exposed to changes in the fair value of these instruments, any change in market value is recorded with an equal and offsetting change in the value of the debt being hedged. At March 31, 2007, PPL estimated that its potential additional exposure to a change in the fair value of these instruments, through a 10% adverse movement in interest rates, was $18 million.

WPDH Limited holds a net position in cross-currency swaps totaling $702 million, to hedge the interest payments and principal of its U.S. dollar-denominated bonds with maturity dates ranging from December 2007 to December 2028. The estimated value of this position at March 31, 2007, being the amount PPL would pay to terminate it, including accrued interest, was $170 million. At March 31, 2007, PPL estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates and interest rates, was $132 million.

Foreign Currency Risk

PPL is exposed to foreign currency risk, primarily through investments in affiliates in the U.K. and Latin America. 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 of expected earnings.

To economically hedge 2007 expected income in Chilean pesos, PPL entered into average rate forwards for 12.4 billion Chilean pesos. The settlement date of these forwards is November 2007. At March 31, 2007, the market value of these positions, representing the amount PPL would receive upon their termination, was not significant. PPL estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $1 million at March 31, 2007.

To economically hedge 2007 expected income denominated in British pounds sterling, PPL entered into a combination of average rate forwards and average rate options for £82.9 million. These forwards and options have termination dates ranging from April 2007 to December 2007. At March 31, 2007, the market value of these positions, representing the amount PPL would pay upon their termination, was $1 million. PPL estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $10 million at March 31, 2007.

PPL executed forward sale contracts for 175 billion Chilean pesos. Of these forward sale contracts, 161 billion Chilean pesos are to hedge PPL's net investment in Emel. The settlement date of these forwards is December 2007. At March 31, 2007, the market value of these positions, representing the amount PPL would receive upon their termination, was $1 million. PPL estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $33 million at March 31, 2007.

PPL has entered into a forward contract to purchase 5.1 million Euros in order to protect against fluctuations in the Euro exchange rate, in connection with the purchase of equipment. The settlement date of this contract is January 2008. At March 31, 2007, the market value of this position, representing the amount PPL would receive upon its termination, was not significant. PPL estimated that its potential additional exposure to a change in the market value of this instrument, through a 10% adverse movement in foreign currency exchange rates, was $1 million at March 31, 2007.

Nuclear Decommissioning Trust Funds - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna nuclear station. As of March 31, 2007, 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 sufficient 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 actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At March 31, 2007, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $38 million reduction in the fair value of the trust assets. See Note 21 in PPL's 2006 Form 10-K for more information regarding the nuclear decommissioning trust funds.

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.

For additional information on related party transactions, see Note 11 to the Financial Statements.

Acquisitions, Development and Divestitures

From time to time, PPL and its subsidiaries are involved in negotiations with third parties regarding acquisitions and dispositions of businesses and assets, joint ventures and development projects, which may or may not result in definitive agreements. Any such transactions may impact future financial results. See Note 8 to the Financial Statements for information regarding such recent transactions.

PPL is currently planning incremental capacity increases of 355 MW at several existing domestic generating facilities. Offsetting this increase is an expected 30 MW reduction in generation capability at each of the Brunner Island and Montour plants, due to the estimated increases in station service usage during the scrubber operation. See Note 10 to the Financial Statements for additional information, as well as information regarding the planned shut down of two 150 MW generating units at PPL Martins Creek in September 2007.

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 10 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 17 to the Financial Statements for a discussion of new accounting standards recently adopted 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 accruals and asset retirement obligations.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL's 2006 Form 10-K 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.

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. The adoption of FIN 48 alters the methodology PPL previously used to account for income tax uncertainties. Effective with the adoption of FIN 48, uncertain tax positions are no longer considered to be contingencies assessed in accordance with SFAS 5, "Accounting for Contingencies." The following is an update to the "Income Tax Uncertainties" section of the "Loss Accruals" critical accounting policy disclosed in PPL's 2006 Form 10-K, which reflects the adoption of FIN 48.

Similar to SFAS 5, FIN 48 continues to require significant management judgment in determining the amount of benefit to be recognized in relation to an uncertain tax position. FIN 48 requires PPL to evaluate its tax positions following a two-step process. The first step requires an entity to determine whether, based on the technical merits supporting a particular tax position, it is more likely than not (greater than a 50 percent chance) that the tax position will be sustained. This determination assumes that the relevant taxing authority will examine the tax position and is aware of all the relevant facts surrounding the tax position. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The measurement of the benefit equals the largest amount of benefit that has a likelihood of realization, upon settlement, that exceeds 50 percent. PPL's management considers a number of factors in assessing the benefit to be recognized, including negotiation of a settlement.

On a quarterly basis, PPL reassesses its uncertain tax positions by considering information known at the reporting date. Based on management's assessment of new information, PPL may subsequently recognize a tax benefit for a previously unrecognized tax position, derecognize a previously recognized tax position, or remeasure the benefit of a previously recognized tax position.

The balance sheet classification of unrecognized tax benefits also requires significant management judgment. FIN 48 requires an entity to classify unrecognized tax benefits as current, to the extent management expects to settle an uncertain tax position, by paying cash, within one year of the reporting date.

Significant management judgment is also required in developing valuation allowances for deferred tax assets. Valuation allowances are initially recorded and reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred tax asset. Management considers a number of factors in assessing the realization of a deferred tax asset, including forecasts of future taxable income and available tax planning strategies. Any tax planning strategy utilized in this assessment must meet the recognition and measurement criteria of FIN 48. See Note 5 to the Financial Statements for the disclosures required by FIN 48.

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. In PPL Energy Supply's 2006 Form 10-K, descriptions of its domestic and international businesses are found in "Item 1. Business - Background." 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. In March 2007, PPL announced its intention to sell its regulated electricity delivery businesses in Latin America. PPL Energy Supply's reportable segments are Supply and International Delivery. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview" in PPL Energy Supply's 2006 Form 10-K for an overview of PPL Energy Supply's strategy and the risks and the challenges that it faces in its business. See "Forward-Looking Information," Note 10 to the Financial Statements and the rest of this Item 2 in this Form 10-Q and "Item 1A. Risk Factors" and the rest of Item 7 in PPL Energy Supply's 2006 Form 10-K for more information concerning the material risks and uncertainties that PPL Energy Supply faces in its businesses and with respect to its future earnings.

The following information should be read in conjunction with PPL Energy Supply's Condensed Consolidated Financial Statements and the accompanying Notes and in conjunction with PPL Energy Supply's 2006 Form 10-K.

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

Results of Operations

The following discussion begins with a summary of PPL Energy Supply's earnings. "Results of Operations" continues with a review of results by reportable segment and a description of key factors by segment that management expects may impact future earnings. This section ends with explanations of significant changes in principal items on PPL Energy Supply's Statements of Income, comparing the three months ended March 31, 2007, with the same period in 2006.

Earnings

Net income was $147 million for the three months ended March 31, 2007, compared with $230 million for the same period in 2006.

The changes in net income from period to period were, in part, attributable to several special items that management considers significant. Details of these special items are provided within the review of each segment's earnings.

The period-to-period changes in significant earnings components, including domestic gross energy margins by region and significant income statement line items, are explained in the "Statement of Income Analysis."

The Statements of Income reflect the results of past operations and are 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.

Segment Results

Net income by segment was:

	Three Months Ended March 31,
	2007		2006
Supply	$	119	$	149
International Delivery		28		81
Total	$	147	$	230

Supply Segment

The Supply segment primarily consists of the domestic energy marketing, domestic generation and domestic development operations of PPL Energy Supply.

The Supply segment results in 2006 reflect the reclassification of PPL's interest in the Griffith plant operating revenues and expenses from certain income statement line items to "(Loss) Income from Discontinued Operations." See Note 8 to the Financial Statements for further discussion.

Supply segment net income was:

	Three Months Ended March 31,
	2007		2006
Energy revenues	$	759	$	816
Energy-related businesses		173		150
Total operating revenues		932		966
Fuel and energy purchases		339		376
Other operation and maintenance		188		177
Depreciation		38		33
Taxes, other than income		8		10
Energy-related businesses		196		147
Total operating expenses		769		743
Other Income - net		13		9
Interest Expense		27		16
Income Taxes		29		66
Minority Interest		1
Loss from Discontinued Operations				(1	)
Net income	$	119	$	149

The after-tax change in net income between these periods was due to the following factors, including discontinued operations.

Eastern U.S. non-trading margins	$	(3	)
Western U.S. non-trading margins		(5	)
Interest expense		(6	)
Earnings from synfuel projects		11
Other		(2	)
Special items		(25	)
	$	(30	)

· See "Domestic Gross Energy Margins" for an explanation of non-trading margins by geographic region and for an explanation of net energy trading margins.

· The improved earnings contribution from synfuel projects was primarily the result of lower assumed phase-out of synthetic fuel tax credits for the three months ended March 31, 2007, compared with the same period in 2006.

The following after-tax amounts, which management considers special items, also had a significant impact on the Supply segment earnings. See the indicated Notes to the Financial Statements for additional information.

	Three Months Ended March 31,
	2007			2006
Mark-to-market adjustments from certain economic non-trading hedges	$	10		$	7
Impairment of telecommunications assets (Note 8)		(18	)
Reduction in Enron reserve (Note 10)					9
Off-site remediation of ash basin leak (Note 10)					1
Total	$	(8	)	$	17

2007 Outlook

PPL Energy Supply projects significantly higher earnings in its Supply business segment in 2007 compared with 2006. Based on current forward energy prices and hedges already in place, PPL Energy Supply is projecting higher energy margins for the balance of 2007, driven primarily by the replacement of expiring supply obligations with higher-margin wholesale energy contracts, such as the contract with NorthWestern in Montana, as well as new full-requirements contracts in the Mid-Atlantic region.

While PPL Energy Supply expects improved baseload power plant performance in 2007, this performance will be offset by the retirement in September of two small coal-fired units in Pennsylvania and by planned outages, including the Susquehanna Unit 1 outage, which is expected to conclude the control rod friction issues that have affected plant operations over the past several years. PPL Energy Supply believes these planned outages will improve the overall long-term reliability of its generation fleet. PPL Energy Supply also expects a modest increase in fuel-related expenses and increased operation and maintenance expenses.

International Delivery Segment

The International Delivery segment includes operations of the international energy businesses of PPL Global that are primarily focused on the distribution of electricity. Substantially all of PPL Global's international businesses are located in the U.K., Chile, El Salvador and Bolivia.

The International Delivery segment results in the first quarter of 2007 and 2006 reflect the reclassification of Latin American revenues and expenses to "(Loss) Income from Discontinued Operations." See Note 8 to the Financial Statements for further discussion.

International Delivery segment net income was:

	Three Months Ended March 31,
	2007			2006
Utility revenues	$	216		$	203
Energy-related businesses		10			10
Total operating revenues		226			213
Other operation and maintenance		56			45
Depreciation		43			35
Taxes, other than income		16			11
Energy-related businesses		5			4
Total operating expenses		120			95
Other Income - net		11			(1	)
Interest Expense		49			43
Income Taxes		15			3
(Loss) Income from Discontinued Operations		(25	)		10
Net income	$	28		$	81

The after-tax change in net income between these periods was due to the following factors, including discontinued operations.

U.K.:
Delivery margins	$	(7	)
Depreciation		(3	)
Operating expenses		(3	)
Interest expense		(3	)
Income taxes		(20	)
Impact of changes in foreign currency exchange rates		7
Hyder liquidation distributions (Note 8)		4
Gain on transfer of equity investment (Note 8)		5
Impairment of investment in U.K. real estate (Note 8)		6
Other		(2	)
Latin American results of operations excluding special items (Note 8)		6
Other		(2	)
Special items		(41	)
	$	(53	)

· The U.K.'s earnings were negatively impacted by lower delivery margins, primarily due to a 4% decrease in sales volumes as a result of milder weather in 2007.

· Higher U.K. income taxes were due to the transfer of WPD tax items in the first quarter of 2006. See Note 5 to the Financial Statements for additional information.

· Changes in foreign exchange rates increased WPD's portion of revenue and expense line items by 12% in the three months ended March 31, 2007, compared with the same period in 2006, which resulted in $7 million of additional earnings in 2007.

The following after-tax amounts, which management considers special items, also had a significant impact on the International Delivery segment earnings. See the indicated Notes to the Financial Statements for additional information.

	Three Months Ended March 31,
	2007			2006
Divestiture of Latin American businesses (Note 8)	$	(40	)
Reduction in Enron reserve				$	1
Total	$	(40	)	$	1

2007 Outlook

PPL Energy Supply projects the earnings from its International Delivery business segment to decline in 2007 compared with 2006. Higher delivery margins in the U.K., due to higher unit prices, are expected to be more than offset by increased operating expenses and higher income taxes in the U.K. in 2007, due to the favorable resolution of several tax-related items in 2006. In addition, gains from the sale or liquidation of U.K. non-electricity delivery businesses are not expected to continue at the same level in 2007 as occurred in 2006.

In March 2007, the U.K. government outlined proposed changes to various U.K. taxes and allowances. This included a reduction in the rate of corporation tax from 30% to 28% effective April 1, 2008, and changes to allowances for PP&E. The proposal is expected to pass into law in July 2007. WPD is currently assessing the impact of the proposed changes, which could result in lower U.K. income taxes for 2007 than currently forecasted by PPL Energy Supply.

Statement of Income Analysis --

Domestic Gross Energy Margins

The following table provides pre-tax changes in the income statement line items that comprise domestic gross energy margins.

	Three Months Ended March 31, 2007 vs. March 31, 2006
Wholesale energy marketing		$	(86	)
Wholesale energy marketing to affiliate			35
Unregulated retail electric and gas			(3	)
Net energy trading margins			(3	)
Other revenue adjustments (a)			14
Total revenues			(43	)
Fuel			65
Energy purchases			(100	)
Energy purchases from affiliate			(2	)
Other cost adjustments (a)			3
Total cost of sales			(34	)
Domestic gross energy margins		$	(9	)

(a) Adjusted to exclude the impact of any revenues and costs not associated with domestic gross energy margins, consistent with the way management reviews domestic gross energy margins internally. These exclusions include revenues and energy costs related to the international operations of PPL Global. Also adjusted to include the margins of the Griffith plant prior to its sale in June 2006, which are included in "(Loss) Income from Discontinued Operations," and gains or losses on sales of emission allowances, which are included in "Other operation and maintenance" expenses on the Statements of Income.

Changes in Domestic Gross Energy Margins By Region

Domestic gross energy margins are generated through PPL Energy Supply's non-trading and trading activities. PPL Energy Supply manages its non-trading energy business on a geographic basis that is aligned with its generation assets. Additionally, beginning in 2006, PPL Energy Supply further segregates non-trading activities into two categories: hedge activity and economic activity. Economic activity represents the net unrealized effect of derivative transactions that are entered into as economic hedges, but do not qualify for hedge accounting, or hedge accounting was not elected, under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended and interpreted.

	Three Months Ended March 31, 2007 vs. March 31, 2006
Non-trading
Eastern U.S.		$	1
Western U.S.			(7	)
Net energy trading			(3	)
Domestic gross energy margins		$	(9	)

Eastern U.S.

Eastern U.S. non-trading margins were higher in the first quarter of 2007, compared with the same period in 2006, primarily because of a 1.3% increase in PLR sale prices in accordance with the schedule established by the PUC Final Order. Although supply costs were higher due to increased customer demand under the PLR Contract between PPL Electric and PPL EnergyPlus, these costs were offset by higher margins from new supply contracts and higher coal-fired generation volumes. Coal-fired generation volumes were up 4%.

Unrealized gains included in Eastern non-trading margins that resulted from transactions that did not qualify for hedge accounting treatment, or for which hedge accounting was not elected, and from hedge ineffectiveness, were $12 million in the first quarter of 2007, compared with $14 million in 2006.

Western U.S.

Western U.S. non-trading margins were lower in the first quarter of 2007, compared with the same period in 2006, primarily due to lower hydroelectric generation output, which was down 8%. Also contributing were higher coal prices, which were up 18%, and the sale of PPL's interest in the Griffith plant in 2006. See Note 8 to the Financial Statements for additional information.

Net Energy Trading

PPL enters into energy contracts to take advantage of market opportunities. As a result, PPL may at times create a net open position in its portfolio that could result in significant losses if prices do not move in the manner or direction anticipated. The margins from these trading activities are reflected in the Statements of Income as "Net energy trading margins." These physical and financial contracts cover trading activity associated with electricity, gas and oil.

The amount of energy trading margins from unrealized mark-to-market transactions was a $12 million loss in the first quarter of 2007, compared with a $4 million gain in the same period in 2006.

The realized physical volumes for electricity and gas associated with energy trading were:

	Three Months Ended March 31,
	2007		2006
GWh		2,788		2,085
Bcf		5.3		4.3

Utility Revenues

The increase in utility revenues was attributable to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
International:
U.K. retail electric delivery (PPL Global)		$	(10	)
Foreign currency exchange rates			23
		$	13

The decrease in U.K. utility revenues, excluding foreign currency exchange rate impacts, was primarily due to a 4% decrease in sales volumes as a result of milder weather in 2007.

Energy-related Businesses

Energy-related businesses contributed $27 million less to operating income for the three months ended March 31, 2007, compared with the same period in 2006. The decrease was primarily attributable to a $31 million impairment of telecommunication assets (see Note 8), partially offset by $3 million of lower pre-tax losses from synfuel projects. This reflects $5 million of lower operating losses due to lower production levels; partially offset by a $2 million lower unrealized gain on options purchased to hedge a portion of the risk associated with the phase-out of the synthetic fuel tax credits.

See Note 10 to the Financial Statements for a detailed discussion of synthetic fuel tax credits.

Other Operation and Maintenance

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

	Three Months Ended March 31, 2007 vs. March 31, 2006
Reduction in Enron reserve in 2006 (Note 10)		$	15
Pension and other postretirement benefits			4
Change in foreign currency exchange rates			4
Allocation of corporate service costs			4
Martins Creek ash basin remediation adjustment in 2006 (Note 10)			3
Susquehanna nuclear station outage			2
Western and Eastern U.S. fossil/hydro stations outages			(3	)
Higher gains on sales of emission allowances			(11	)
Other			4
		$	22

Depreciation

The increase in depreciation expense was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Additions to PP&E		$	4
Foreign currency exchange rates			4
Contribution of assets from parent			3
Purchase of equipment previously leased			1
Reduction of useful lives of certain distribution assets			1
		$	13

Taxes, Other Than Income

Taxes, other than income increased by $3 million during the three months ended March 31, 2007, compared with the same period in 2006. The increase was primarily due to an increase in WPD property taxes, as the 2006 period included a credit of $2 million for a refund received.

Other Income - net

See Note 12 to the Financial Statements for details of other income.

Interest Expense

The increase in interest expense, which includes "Interest Expense with Affiliates," was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Long-term debt interest expense		$	17
Foreign currency exchange rates			4
Loss on redemption of 8.23% Subordinated Debentures due 2027			2
Increase in capitalized interest			(7	)
Other			1
		$	17

Income Taxes

The decrease in income taxes was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Lower pre-tax book income		$	(25	)
Change in tax benefits related to nonconventional fuel tax credits			(10	)
Change in tax expense on foreign earnings			(10	)
Transfer of WPD tax items in the first quarter of 2006 (Note 5)			20
		$	(25	)

See Note 5 to the Financial Statements for details on effective income tax rates.

Discontinued Operations

See "Discontinued Operations" in Note 8 to the Financial Statements for information related to the (loss) income from discontinued operations recorded during the three months ended March 31, 2007 and 2006, in connection with PPL's anticipated sale of its Latin American businesses, along with information regarding the operating loss recorded in the first quarter of 2006 prior to the sale of PPL's interest in the Griffith plant.

Financial Condition

Liquidity and Capital Resources

PPL Energy Supply had the following cash and cash equivalents and short-term investments as of the dates noted below:

	March 31, 2007			December 31, 2006
Cash and cash equivalents	$	757	(a)	$	524
Short-term investments		348			328
	$	1,105	(a)	$	852

(a) Excludes $36 million of cash related to the Latin American businesses that is included in "Assets held for sale" on the Balance Sheet.

The $253 million increase in PPL Energy Supply's cash, cash equivalents and short-term investments position was primarily the net result of:

· $500 million of contributions from Member;

· $223 million of cash provided by operating activities; and

· net proceeds of $26 million from the sale of emission allowances; offset by

· $270 million of capital expenditures;

· the retirement of $121 million of long-term debt (which includes a payment of $29 million to settle related cross-currency swaps);

· distributions to Member of $72 million; and

· the reclassification of $36 million of cash related to the Latin American businesses to "Assets held for sale."

Convertible Senior Notes

The terms of PPL Energy Supply's 2.625% Convertible Senior Notes due 2023 include a market price trigger that permits holders to convert the notes during any fiscal quarter if the closing sale price of PPL's common stock exceeds $29.83 for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. Holders of the Convertible Senior Notes were entitled to convert their notes at any time during the first quarter of 2007 and are also entitled to convert their notes any time during the second quarter of 2007 as a result of the market price trigger being met. When holders elect to convert the Convertible Senior Notes, PPL Energy Supply is required to settle the principal amount in cash and any conversion premium in cash or PPL common stock. During the first quarter of 2007, an insignificant amount of Convertible Senior Notes were presented for conversion and settled with an insignificant amount of cash and PPL common stock. After such conversions, $102 million of Convertible Senior Notes remain outstanding and are eligible for conversion in the second quarter of 2007. PPL and PPL Energy Supply have, and expect to continue to have, sufficient liquidity sources to fund any such conversions.

Credit Facilities

In January 2007, WPD (South West) terminated its £150 million three-year committed credit facility, which was to expire in October 2008. This facility was replaced by a new £150 million five-year committed credit facility at WPDH Limited that expires in January 2012, with the option to extend the expiration date by a maximum of two years.

In March 2007, PPL Energy Supply extended the expiration date of its 364-day reimbursement agreement, under which it can cause the bank to issue up to $200 million of letters of credit, to March 2008.

In May 2007, PPL Energy Supply expects to increase the capacity of its $1.9 billion syndicated credit facility to $3.4 billion and extend the June 2011 expiration date of this facility by one year. The additional capacity is expected to support potential collateral requirements under contracts that PPL Energy Supply anticipates entering into in connection with expanding its wholesale marketing and trading business.

Financings

In December 2006, Elfec issued $11 million of 6.05% UFV (inflation-adjusted bolivianos) denominated bonds with serial maturities from 2012 through 2014. Of these bonds, $5 million were issued in exchange for existing bonds with maturities in 2007 and 2008. Cash proceeds of $6 million were used in January 2007 to refinance bonds with maturities in 2007. These transactions were reflected in PPL's January 2007 financial statements due to the one-month lag in foreign subsidiary reporting.

Early Redemption of Debt

In February 2007, WPD LLP redeemed all of the 8.23% Subordinated Debentures due 2027 that were held by SIUK Capital Trust I. Upon redemption, WPD LLP paid a premium of 4.115%, or approximately $3 million, on the principal amount of $85 million of subordinated debentures. WPD LLP received $3 million when its investment in SIUK Capital Trust I was liquidated in connection with this redemption. Additionally, a payment of $29 million was made to settle related cross-currency swaps.

Proceeds from Anticipated Disposals

Proceeds from the anticipated sales of the Latin American and telecommunications businesses are expected to be used to invest in growth opportunities in PPL's core electricity supply and delivery businesses and/or for the repurchase of securities, including PPL common stock. See Note 8 for additional information.

Rating Agency Decisions

Moody's, S&P and Fitch periodically review the credit ratings on the debt and preferred securities of PPL Energy Supply and its subsidiaries. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.

A credit rating reflects an assessment by the rating agency of the creditworthiness associated with an issuer and particular securities that it issues. The credit ratings of PPL Energy Supply and its subsidiaries are based on information provided by PPL Energy Supply and other sources. The ratings of Moody's, S&P 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 the securities. A downgrade in PPL Energy Supply's or its subsidiaries' credit ratings could result in higher borrowing costs and reduced access to capital markets.

Moody's and S&P did not take any actions related to PPL Energy Supply and its rated subsidiaries during the first quarter of 2007. In March 2007, Fitch affirmed its BBB rating of PPL Montana's 8.903% Pass Through Certificates due 2020.

For additional information on PPL Energy Supply's liquidity and capital resources, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Energy Supply's 2006 Form 10-K.

Risk Management - Energy Marketing & Trading and Other

Market Risk

Commodity Price Risk (Non-trading)

PPL Energy Supply's non-trading commodity derivative contracts mature at various times through 2017. PPL Energy Supply segregates its non-trading activities as either hedge or economic. Transactions that are accounted for as hedge activity qualify for hedge accounting treatment under SFAS 133. The majority of PPL Energy Supply's energy transactions qualify for accrual or hedge accounting. The non-trading economic category includes transactions that address a specific risk, but are not eligible for hedge accounting or hedge accounting is not elected. Included in the non-trading economic category are certain load-following energy obligations and related supply contracts, FTRs, crude oil swaps to hedge rail transportation charges and hedges of synthetic fuel tax credits. Although they do not receive hedge accounting treatment, these contracts are considered non-trading. The fair value of the non-trading economic contracts that do not qualify for accrual or hedge accounting treatment as of March 31, 2007, including net premiums on options, was $88 million. The following chart sets forth PPL Energy Supply's net fair market value of all non-trading commodity derivative contracts.

	Three Months Ended March 31,
	2007			2006
Fair value of contracts outstanding at the beginning of the period	$	(111	)	$	(278	)
Contracts realized or otherwise settled during the period		18			9
Fair value of new contracts at inception		23
Other changes in fair values		57			173
Fair value of contracts outstanding at the end of the period	$	(13	)	$	(96	)

The following chart segregates estimated fair values of PPL Energy Supply's non-trading commodity derivative contracts at March 31, 2007, 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	$	15	$	5		$	(6	)				$	14
Prices provided by other external sources		15		(144	)		(16	)	$	(2	)		(147	)
Prices based on models and other valuation methods		60		12						48			120
Fair value of contracts outstanding at the end of the period	$	90	$	(127	)	$	(22	)	$	46		$	(13	)

The "Prices actively quoted" category includes the fair value of exchange-traded natural gas futures contracts quoted on the NYMEX, which has quoted prices through 2011.

The "Prices provided by other external sources" category includes PPL Energy Supply's forward positions and options in natural gas and electricity and natural gas basis swaps at points for which over-the-counter (OTC) broker quotes are available.

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. This category includes the fair value of transactions completed in auction markets, where contract prices represent the market value for load-following bundled energy prices delivered at illiquid delivery points. The transaction prices associated with the contracts did not equal the wholesale bilateral market prices at inception (Day 1). However, EITF 02-3 does not generally permit Day 1 gains and losses to be recognized unless the fair value is derived principally from observable market inputs. Therefore, PPL Energy Supply recorded a reserve for the modeled Day 1 gain, which is netted against the above fair values.

Because of PPL Energy Supply's efforts to hedge the value of the energy from its generation assets, PPL Energy Supply sells electricity, capacity and related services and buys fuel on a forward basis, resulting in open contractual positions. If PPL Energy Supply were unable to deliver firm capacity and energy or to accept the delivery of fuel under its agreements, under certain circumstances it could be required to pay damages. These damages would be based on the difference between the market price and the contract price of the commodity. Depending on price volatility in the wholesale energy markets, such damages could be significant. Extreme weather conditions, unplanned power plant outages, transmission disruptions, non-performance by counterparties (or their own counterparties) with which it has energy contracts and other factors could affect PPL Energy Supply's ability to meet its obligations, or cause significant increases in the market price of replacement energy. Although PPL Energy Supply attempts to mitigate these risks, there can be no assurance that it will be able to fully meet its firm obligations, that it will not be required to pay damages for failure to perform, or that it will not experience counterparty non-performance in the future.

As of March 31, 2007, 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 $373 million, compared to $263 million as of March 31, 2006. For purposes of this calculation, an increase in the market price for electricity is considered an adverse movement because PPL Energy Supply's electricity portfolio is generally in a net sales position, and the decrease in the market price for fuel is considered an adverse movement because PPL Energy Supply's commodity fuels portfolio is generally in a net purchase position. PPL Energy Supply enters into those commodity contracts to reduce the market risk inherent in the generation of electricity.

Starting in 2007, PPL Energy Supply elected to use an alternative method for disclosing quantitative information about market risk sensitive instruments. This method utilizes a VaR model to measure commodity price risk in its non-trading and trading portfolios. This approach is consistent with how PPL's Risk Manager assesses the market risk of its commodity business. VaR is a statistical model that attempts to predict risk of loss, under normal market conditions, based on historical market price volatility. PPL Energy Supply calculates VaR using a Monte Carlo simulation technique, which uses historical data from the past 12 month period. The VaR is the estimated nominal loss of earnings based on a one-day holding period at a 95% confidence interval. As of March 31, 2007, the VaR for PPL Energy Supply's non-trading portfolio was $16 million. This excludes the activity for PPL Energy Supply's synthetic fuel tax credit hedges. Additional information regarding these hedges can be found in the "Synthetic Fuel Tax Credit Risk" section below.

Commodity Price Risk (Trading)

PPL Energy Supply's trading contracts mature at various times through 2011. The following chart sets forth PPL Energy Supply's net fair market value of trading contracts.

	Three Months Ended March 31,
	2007			2006
Fair value of contracts outstanding at the beginning of the period	$	41		$	5
Contracts realized or otherwise settled during the period		(13	)		(11	)
Fair value of new contracts at inception		16			4
Other changes in fair values		1			14
Fair value of contracts outstanding at the end of the period	$	45		$	12

PPL Energy Supply will reverse a gain of approximately $8 million of the $45 million unrealized trading gains over the next three months of 2007 as the transactions are realized.

The following chart segregates estimated fair values of PPL Energy Supply's trading portfolio at March 31, 2007, 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	$	(3	)	$	2	$	1
Prices provided by other external sources		4			1				$	5
Prices based on models and other valuation methods		18			22					40
Fair value of contracts outstanding at the end of the period	$	19		$	25	$	1		$	45

See "Commodity Price Risk (Non-trading)" for information on the various sources of fair value.

As of March 31, 2007, 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 $35 million, compared to $20 million as of March 31, 2006.

As of March 31, 2007, the VaR for PPL Energy Supply's trading portfolio was $4 million. This excludes the activity for PPL Energy Supply's synthetic fuels tax credits. Additional information regarding these hedges can be found in the "Synthetic Fuel Tax Credit Risk" section below.

Synthetic Fuel Tax Credit Risk

At this time, PPL Energy Supply expects that the high level and the volatility of crude oil prices will reduce the amount of synthetic fuel tax credits that PPL receives through its synthetic fuel production. The tax credits are reduced if the annual average wellhead price of domestic crude oil falls within a phase-out range. The tax credits are eliminated if this reference price exceeds the phase-out range. See "Regulatory Issues - IRS Synthetic Fuels Tax Credits" in Note 10 to the Financial Statements for more information regarding the phase-out of the tax credits.

PPL Energy Supply implemented a risk management strategy to hedge a portion of the variability of cash flows associated with its 2006 and 2007 synthetic fuel tax credits by hedging the risk that the 2006 and 2007 annual average wellhead price for domestic crude oil will be within the phase-out range.

PPL Energy Supply has net purchased options for 2007 that are expected to mitigate PPL Energy Supply's tax credit phase-out risk due to an increase of the average wellhead price in 2007. These positions did not qualify for hedge accounting treatment. The mark-to-market value of these positions at March 31, 2007, was a gain of $29 million. 

As of March 31, 2007, PPL Energy Supply estimated that a 10% adverse movement in market prices of crude oil would have decreased the value of the synthetic fuel hedges by $26 million. For purposes of this calculation, a decrease in the market price for crude oil is considered an adverse movement.

Commodity Price Risk Summary

In accordance with its marketing strategy, PPL Energy Supply elects not to fully hedge its generation output or fuel requirements. PPL Energy Supply estimates that for its entire portfolio, including all generation, emissions and physical and financial energy positions, a 10% adverse change in power prices across all geographic zones and time periods would decrease expected 2007 gross margins by $7 million. A 10% adverse movement in all fossil fuel prices would not have a material effect on 2007 gross margins.

Interest Rate Risk

PPL Energy Supply and its subsidiaries have issued debt to finance their operations, which exposes them to interest rate risk. Both PPL and PPL Energy Supply manage interest rate risk for PPL Energy Supply by using various financial derivative products to adjust the mix of fixed and floating interest rates in PPL Energy Supply's debt portfolio, adjust the duration of its debt portfolio and lock in 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, 2007, PPL Energy Supply's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was $4 million.

PPL Energy Supply is also exposed to changes in the fair value of its domestic and international debt portfolios. At March 31, 2007, 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 $282 million.

PPL and PPL Energy Supply utilize various risk management instruments to reduce PPL Energy Supply's exposure to the expected future cash flow variability of its debt instruments. These risks include exposure to adverse interest rate movements for outstanding variable rate debt and for future anticipated financing. While PPL Energy Supply is exposed to changes in the fair value of these instruments, any changes in the fair value of these instruments are recorded in equity and then reclassified into earnings in the same period during which the item being hedged affects earnings. At March 31, 2007, the market value of this position, representing the amount PPL Energy Supply would receive upon its termination, was $1 million. At March 31, 2007, PPL Energy Supply estimated that its potential exposure to a change in the fair value of this instrument, through a 10% adverse movement in the hedged exposure, was $2 million.

PPL and PPL Energy Supply also utilize various risk management instruments to adjust the mix of fixed and floating interest rates in PPL Energy Supply's debt portfolio. While PPL Energy Supply is exposed to changes in the fair value of these instruments, any change in market value is recorded with an equal and offsetting change in the value of the debt being hedged. At March 31, 2007, 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.

WPDH Limited holds a net position in cross-currency swaps totaling $702 million to hedge the interest payments and principal of its U.S. dollar-denominated bonds with maturity dates ranging from December 2007 to December 2028. The estimated value of this position at March 31, 2007, being the amount PPL Energy Supply would pay to terminate it, including accrued interest, was $170 million. At March 31, 2007, PPL Energy Supply estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates and interest rates, was $132 million.

Foreign Currency Risk

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

PPL and PPL Energy Supply have 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 and PPL Energy Supply enter into financial instruments to protect against foreign currency translation risk of expected earnings.

To economically hedge 2007 expected income in Chilean pesos, PPL Energy Supply entered into average rate forwards for 12.4 billion Chilean pesos. The settlement date of these forwards is November 2007. At March 31, 2007, the market value of these positions, representing the amount PPL Energy Supply would receive upon their termination, was not significant. PPL Energy Supply estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $1 million at March 31, 2007.

To economically hedge 2007 expected income denominated in British pounds sterling, PPL entered into a combination of average rate forwards and average rate options for £82.9 million. In connection with these transactions, PPL Energy Supply entered into average rate forwards and average rate options with PPL that have terms identical to those executed by PPL. These forwards and options have termination dates ranging from April 2007 to December 2007. At March 31, 2007, the market value of these positions, representing the amount PPL Energy Supply would pay upon their termination, was $1 million. PPL Energy Supply estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $10 million at March 31, 2007.

PPL executed forward sale contracts for 175 billion Chilean pesos. In connection with these transactions, PPL Energy Supply entered into forward contracts with PPL that have terms identical to those executed by PPL. Of these forward sale contracts, 161 billion Chilean pesos are to hedge PPL Energy Supply's net investment in Emel. The settlement date of these forwards is December 2007. At March 31, 2007, the market value of these positions, representing the amount PPL Energy Supply would receive upon their termination, was $1 million. PPL Energy Supply estimated that its potential additional exposure to a change in the market value of these instruments, through a 10% adverse movement in foreign currency exchange rates, was $33 million at March 31, 2007.

PPL Energy Supply has entered into a forward contract to purchase 5.1 million Euros in order to protect against fluctuations in the Euro exchange rate, in connection with the purchase of equipment. The settlement date of this contract is January 2008. At March 31, 2007, the market value of this position, representing the amount PPL Energy Supply would receive upon its termination, was not significant. PPL Energy Supply estimated that its potential additional exposure to a change in the market value of this instrument, through a 10% adverse movement in foreign currency exchange rates, was $1 million at March 31, 2007.

Nuclear Decommissioning Trust Funds - Securities Price Risk

In connection with certain NRC requirements, PPL Susquehanna maintains trust funds to fund certain costs of decommissioning the Susquehanna nuclear station. As of March 31, 2007, 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 sufficient 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 actively monitors the investment performance and periodically reviews asset allocation in accordance with its nuclear decommissioning trust policy statement. At March 31, 2007, a hypothetical 10% increase in interest rates and a 10% decrease in equity prices would have resulted in an estimated $38 million reduction in the fair value of the trust assets. See Note 21 in PPL Energy Supply's 2006 Form 10-K for more information regarding the nuclear decommissioning trust funds.

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 11 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 and dispositions of businesses and assets, joint ventures and development projects which may or may not result in definitive agreements. Any such transactions may impact future financial results. See Note 8 to the Financial Statements for information regarding such recent transactions.

PPL Energy Supply is currently planning incremental capacity increases of 355 MW at several existing domestic generating facilities. Offsetting this increase is an expected 30 MW reduction in generation capability at each of the Brunner Island and Montour plants, due to the estimated increases in station service usage during the scrubber operation. See Note 10 to the Financial Statements for additional information, as well as information regarding the planned shut down of two 150 MW generating units at PPL Martins Creek in September 2007.

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 10 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 17 to the Financial Statements for a discussion of new accounting standards recently adopted 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 accruals and asset retirement obligations.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Energy Supply's 2006 Form 10-K 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.

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL Energy Supply and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. The adoption of FIN 48 alters the methodology PPL Energy Supply previously used to account for income tax uncertainties. Effective with the adoption of FIN 48, uncertain tax positions are no longer considered to be contingencies assessed in accordance with SFAS 5, "Accounting for Contingencies." The following is an update to the "Income Tax Uncertainties" section of the "Loss Accruals" critical accounting policy disclosed in PPL Energy Supply's 2006 Form 10-K, which reflects the adoption of FIN 48.

Similar to SFAS 5, FIN 48 continues to require significant management judgment in determining the amount of benefit to be recognized in relation to an uncertain tax position. FIN 48 requires PPL Energy Supply to evaluate its tax positions following a two-step process. The first step requires an entity to determine whether, based on the technical merits supporting a particular tax position, it is more likely than not (greater than a 50 percent chance) that the tax position will be sustained. This determination assumes that the relevant taxing authority will examine the tax position and is aware of all the relevant facts surrounding the tax position. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The measurement of the benefit equals the largest amount of benefit that has a likelihood of realization, upon settlement, that exceeds 50 percent. PPL Energy Supply's management considers a number of factors in assessing the benefit to be recognized, including negotiation of a settlement.

On a quarterly basis, PPL Energy Supply reassesses its uncertain tax positions by considering information known at the reporting date. Based on management's assessment of new information, PPL Energy Supply may subsequently recognize a tax benefit for a previously unrecognized tax position, derecognize a previously recognized tax position, or remeasure the benefit of a previously recognized tax position.

The balance sheet classification of unrecognized tax benefits also requires significant management judgment. FIN 48 requires an entity to classify unrecognized tax benefits as current, to the extent management expects to settle an uncertain tax position, by paying cash, within one year of the reporting date.

Significant management judgment is also required in developing valuation allowances for deferred tax assets. Valuation allowances are initially recorded and reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred tax asset. Management considers a number of factors in assessing the realization of a deferred tax asset, including forecasts of future taxable income and available tax planning strategies. Any tax planning strategy utilized in this assessment must meet the recognition and measurement criteria of FIN 48. See Note 5 to the Financial Statements for the disclosures required by FIN 48.

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, PA. In PPL Electric's 2006 Form 10-K, a description of its business is found in "Item 1. Business - Background" and an overview of its strategy and the risks and the challenges that it faces in its business are discussed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview." See "Forward-Looking Information," Note 10 to the Financial Statements and the rest of this Item. 2 in this Form 10-Q and "Item 1A. Risk Factors" and the rest of Item 7 in PPL Electric's 2006 Form 10-K for more information concerning the material risks and uncertainties that PPL Electric faces in its business and with respect to its future earnings.

The following information should be read in conjunction with PPL Electric's Condensed Consolidated Financial Statements and the accompanying Notes and in conjunction with PPL Electric's 2006 Form 10-K.

Terms and abbreviations 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 PPL Electric's Statements of Income, compares the three months ended March 31, 2007, with the same period in 2006.

The Statements of Income reflect the results of past operations and are 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 $52 million for the three months ended March 31, 2007, compared with $51 million for the same period in 2006.

The after-tax change in income available to PPL between these periods was due to:

Delivery revenues (net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges)	$	5
Operation and maintenance expenses		(2	)
Depreciation		(2	)
	$	1

The period-to-period changes in significant earnings components are explained in the "Statement of Income Analysis."

PPL Electric's period-to-period earnings were affected by a number of factors, including higher delivery revenues which were primarily due to a 4% increase in sales volumes, due in part to the impact of colder weather in 2007 on residential and commercial sales and the return of customers previously served by alternate suppliers.

2007 Outlook

PPL Electric expects to have flat earnings in 2007 compared with 2006, with modest load growth being offset by increased operation and maintenance expenses.

In March 2007, PPL Electric filed a request with the PUC to increase distribution rates by approximately $84 million. The PUC's review of the distribution rate request is expected to take about nine months. The proposed distribution rate increase would result in a 2.7% increase over PPL Electric's present rates and would be effective January 1, 2008. PPL Electric cannot predict the outcome of this proceeding.

Refer to PPL Electric's 2006 Form 10-K for information about PPL Electric's plan detailing how it proposes to acquire its PLR electricity supply for non-shopping customers in 2010 after its PLR contract with PPL EnergyPlus expires, as well as the PUC's proposed PLR regulations and policy statement regarding interpretation and implementation of those regulations. Based on current forward market prices, PPL Electric estimated that under its proposed plan customer rates could increase by approximately 30% from 2009 to 2010.

Statement of Income Analysis --

Operating Revenues

Retail Electric

The increase in revenues from retail electric operations was attributable to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
PLR electric delivery		$	37
Electric delivery			14
Other			1
		$	52

Higher PLR revenues and electric delivery revenues were primarily attributable to a 4% increase in sales volume, due in part to the impact of colder weather in 2007 on residential and commercial sales and the return of customers previously served by alternate suppliers.

Energy Purchases from Affiliate

The increase in energy purchases from affiliate of $35 million reflects a 1.3% increase in prices for energy purchased under the power supply contracts with PPL EnergyPlus needed to support the increased PLR load.

Other Operation and Maintenance

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

	Three Months Ended March 31, 2007 vs. March 31, 2006
Storm insurance premiums		$	2
Tree-trimming			2
Environmental remediation			1
PUC reportable storms			(3	)
Other			1
		$	3

Depreciation

Depreciation increased $3 million, primarily due to the purchase in September 2006 of equipment previously leased.

Taxes, Other Than Income

The $5 million increase in taxes, other than income was primarily due to an increase in domestic gross receipts tax expense.

Other Income - net

See Note 12 to the Financial Statements for details of other income.

Financing Costs

The decrease in financing costs, which include "Interest Expense," "Interest Expense with Affiliate" and "Dividends on Preferred Securities," was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Dividends on 6.25% Series Preference Stock		$	4
Long-term debt interest expense			(7	)
Other			1
		$	(2	)

Income Taxes

The increase in income taxes was due to:

	Three Months Ended March 31, 2007 vs. March 31, 2006
Higher pre-tax book income		$	2
Change in tax expense related to tax reserves			(1	)
		$	1

See Note 5 to the Financial Statements for details on effective income tax rates.

Financial Condition

Liquidity and Capital Resources

PPL Electric had the following cash and cash equivalents, short-term investments and short-term debt as of the dates noted below:

	March 31, 2007		December 31, 2006
Cash and cash equivalents	$	54	$	150
Short-term investments				26
	$	54	$	176
Short-term debt	$	71	$	42

The $122 million decrease in PPL Electric's cash, cash equivalents and short-term investments position was primarily the net result of:

· the retirement of $80 million of long-term debt;

· $63 million of capital expenditures; and

· the payment of $40 million of common stock dividends to PPL; offset by

· a net increase in short-term debt of $29 million; and

· $30 million of cash provided by operating activities.

Credit Facilities

In May 2007, PPL Electric expects to extend the expiration date of its $200 million syndicated credit facility to May 2012.

Rating Agency Decisions

Moody's, S&P and Fitch periodically review the credit ratings on the debt and preferred securities of PPL Electric and PPL Transition Bond Company. Based on their respective independent reviews, the rating agencies may make certain ratings revisions or ratings affirmations.

A credit rating reflects an assessment by the rating agency of the creditworthiness associated with an issuer and particular securities that it issues. The credit ratings of PPL Electric and PPL Transition Bond Company are based on information provided by PPL Electric and other sources. The ratings of Moody's, S&P and Fitch are not a recommendation to buy, sell or hold any securities of PPL Electric or PPL Transition Bond Company. 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 the securities. A downgrade in PPL Electric's or PPL Transition Bond Company's credit ratings could result in higher borrowing costs and reduced access to capital markets.

Moody's, S&P and Fitch did not take any actions related to PPL Electric or PPL Transition Bond Company during the first quarter of 2007.

For additional information on PPL Electric's liquidity and capital resources, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Electric's 2006 Form 10-K.

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 through 2009. See Note 11 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, 2007, PPL Electric's potential annual exposure to increased interest expense, based on a 10% increase in interest rates, was not significant.

PPL Electric is also exposed to changes in the fair value of its debt portfolio. At March 31, 2007, 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 $36 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 11 to the Financial Statements.

Environmental Matters

See Note 10 to the Financial Statements for a discussion of environmental matters.

New Accounting Standards

See Note 17 to the Financial Statements for a discussion of new accounting standards recently adopted 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 accruals.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in PPL Electric's 2006 Form 10-K 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.

In June 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109." In May 2007, the FASB amended this guidance by issuing FSP FIN 48-1, "Definition of Settlement in FASB Interpretation No. 48." PPL Electric and its subsidiaries adopted FIN 48, as amended, effective January 1, 2007. The adoption of FIN 48 alters the methodology PPL Electric previously used to account for income tax uncertainties. Effective with the adoption of FIN 48, uncertain tax positions are no longer considered to be contingencies assessed in accordance with SFAS 5, "Accounting for Contingencies." The following is an update to the "Income Tax Uncertainties" section of the "Loss Accruals" critical accounting policy disclosed in PPL Electric's 2006 Form 10-K, which reflects the adoption of FIN 48.

Similar to SFAS 5, FIN 48 continues to require significant management judgment in determining the amount of benefit to be recognized in relation to an uncertain tax position. FIN 48 requires PPL Electric to evaluate its tax positions following a two-step process. The first step requires an entity to determine whether, based on the technical merits supporting a particular tax position, it is more likely than not (greater than a 50 percent chance) that the tax position will be sustained. This determination assumes that the relevant taxing authority will examine the tax position and is aware of all the relevant facts surrounding the tax position. The second step requires an entity to recognize in the financial statements the benefit of a tax position that meets the more-likely-than-not recognition criterion. The measurement of the benefit equals the largest amount of benefit that has a likelihood of realization, upon settlement, that exceeds 50 percent. PPL Electric's management considers a number of factors in assessing the benefit to be recognized, including negotiation of a settlement.

On a quarterly basis, PPL Electric reassesses its uncertain tax positions by considering information known at the reporting date. Based on management's assessment of new information, PPL Electric may subsequently recognize a tax benefit for a previously unrecognized tax position, derecognize a previously recognized tax position, or remeasure the benefit of a previously recognized tax position.

The balance sheet classification of unrecognized tax benefits also requires significant management judgment. FIN 48 requires an entity to classify unrecognized tax benefits as current, to the extent management expects to settle an uncertain tax position, by paying cash, within one year of the reporting date.

Significant management judgment is also required in developing valuation allowances for deferred tax assets. Valuation allowances are initially recorded and reevaluated each reporting period by assessing the likelihood of the ultimate realization of a deferred tax asset. Management considers a number of factors in assessing the realization of a deferred tax asset, including forecasts of future taxable income and available tax planning strategies. Any tax planning strategy utilized in this assessment must meet the recognition and measurement criteria of FIN 48. See Note 5 to the Financial Statements for the disclosures required by FIN 48.

PPL CORPORATION

PPL ENERGY SUPPLY, LLC

PPL ELECTRIC UTILITIES CORPORATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Reference is made to "Risk Management - Energy Marketing & Trading and Other" for PPL and PPL Energy Supply and "Risk Management" for PPL Electric 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, 2007, the registrants' disclosure controls and procedures are 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. The aforementioned principal officers have concluded that the disclosure controls and procedures are also effective to ensure that information required to be disclosed in reports filed under the Exchange Act is accumulated and communicated to management, including the principal executive and principal financial officers, to allow for timely decisions regarding required disclosure.
(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 control 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 2006 Form 10-K; and
·	Note 10 of the registrants' "Combined Notes to Condensed Consolidated Financial Statements" in Part I of this report.

Item 1A. Risk Factors

There have been no material changes in PPL's, PPL Energy Supply's and PPL Electric's risk factors from those disclosed in "Item 1A. Risk Factors" of the 2006 Form 10-K.

Item 6. Exhibits
*4(a)	-	Subordinated Indenture, dated as of March 1, 2007, among PPL Capital Funding, Inc., PPL Corporation and The Bank of New York, as trustee thereunder (Exhibit 4(a) to PPL Corporation Form 8-K Report (File No. 1-11459) dated March 20, 2007)
*4(b)	-	Supplemental Indenture No. 1, dated as of March 1, 2007, among PPL Capital Funding, Inc., PPL Corporation and The Bank of New York, as trustee thereunder (Exhibit 4(b) to PPL Corporation Form 8-K Report (File No. 1-11459) dated March 20, 2007)
*[_]10(a)	-	Establishment of 2007 annual performance goals and business criteria for incentive awards to PPL Corporation Named Executive Officers (PPL Corporation Form 8-K Report (File No. 1-11459) dated March 28, 2007)
*[_]10(b)	-	Establishment of 2007 annual performance goals and business criteria for incentive awards to PPL Electric Utilities Corporation Named Executive Officers (PPL Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated March 28, 2007)
[_]10(c)	-	Trust Agreement, dated as of March 20, 2007, between PPL Corporation and Wachovia Bank, N.A., as Trustee
[_]10(d)	-	Trust Agreement, dated as of March 20, 2007, between PPL Corporation and Wachovia Bank, N.A., as Trustee
[_]10(e)	-	Trust Agreement, dated as of March 20, 2007, between PPL Corporation and Wachovia Bank, N.A., as Trustee
[_]10(f)	-	Amendment No. 3 to Amended and Restated Incentive Compensation Plan, dated as of March 21, 2007
[_]10(g)	-	Amendment No. 3 to Amended and Restated Incentive Compensation Plan for Key Employees, dated as of March 21, 2007
[_]10(h)	-	Form of Retention Agreement entered into between PPL Corporation and Messrs. Champagne, Farr, Miller and Shriver
[_]10(i)	-	Form of Severance Agreement entered into between PPL Corporation and the Named Executive Officers
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
12(c)	-	PPL Electric Utilities Corporation and Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
* - Previously filed
[_] - Filed or listed pursuant to Item 601(b)(10)(iii) of Regulation S-K
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the quarterly period ended March 31, 2007, filed by the following officers for the following companies:
31(a)	-	James H. Miller for PPL Corporation
31(b)	-	Paul A. Farr for PPL Corporation
31(c)	-	James H. Miller for PPL Energy Supply, LLC
31(d)	-	Paul A. Farr for PPL Energy Supply, LLC
31(e)	-	David G. DeCampli for PPL Electric Utilities Corporation
31(f)	-	J. Matt Simmons, Jr. for PPL Electric Utilities Corporation

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the quarterly period ended March 31, 2007, furnished by the following officers for the following companies:
32(a)	-	James H. Miller for PPL Corporation
32(b)	-	Paul A. Farr for PPL Corporation
32(c)	-	James H. Miller for PPL Energy Supply, LLC
32(d)	-	Paul A. Farr for PPL Energy Supply, LLC
32(e)	-	David G. DeCampli for PPL Electric Utilities Corporation
32(f)	-	J. Matt Simmons, Jr. for PPL Electric Utilities Corporation

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 3, 2007	/s/  J. Matt Simmons, Jr.
	J. Matt Simmons, Jr.
	Vice President and Controller
	(Principal Accounting Officer)

EX-10.C

Exhibit 10(c)

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A. AS TRUSTEE

PPL REVOCABLE EMPLOYEE NON-QUALIFIED PLANS TRUST

TABLE OF CONTENTS

ARTICLE

I            Establishment, Purpose and Nature of Trust Fund

II          Contributions to Trust Fund and Allocation to Plan Accounts

III         Cessation of Payments from Trust Fund While Company Insolvent

IV         Payments from Trust Fund While Company Solvent

V          Responsibilities of the Trustee

VI         Fees, Expenses and Taxes

VII        Accounts of the Trustee

VIII       Resignation or Removal of the Trustee

IX         Action of PPL

X           Reservation of Powers

XI          Surplus Plan Accounts and Termination of Trust

XII        Merger or Consolidation of the Trustee

XIII       Miscellaneous

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A., AS TRUSTEE

This Agreement and Declaration of Trust (hereinafter called the "Trust Agreement") made as of the 1st day of January, 2007, by and between PPL Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business at Allentown, Pennsylvania, hereinafter referred to as “PPL" or the "Company,” and Wachovia Bank, N.A., with its principal place of business at Charlotte, North Carolina, hereinafter called the "Trustee",

WITNESSETH:

WHEREAS, PPL has heretofore adopted certain nonqualified deferred compensation plans and agreements for certain of its subsidiaries' employees (such employees and their designated beneficiaries where applicable being hereinafter referred to collectively as the "Participants" and individually as a "Participant") and may hereafter adopt other such plans or agreements; and

WHEREAS, PPL has heretofore entered into a trust agreement dated April 1, 2001 between PPL, as grantor, and Wachovia Bank, as trustee, titled the PPL Employee Nonqualified Plans Trust (the "Plans' Trust"); and

WHEREAS, PPL wishes to establish this grantor trust, hereinafter called the "Trust," for the collective investment of such property as may from time to time be contributed thereto, subject only to the claims of PPL's general creditors in the event of PPL's Insolvency (as defined in Article III); and

WHEREAS, PPL wishes the Trust to be used in connection with such plans or agreements as have been designated under Article X and Appendix A of the Plans' Trust (which plans and agreements are hereinafter called the "Plans" collectively or the "Plan" individually), although the Trust may not necessarily hold sufficient assets to satisfy all of the benefits to be provided under the Plans, and which together with the Plans' Trust is intended to fund certain benefits provided under the Plans in connection with a "Change in Control" (as defined in Paragraph 10.3); and

WHEREAS, the Trustee is willing to hold and administer such trust assets pursuant to the terms of this Trust Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, PPL and the Trustee intending to be legally bound hereby, do covenant and agree as follows:

Article I

Establishment, Purpose and Nature of Trust Fund

1.1PPL hereby establishes with the Trustee a trust consisting of such cash and/or marketable securities as shall be paid to the Trustee with respect to the Plans pursuant to Article II, Paragraph 2.1. The Trust shall be known as the PPL REVOCABLE EMPLOYEE NONQUALIFIED PLANS TRUST. The creation of this Trust is not intended to create an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974. The Trust is intended to constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

1.2The Trust shall consist of all contributions to the Trust by PPL and the earnings and losses thereon (including unrealized gains and losses), less disbursements therefrom (hereinafter called the "Trust Fund"). The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of PPL and shall be used exclusively for the uses and purposes of Participants, and general creditors as herein set forth. Participants shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Participants against PPL. Any assets held by the Trust will be subject to the claims of PPL's general creditors under federal and state law in the event PPL becomes Insolvent.

1.3The Trust hereby established is revocable and amendable by PPL at all times.

1.4The Trust Fund shall be held by the Trustee, subject to the reservation of powers under Paragraphs 10.1 and 10.2 of Article X, for the purpose of providing, immediately prior to a Change in Control, or at such other time or times as PPL may in its sole discretion determine, funds to the Trustee under the Plans' Trust. The Trustee shall pay to the Plans' Trust, on notice from PPL that the time identifiable as immediately prior to a Change in Control has occurred, all or such other amount of assets from the Trust Fund to the Plans' Trust, as directed by PPL. Notwithstanding the foregoing, the Trust Fund shall be treated as an asset of PPL and shall remain subject to the claims of PPL's general creditors in the event of PPL becomes Insolvent.

1.5The rights, powers, titles, duties, discretions and immunities of the Trustee shall be governed solely by this Trust Agreement and applicable state and federal law.

1.6The Trust is intended to be a grantor trust, of which PPL is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, Sections 671-678, and any successor statute thereto, and shall be construed accordingly.

1.7The Plans' Trust and any persons who may be entitled to benefit payments under the terms of the Plans shall not have any preferred claim on the Trust Fund.

1.8Notwithstanding anything else in this Agreement to the contrary: (1) the Trustee is not a party to, and has, except as expressly provided herein, no duties or responsibilities under, the Plans; (2) PPL shall be required to certify in writing to the Trustee the identity of any party or person, whether or not a fiduciary named in any Plans, which has the power to manage and control Plan assets, and the Trustee shall be entitled to rely upon such certification until notified otherwise in writing by PPL; and (3) in any case in which a provision of this Agreement conflicts with any provision in any Plans, this Agreement shall control. Notwithstanding the preceding sentence, the Trustee reserves the right to seek a judicial and/or administrative determination as to its proper course of action under this Agreement.

1.9The intent of this Trust Agreement is to provide PPL with a revocable trust that holds funds that may be available to pay to the Plans' Trust at any time, or should a Change in Control be imminent. The Trustee under this Trust Agreement shall have no responsibility concerning the Plans except for the requirement set forth in Paragraph 1.4. Although this Trust Agreement may be funded upon the occurrence of a Potential Change in Control (as defined in Paragraph 10.3), PPL, in its sole discretion, at any time, may instruct the Trustee to return all Trust Funds to PPL, or may revoke the Trust.

Article II

Contributions to Trust Fund and Allocation to Plan Accounts

2.1Subject to the provisions of Paragraph 2.2, PPL may from time to time make, or cause to be made, such contributions to the Trust Fund of cash and/or marketable securities as it determines to be appropriate in its sole discretion and are acceptable to the Trustee, which shall be held by the Trustee for the benefit of the Plans' Trust, subject to the reservation of powers under Article X and the claims of PPL's general creditors in the event PPL becomes Insolvent. The Trustee shall be accountable for all such contributions, but shall have no duty to determine that the amounts thereof comply with the provisions of the Plans.

2.2Upon the occurrence of a Potential Change in Control, the Chief Executive Officer of PPL (or his or her designee) may authorize a cash contribution to be made to the Trust in an amount that, in the determination of PPL, is sufficient to pay each Participant or beneficiary the benefits to which Participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date of the Change in Control assuming each Participant terminated employment as of such date under circumstances giving rise to payment of benefits under the Plans or any other amount determined by PPL, in its sole discretion.

2.3The Trustee shall hold the Trust Fund without distinction as to principal or income as a single commingled fund. The Trustee shall advise PPL of the Fair Market Value (as defined in Paragraph 2.4 below) of assets in the Trust Fund as of the close of each calendar year of the Trust, or at such more frequent intervals as may be mutually agreed upon between PPL and the Trustee.

2.4For purposes of this Trust Agreement, "Fair Market Value" for any security shall be determined as follows:

(a)securities listed on the New York Stock Exchange, the American Stock Exchange or any other recognized exchange shall be valued at their last sale prices on the exchange on which securities are principally traded on the valuation date (NYSE-Composite Transactions or AMEX-Composite Transactions prices to prevail on any security listed on either of these exchanges as well as on another exchange); and where no sale is reported for that date, the last bid price shall be used.

(b)all other securities and assets shall be valued at their market values as fixed by the Trustee's staff regularly engaged in such activities.

Article III

Cessation of Payments from

Trust Fund While Company Insolvent

3.1The Trust Fund shall be subject to claims of general creditors of PPL in the event PPL becomes Insolvent, and at any time the Trustee has actual knowledge, or has determined, that PPL is Insolvent, the Trustee shall deliver the Trust Fund to satisfy such claims as a court of competent jurisdiction may direct. PPL shall be considered "Insolvent" for purposes of this Trust Agreement if (1) PPL is unable to pay its debts as they become due or (2) PPL is subject to a pending proceeding as a debtor or a debtor in possession under the federal Bankruptcy Code, 11 U.S.C. 101 et seq. (or any successor federal statute).

3.2At all times during the continuance of this Trust, as provided in Section 1.3 hereof, the principal and income of the Trust shall be subject to claims of general creditors of PPL under federal and state law as set forth below.

3.3The Board of Directors and the Chief Executive Officer of PPL shall have the duty to inform the Trustee in writing that PPL has become Insolvent and the basis on which they consider PPL to be Insolvent. If a person claiming to be a creditor of PPL alleges in writing to the Trustee that PPL has become Insolvent, the Trustee shall determine whether PPL is Insolvent and, pending such determination, the Trustee shall be excused from compliance with any instruction by PPL for payment of funds to any person.

3.4If the Board of Directors or the Chief Executive Officer of PPL informs the Trustee in writing that PPL has become Insolvent, the Trustee shall independently determine, within a reasonable time that in no event shall exceed sixty days after receipt of such notice, whether PPL is Insolvent and, pending such determination, the Trustee shall make no payments from the Trust Fund (unless otherwise required by applicable law), shall hold the Trust Fund for the benefit of PPL's general creditors, and shall resume payments from the Trust Fund only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent, if the Trustee initially determined PPL to be Insolvent).

3.5If at any time the Trustee has determined that PPL is Insolvent, the Trustee shall make no payments to Participants and shall hold the assets of the Trust for the benefit of PPL's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of PPL with respect to benefits due under the Plans or otherwise.

3.6The Trustee shall permit payment of Trust Funds in accordance with Article IV of this Trust Agreement only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent). If the Trustee discontinues payments from the Trust Fund and subsequently resumes such payments, the first payments following such discontinuance shall include the aggregate amount of all payments which would have been made under Article IV during the period of such discontinuance (together with interest based upon the daily average, as determined by the Trustee, of the Average Prime Rate Charged by Banks (Percent) as published in the Business Conditions Digest, or any successor publication, of the Social and Economic Statistics Administration, Bureau of Economic Analysis, of the U.S. Department of Commerce, or any successor governmental agency).

3.7Except as provided in Paragraph 3.3 or 3.4, or unless the Trustee has actual knowledge that PPL is Insolvent, the Trustee shall have no duty to inquire whether PPL is Insolvent. The Trustee may in all events rely on such evidence concerning PPL's insolvency as may be a furnished to the Trustee which will give the Trustee a reasonable basis for making a determination concerning PPL's insolvency.

3.8Nothing in this Trust Agreement shall in any way diminish any rights of a person to pursue his rights as a general creditor of PPL under the Plans.

Article IV

Payments from Trust Fund While Company Solvent

4.1All payments from the Trust Fund while PPL is solvent shall be made by the Trustee only as directed by PPL.

4.2PPL shall have the right and the power at all times to direct the Trustee to return to PPL or to divert to others any of the Trust assets, and the right and the power to revoke the Trust and amend this Trust Agreement at any time.

Article V

Responsibilities of the Trustee

5.1The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims (the "Prudent Man Standard of Care"); provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by PPL which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by PPL. In the event of a dispute between PPL and another party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument believed by it to be genuine and delivered by the proper party or parties. Under no circumstances shall the Trustee be liable for consequential, special, or speculative damages under the Trust Agreement even if the Trustee is advised as to the possibility thereof. It is understood and agreed that the Trustee shall be under no duty to take any action other than herein specified with respect to any securities or other property at any time deposited hereunder unless specifically agreed to by the Trustee in writing or as otherwise provided in this Trust Agreement. Subject to PPL's power of investment direction under Article X, the Trustee shall have exclusive authority and discretion to hold, manage, care for and protect the Trust Fund and shall have the following powers and discretions in addition to those conferred by law:

(a)To invest and reinvest the Trust Fund in such equities (of any classification, including common and preferred stocks), fixed income, cash, cash equivalents or other property (real, personal or mixed) and interests in investment companies and investment trusts as the Trustee shall deem advisable, excluding any obligations or security, or other property of PPL, whether or not such investments and reinvestments be authorized by any state law for the investment of Trust Funds generally;

(b)To sell, exchange, convey, transfer or dispose of, and also to grant options with respect to, any property, whether real or personal, at any time held by it by private contract or by public auction, for cash or upon credit, or partly for cash and partly upon credit, as the Trustee may deem best, and no person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity, expediency or propriety of any such sale or other disposition;

(c)To compromise, compound and settle any debt or obligation due to or from it as the Trustee and to reduce the rate of interest thereon, to extend or otherwise modify, or to foreclose upon default or otherwise enforce or act with respect to any such obligation;

(d)If directed by PPL, the Trustee shall vote as instructed by PPL, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting.

(e)To vote, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting; to exercise any options appurtenant to any stocks, bonds or other securities for the conversion thereof into other stocks, bonds or securities; to exercise or sell any conversion or subscription rights appurtenant to any stocks, bonds or other securities at any time held in the Trust Fund, and to make any and all necessary payments therefor; to join in, and to approve, or to dissent from and to oppose, any corporate act or proceeding, including any reorganization, recapitalization, consolidation, merger, dissolution, liquidation, sale of assets or other action by or plan in respect of corporations or properties, the stocks or securities of which may at any time be held in the Trust Fund; to deposit with any committee or depository, pursuant to any plan or agreement of protection, reorganization, consolidation, sale, merger, or other readjustment, any property held in the Trust Fund; and to make payment from the Trust Fund of any charges or assessments imposed by the terms of any such plan or agreement;

(f)To accept and hold any securities or other property received by it under the provisions of any of the subdivisions of this Article whether or not the Trustee would be authorized hereunder then to invest therein;

(g)To borrow money on behalf of the Trust upon such terms and conditions as the Trustee shall deem advisable to carry out the purposes of the Trust and to pledge securities or other property of the Trust Fund in repayment of any such loan;

(h)To enforce any right, obligation or claim in its discretion and in general to protect in any way the interests of the Trust Fund, either before or after default, and in case the Trustee shall, in its discretion, consider such action for the best interest of the Trust Fund, to abstain from the enforcement of any right, obligation or claim and to abandon any property, whether real or personal, which at any time may be held by the Trustee;

(i)To make, execute, acknowledge and deliver any and all deeds, leases, assignments, transfers, conveyances and any and all other instruments necessary or appropriate to carry out any powers herein granted;

(j)To cause any investments from time to time held by it hereunder to be registered in, or transferred into, its name as the Trustee or the name of its nominee or nominees, and with or without designation of fiduciary capacity, or to retain any investments unregistered or in form permitting transfer by delivery, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;

(k)To hold any part or all of the Trust Fund uninvested;

(l)The Trustee may not invest in securities (including stock and the rights to acquire stock) or obligations issued by PPL or an Employer as that term is defined in the Plan, except by reason of the inclusion of such securities in a broadly inclusive index, mutual fund, or collective investment medium.

Notwithstanding anything else in this Agreement to the contrary, including, without limitation, any specific or general power granted to the Trustee, including the power to invest in real property, no portion of the Trust Fund shall be invested in real estate. For this purpose, “real estate” includes, but is not limited to, any direct or indirect interest in real property, leaseholds or mineral interests.

5.2If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Trustee shall act only under the Prudent Man Standard of Care, and PPL agrees to indemnify the Trustee against the Trustee’s costs, expenses and liabilities (including, without limitation, attorney’s fees and expenses) relating thereto and to be primarily liable for such payments if the following conditions are met: (a) the Trustee shall notify PPL as soon as practicable after it has received actual notice of litigation, or when the Trustee has reached a decision to undertake litigation but prior to filing a complaint or other written notice to any party or agency, and (b) the Trustee shall at all times afford PPL the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such litigation. If PPL does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. In no event shall the Trustee have any liability or responsibility to undertake or defend any litigation unless the Trustee is reasonably assured of receiving payment of related fees and expenses. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person other than PPL the proceeds of any borrowing against such policy.

5.3The Trustee, at the expense of the Trust or PPL, may consult with legal counsel (who prior to the occurrence of a Change in Control may also be counsel for PPL generally) with respect to any of its duties or obligations hereunder. The Trustee may consult with counsel, and the Trustee shall not be deemed imprudent by reason of its taking or refraining from taking any action, prior to the occurrence of a Change in Control, in accordance with the opinion of counsel for PPL. PPL agrees to indemnify and hold the Trustee harmless from and against any loss, costs and expenses including without limitation reasonable attorneys' fees and other costs and expenses incident to any suit, action, investigation, claim or proceeding that the Trustee may incur in the administration of the Trust Fund, and this provision shall survive termination of this Trust Agreement and the Trust, provided the following conditions are met: (a) the Trustee shall act at all times under the Prudent Man Standard of Care, (b) the Trustee shall notify PPL as soon as practicable after it has received actual notice of the suit, action, investigation, claim or proceeding, and (c) the Trustee shall at all times afford PPL the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such matter. The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Trust Agreement, except such as may be required by any law which prohibits the waiver thereof.

5.4The Trustee shall not be responsible in any manner whatsoever for the correctness of the recitals of fact herein (other than recitals of fact relating solely to the Trustee and its power and authority to enter into and perform this Trust Agreement) all of which have been made by PPL solely; and the Trustee shall not be responsible or accountable in any manner whatsoever for or with respect to the validity or sufficiency of this Trust Agreement and makes no representation with respect thereto. The Trustee shall not be responsible for the sufficiency of the Trust to pay the benefits contemplated by the Plans or for the use or application by PPL of any monies held in the Trust when disbursed in conformity with this Trust Agreement.

5.5During the term of this Trust, all of the income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

5.6Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

5.7The Trustee shall not be liable for any expense, loss, claim or amage (including counsel fees) suffered by the Plan or Participant arising out of or caused by any delay in, or failure of, performance by the Trustee, in whole or in part, arising out of, or caused by, unforseeable circumstances beyond the Trustee’s control, including without limitation: acts of God, interruption, delay in, or loss (partial or complete) of electrical power or external computer (hardware or software) or communication services (including access to book-entry securities systems maintained by Federal Reserve Bank of New York and/or any clearing corporation); act of civil or military authority; sabotage; natural emergency; epidemic; war or other government actions; civil disturbance; flood, earthquake, fire, other catastrophe; strike or other labor disturbance by employees of nonaffiliates; government, judicial, or self regulatory organization order, rule or regulation; riot; energy or natural resource difficulty or shortage; and inability to obtain materials, equipment, or transportation, provided, in all cases, the Trustee has acted under the Prudent Man Standard of Care to mitigate, control, and prevent losses and expenses due to such circumstances.

5.8The Trustee shall have no responsibility with respect to: (i) the selection or monitoring of any insurance policies or insurance contracts held in the Trust or the insurers issuing such policies or contracts; or (ii) the payment of any premiums with respect to such policies or contracts.

5.9 The duties of the Trustee shall be limited to the assets held in the Trust, and the Trustee shall have no duties with respect to assets held by any other person including, without limitation, any other trustee for the Plan.

Article VI

Fees, Expenses and Taxes

6.1PPL shall pay the reasonable expenses incurred by the Trustee in or as a result of the performance of its duties hereunder, including reasonable fees and expenses for services rendered to the Trustee, and such compensation to the Trustee as may be agreed upon in writing from time to time between PPL and the Trustee.

6.2If PPL fails to pay any such expenses and compensation as provided for in Paragraphs 6.1, the Trustee shall pay them from the Trust Fund.

6.3Any taxes, including personal property taxes, income taxes, transfer taxes and other taxes of any kind whatsoever that may under any existing or future laws be assessed against or levied upon or in respect of the Trust Fund or its assets or any interest therein shall be paid by PPL. The word "taxes" in this Article VI shall be deemed to include any interest or penalties that may be levied or imposed in respect to any taxes.

Article VII

Accounts of the Trustee

7.1The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by any person or persons designated by PPL. The cost of any audit if requested by PPL shall be paid by PPL.

7.2Within ninety (90) days following the close of each calendar year, the Trustee shall file with PPL a written account setting forth all investments, receipts, disbursements, and other transactions of the Trust Fund effected by it during such fiscal year including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales, and showing all cash, securities and other property held, including values at the end of such calendar year.

7.3Upon the expiration of one hundred eighty days following the filing as above provided of such account, such account shall be considered as final and binding upon PPL, its subsidiaries, directors, former directors, Participants, employees, former employees, retired employees, their beneficiaries, and the Trustee, as if settled by a court of competent jurisdiction, and the Trustee shall be forever released and discharged from any liability or accountability to anyone in connection with or arising or resulting from any of the acts or transactions shown therein, except with respect to such acts or transactions as to which PPL shall within such one hundred eighty day period file with the Trustee written objections or which involve manifest error, gross negligence, willful misconduct or fraud.

7.4Accounts of the Trustee need only be settled with PPL. Subject to any express provision of applicable law as may be in effect from time to time to the contrary, no other person or party shall be entitled to any accounting by the Trustee.

7.5Nothing contained in this Trust Agreement shall, however, preclude the Trustee from having any of its accounts settled by a court of competent jurisdiction. In any action or proceeding for settlement of the accounts of the Trustee or concerning administration of the Trust Fund, PPL and the Trustee shall be the only necessary parties thereto. To the extent provided by law, service of any notice or process upon PPL shall be deemed for all purposes service upon PPL's subsidiaries, directors, former directors, Participants, employees, former employees, and retired employees of PPL, and their beneficiaries and any final judgment in any such action or proceeding shall be binding and conclusive on PPL, employees, former employees, directors, former directors and retired employees of PPL and their beneficiaries and the Trustee.

Article VIII

Resignation or Removal of the Trustee

8.1The Trustee may be removed by PPL to the extent provided in Article X at any time upon sixty days notice in writing. The Trustee shall have the right to resign at any time by giving sixty days notice in writing to PPL, provided that such resignation shall not become effective until a successor trustee has accepted its appointment. Upon such removal or notice of resignation of the Trustee, provided the Trust is not revoked, PPL shall appoint and designate a successor Trustee, which shall be a corporate trustee qualified to conduct trust business in Pennsylvania, which is independent of and not subject to control by PPL. Such successor trustee shall qualify as such by delivering a written acceptance of the trust to PPL and the retiring Trustee, and thereupon all the provisions hereof shall relate and be applicable to such successor Trustee. Until the effective date of the assumption by the successor Trustee of its duties under this Trust Agreement, the retiring Trustee shall continue to function and be bound hereunder as trustee hereof. Upon receipt of such written acceptance the retiring Trustee shall forthwith file with PPL a written account of its acts in the same form as its annual account above provided for in Article VII from the date of its last annual account to the date of the acceptance of the Trust by the successor trustee and settlement of such account shall be accomplished as in Article VII. Upon the filing of such account, the retiring Trustee shall transfer and deliver the Trust Fund to the successor Trustee but shall be entitled to reserve therefrom and hold such assets as it may reasonably deem necessary to provide for any and all expenses and payments properly chargeable against the Trust Fund or for which the Trust Fund may be liable or to which the retiring Trustee may be entitled by way of fees and expenses in the settlement of its account. If the assets so withheld are insufficient or excessive for such purposes, the retiring Trustee shall be entitled to reimbursement for any deficiency out of the Trust Fund from the successor Trustee, or shall deliver the excess to the successor Trustee, as the case may be. To the extent permitted by law, upon the transfer of the Trust Fund as above provided and the settlement of its account, the retiring Trustee's previous annual accounts having been settled as provided in Article VII, the retiring Trustee shall thereupon be discharged from any further duty, obligation or responsibility with respect to the operation of the Trust Fund or any matter connected therewith prior to the delivery of said written acceptance except matters which relate to manifest error, gross negligence, willful misconduct or fraud.

8.2If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 8.1 hereof, by the effective date of resignation or removal under Section 8.1. If no such appointment has been made, provided PPL has not revoked the Trust, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

Article IX

Action of PPL

Any action of PPL pursuant to any of the provisions of this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature of: i) any officer or ii) other representative of PPL who shall have been certified to the Trustee by the President, Treasurer or Secretary of PPL as having such authority. The Trustee shall be fully protected in acting in accordance with such notices or directions. All communications from PPL to the Trustee shall be in writing, signed by the person designated as having such authority as PPL shall certify to the Trustee, and the Trustee shall act and be fully protected in acting in accordance with such communications.

Article X

Reservation of Powers

10.1PPL expressly reserves the powers to:

(a)remove the Trustee;

(b)direct the investment and reinvest-ment of the principal and income of the Trust Fund; it shall be the duty of the Trustee to act strictly in accordance with such invest-ment directions, and any changes therein, as so communicated to the Trustee from time to time in writing. Tothe maximum extent permitted by law, the Trustee shall have no duty or responsibility (i) to advise with respect to, or inquire as to the propriety of, any such investment direction or (ii) for any investment decisions made with respect to the Trust by PPL. In the absence of investment direction, the Trustee shall invest Trust assets in any manner permitted under Section 5.1.

10.2PPL expressly reserves the powers to:

(a)modify, alter, amend, terminate or revoke, in whole or in part, this Trust Agreement and the trust hereby created to any extent and in any respect deemed advisable by PPL, through an action of PPL that is in writing duly executed and acknowledged and delivered to the Trustee; providedhowever, that the rights, duties, powers, liabilities or immunities of the Trustee hereunder shall not be changed without its written consent, except as provided upon the Trustee's removal in Article VIII;

(b)withdraw from the Trust Fund any property forming a part of the Trust Fund, any such withdrawal shall be considered a revocation of this Trust solely with respect to such property;

(c)reallocate amounts among Plan Accounts in the Trust Fund;

(d)require the Trustee to furnish such information as may be reasonably requested in regard to the operations of the Trust Fund and the investment thereof;

(e)contribute to the Trust Fund property other than cash or marketable securities to the extent not expressly prohibited by the Plans or within the terms of this Trust, if acceptable to the Trustee.

10.3For purposes of this Trust Agreement, a Change in Control shall be deemed to have occurred

(a)if one of the following events occurs:

(I) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company's shareowners was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(II) any Person becomes the Beneficial Owner, as defined below, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors;

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corpora-tion or other entity, other than (I) a merger or con-solidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation contin-uing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securi-ties of the Company or at least 60% of the combined voting power of the securi-ties of such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (excluding in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities;

(IV) the shareowners of the Company approve a plan of complete liquidation or dissolution of the Company; or

(V) the Board of Directors adopts a resolution to the effect that a "Change in Control" has occurred or is anticipated to occur.

(b)For purposes of this Trust Agreement, a "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II) the Company or any Person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control;

(III) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred; or

(IV) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors.

Notwithstanding the foregoing, a "Potential Change in Control" shall not be deemed to occur if (i) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares but less than 20% and such Person has reported or is required to report such ownership on Schedule 13G under the Securities Exchange Act of 1934 (the "Exchange Act") (or any comparable or successor report); (ii) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares and such Person has reported or is required to report such ownership under Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common shares) and, within 10 business days of being requested by the Company to advise it regarding the same, certifies to the Company that such Person acquired common shares amounting to 5% or more of the Company's outstanding common shares inadvertently and who or which, together with all Affiliates thereof, thereafter does not acquire additional common shares while the Beneficial Owner, as such term is defined in or used by Regulation 13D-G as promulgated under the Exchange Act, of 5% or more of the common shares then outstanding; provided, however, that if the Person requested to so certify fails to do so within 10 business days, then a Potential Change in Control shall be deemed to have occurred immediately after such 10-Business-Day period; or (iii) any Person who becomes the Beneficial Owner of 5% or more of the common shares then outstanding due to the repurchase of common shares by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of 5% or more of the common shares then outstanding, acquires beneficial ownership of additional common shares representing 1% or more of the common shares then outstanding.

(c)For purposes of this Paragraph 10.3:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) PPL or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of PPL or any of its Affiliates (as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act), (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of PPL in substantially the same proportions as their ownership of stock of PPL.

10.4The Board of Directors or the Chief Executive Officer may notify the Trustee in writing as promptly as practicable following the occurrence of a Change in Control or Potential Change in Control, and the Trustee shall not be charged with knowledge of such Change in Control or Potential Change in Control in the absence of written notification.

Article XI

Surplus Plan Accounts and Termination of Trust

Unless the Trust is terminated or revoked under Article X, the Trust shall not terminate until the date that the Plans' Trust terminates.

Article XII

Merger or Consolidation of the Trustee

Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger, reorganization or consolidation to which the Trustee may be a party, or any corporation to which all or substantially all of the trust business of the Trustee may be transferred shall be the successor of the Trustee hereunder without the execution or filing of any instrument or the performance of any further act; provided that in case of any such transfer of trust business the transferee corporation shall file with PPL written acceptance of the Trust hereby created.

Article XIII

Miscellaneous

13.1This Trust Agreement, as amended from time to time, shall be administered, construed and enforced according to the laws of the Commonwealth of Pennsylvania and in courts situated in that Commonwealth. The situs of the Trust shall be Lehigh County, Pennsylvania.

13.2This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

13.3Nothing in this Trust Agreement shall require PPL to retain any employee in its service or the service of any of its subsidiaries.

13.4The Trustee by joining in the execution of this Trust Agreement hereby signifies its acceptance of the Trust hereby created.

13.5Notwithstanding anything in this Trust Agreement to the contrary, this Trust shall terminate no later than twenty one years after the death of the last survivor in being upon the cessation of PPL's powers under Article X of the class consisting of the persons entitled to receive benefits under the Plans.

13.6No attempt by any person entitled to benefits under the Plans to assign, alienate, anticipate, sell, transfer, pledge, encumber or place a charge upon any benefit or any installment thereof shall be recognized by the Trustee, nor shall the Trustee recognize any such attempt to attach or garnish or otherwise subject the Trust Fund or any benefit or any installment thereof to legal process, except as the Trustee may be required to do by law.

13.7Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

13.8This Trust Agreement shall be binding upon any successors or assigns of PPL and any transferee(s) of all or substantially all of PPL's assets.

13.9Any notice to the Trustee shall be sent to the following:

                          Wachovia Bank, N.A.

                           Attn: Heather E. Lineaweaver

                           600 Penn Street, 1^st Floor PA6450

                           Reading, PA 19602

                           Any notice to PPL shall be sent to the

                           PPL Corporation

                           Attn: James E. Abel

                           Two North Ninth Street

                           Allentown, Pennsylvania 18101

Either party hereto may designate a new representative for the purpose of receiving notices by notifying the other party in writing of the name and address of such new representative.

IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the authorized officers of the parties hereto.

	PPL CORPORATION
ATTEST:
	By:
	Name:   James E. Abel
	Title:    Vice President-Finance and Treasurer
	Date:

	WACHOVIA BANK, N.A. AS TRUSTEE
ATTEST:
	By:
	Name:
	Title:
	Date:

EX-10.D

Exhibit 10(d)

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A., AS TRUSTEE

PPL EMPLOYEE CHANGE IN CONTROL AGREEMENTS TRUST

TABLE OF CONTENTS

ARTICLE

I	Establishment, Purpose and Nature of Trust Fund
II	Contributions to Trust Fund and Allocation to Plan Accounts
III	Cessation of Payments from Trust Fund While Company Insolvent
IV	Payments from Trust Fund While Company Solvent
V	Responsibilities of the Trustee
VI	Fees, Expenses and Taxes
VII	Accounts of the Trustee
VIII	Resignation or Removal of the Trustee
IX	Action of PPL or the Accounting Party
X	Reservation of Powers
XI	Surplus Plan Accounts and Termination of Trust
XII	Merger or Consolidation of the Trustee
XIII	Miscellaneous

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A., AS TRUSTEE

This Agreement and Declaration of Trust (hereinafter called the "Trust Agreement") made as of the 1st day of January 2007, by and between PPL Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business at Allentown, Pennsylvania, hereinafter referred to as “PPL,” or the "Company," and Wachovia Bank, N.A., with its principal place of business at Charlotte, North Carolina, hereinafter called the "Trustee",

WITNESSETH:

WHEREAS, PPL has heretofore adopted certain change in control agreements with certain of its subsidiaries' employees (such employees and their designated beneficiaries where applicable being hereinafter referred to collectively as the "Participants" and individually as a "Participant") and may hereafter adopt other such agreements or plans; and

WHEREAS, PPL wishes to establish this grantor trust, hereinafter called the "Trust," for the collective investment of such property as may from time to time be contributed thereto, subject only to the claims of PPL's general creditors in the event of PPL's Insolvency (as defined in Article III); and

WHEREAS, PPL wishes the Trust to be used in connection with such plans or agreements as it may from time to time designate under Article X of this Trust Agreement (which plans and agreements are hereinafter called the "Plans" collectively or the "Plan" individually), although the Trust may not necessarily hold sufficient assets to satisfy all of the benefits to be provided under the Plans; and

WHEREAS, the Trustee is willing to hold and administer such trust assets pursuant to the terms of this Trust Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, PPL and the Trustee intending to be legally bound hereby, do covenant and agree as follows:

Article I

Establishment, Purpose and Nature of Trust Fund

1.1PPL hereby establishes with the Trustee a trust consisting of such cash and/or marketable securities as shall be paid to the Trustee with respect to the Plans pursuant to Article II, Paragraph 2.1. The Trust shall be known as the PPL EMPLOYEE CHANGE IN CONTROL AGREEMENTS TRUST. The creation of this Trust is not intended to create an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974. The Trust is intended to constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

1.2The Trust shall consist of all contributions to the Trust by PPL and the earnings and losses thereon (including unrealized gains and losses), less disbursements therefrom (hereinafter called the "Trust Fund"). The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of PPL and shall be used exclusively for the uses and purposes of Participants, and general creditors as herein set forth. Participants shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Participants against PPL. Any assets held by the Trust will be subject to the claims of PPL's general creditors under federal and state law in the event PPL becomes Insolvent.

1.3The Trust hereby established is revocable by PPL; provided, however, that it shall be irrevocable upon a Change in Control, as defined in Paragraph 10.3.

1.4The Trust Fund shall be held by the Trustee, subject to the reservation of powers under Paragraphs 10.1 and 10.2 of Article X, for the purpose of providing benefits in accordance with the terms of the Plans. The Trustee shall pay all benefits as they become due and payable pursuant to the Plans in accordance with Article III and Article IV to the extent there are sufficient funds in the Trust to do so. Notwithstanding the foregoing, the Trust Fund shall be treated as an asset of PPL and shall remain subject to the claims of PPL's general creditors in the event of PPL becomes Insolvent.

1.5The rights, powers, titles, duties, discretions and immunities of the Trustee shall be governed solely by this Trust Agreement and applicable state and federal law.

1.6The Trust is intended to be a grantor trust, of which PPL is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, Sections 671-678, and any successor statute thereto, and shall be construed accordingly.

1.7The Plans and any persons who may be entitled to benefit payments under the terms of the Plans shall not have any preferred claim on the Trust Fund. Persons who may be entitled to benefit payments under the terms of the Plans shall have no greater right or status than an unsecured creditor of PPL with respect to such amounts.

1.8Notwithstanding anything else in this Agreement to the contrary: (1) the Trustee is not a party to, and has, except as expressly provided herein, no duties or responsibilities under, the Plans; (2) PPL shall be required to certify in writing to the Trustee the identity of any party or person, whether or not a fiduciary named in any Plans, which has the power to manage and control Plan assets, and the Trustee shall be entitled to rely upon such certification until notified otherwise in writing by PPL; and (3) in any case in which a provision of this Agreement conflicts with any provision in any Plans, this Agreement shall control. Notwithstanding the preceding sentence, the Trustee reserves the right to seek a judicial and/or administrative determination as to its proper course of action under this Agreement.

1.9The terms of the Plans shall govern the amount, form and timing of benefit payments to which a Participant is entitled under the Plans. The Trustee shall have no right or obligations with respect to any of the provisions of the Plans except as provided in this Trust Agreement.

Article II

Contributions to Trust Fund and Allocation to Plan Accounts

2.1Subject to the provisions of Paragraph 2.2, PPL may from time to time make, or cause to be made, such contributions to the Trust Fund of cash and/or marketable securities as it determines to be appropriate in its sole discretion and are acceptable to the Trustee, which shall be held by the Trustee for the benefit of the Participants covered by each respective Plan, subject to the reservation of powers under Paragraphs 10.1 and 10.2 of Article X and the claims of PPL's general creditors in the event PPL becomes Insolvent. The Trustee shall be accountable for all such contributions, but shall have no duty to determine that the amounts thereof comply with the provisions of the Plans. PPL shall designate the Plan Account or Accounts as defined in Paragraph 2.3 to which each contribution shall be allocated and the amount of such contribution to be allocated to each such Plan Account.

2.2Upon the occurrence of a Potential Change in Control (as defined in Paragraph 10.3), the Chief Executive Officer of PPL (or his or her designee) may authorize a cash contribution to be made to the Trust in an amount equal to the amount that, in the determination of PPL, is sufficient to pay each Participant or beneficiary the benefits to which Participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date of the Potential Change in Control assuming each Participant terminated employment as of such date under circumstances giving rise to payment of benefits under the Plans. After a Change in Control, the Trustee may compel any contribution that is required under the Trust. Within 60 days following the end of each Plan year ending after a Change in Control has occurred, PPL shall be required to irrevocably deposit additional cash or other property to the Trust in an amount sufficient and to the extent necessary, to pay each Participant or beneficiary the benefits payable pursuant to the terms of the Plans as of the close of the Plan years.

2.3The Trustee shall hold the Trust Fund without distinction as to principal or income as a single commingled fund, but for bookkeeping purposes shall maintain a separate account (hereinafter called a "Plan Account" or an "Account") reflecting the interest of each Plan in the Trust Fund. Each Plan Account shall consist of contributions to and payments from the Trust Fund which are allocable to each such Plan, and the earnings thereon, less disbursements therefrom attributable to the interest of each Plan in the entire Trust Fund. The Trustee shall advise the Accounting Party (as defined in Paragraph 2.4 below) of the Fair Market Value (as defined in Paragraph 2.5 below) of assets in the Trust Fund as of the close of each calendar year of the Trust, or at such more frequent intervals as may be mutually agreed upon between the Accounting Party and the Trustee, among the Plan Accounts based upon the actual return of each Plan Account.

2.4For purposes of this Trust Agreement, the Accounting Party is PPL prior to the occurrence of a Change in Control, and after the occurrence of a Change in Control, in lieu of PPL, a committee composed of three members appointed by the Board of Directors of PPL prior to the occurrence of a Change in Control. Any vacancy on the committee after the occurrence of a Change in Control (arising for any reason, including the failure of the Board of Directors of PPL to appoint three members willing to serve on the committee or the death or resignation of any member) will be filled by an employee or former employee of PPL with an accrued benefit under any of the Plans designated by the remaining members or member of the committee, who is willing to serve as a member of the committee. If the remaining members of the committee cannot agree on a new member or there are no members of the committee (for any reason, including the failure of the Board of Directors of PPL to appoint prior to the occurrence of a Change in Control any person who is willing to serve on the committee or the death or resignation of all members) any vacancy after the occurrence of a Change in Control shall be filled by the Participant with the largest accrued benefit under the Plans and who is willing to serve as a member. If at any time after an occurrence of a Change in Control, there are no members of the committee willing or able to serve, the determination as to the Participant with the largest accrued benefit under the Plans shall be made by the Trustee. In the event that there are less than three persons who are willing to serve as members, the committee shall consist of the number of such persons who are willing to serve as members.

2.5For purposes of this Trust Agreement, "Fair Market Value" for any security shall be determined as follows:

(a)securities listed on the New York Stock Exchange, the American Stock Exchange or any other recognized exchange shall be valued at their last sale prices on the exchange on which securities are principally traded on the valuation date (NYSE-Composite Transactions or AMEX-Composite Transactions prices to prevail on any security listed on either of these exchanges as well as on another exchange); and where no sale is reported for that date, the last bid price shall be used.

(b)all other securities and assets shall be valued at their market values as fixed by the Trustee's staff regularly engaged in such activities.

Article III

Cessation of Payments from

Trust Fund While Company Insolvent

3.1The Trust Fund shall be subject to claims of general creditors of PPL in the event PPL becomes Insolvent, and at any time the Trustee has actual knowledge, or has determined, that PPL is Insolvent, the Trustee shall deliver the Trust Fund to satisfy such claims as a court of competent jurisdiction may direct. PPL shall be considered "Insolvent" for purposes of this Trust Agreement if (1) PPL is unable to pay its debts as they become due or (2) PPL is subject to a pending proceeding as a debtor or a debtor-in-possession under the federal Bankruptcy Code, 11 U.S.C. 101 et seq. (or any successor federal statute).

3.2At all times during the continuance of this Trust, as provided in Section 1.3 hereof, the principal and income of the Trust shall be subject to claims of general creditors of PPL under federal and state law as set forth below.

3.3The Board of Directors and the Chief Executive Officer of PPL shall have the duty to inform the Trustee in writing that PPL has become Insolvent and the basis on which they consider PPL to be Insolvent. If a person claiming to be a creditor of PPL alleges in writing to the Trustee that PPL has become Insolvent, the Trustee shall determine whether PPL is Insolvent and, pending such determination, the Trustee shall be excused from compliance with any instruction by PPL for payment of benefits or funds to Participants, their beneficiaries or any other person.

3.4If the Board of Directors or the Chief Executive Officer of PPL informs the Trustee in writing that PPL has become Insolvent, the Trustee shall independently determine, within a reasonable time that in no event shall exceed sixty days after receipt of such notice, whether PPL is Insolvent and, pending such determination, the Trustee shall make no payments from the Trust Fund (unless otherwise required by applicable law), shall hold the Trust Fund for the benefit of PPL's general creditors, and shall resume payments from the Trust Fund only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent, if the Trustee initially determined PPL to be Insolvent).

3.5If at any time the Trustee has determined that PPL is Insolvent, the Trustee shall make no payments to Participants and shall hold the assets of the Trust for the benefit of PPL's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of PPL with respect to benefits due under the Plans or otherwise.

3.6The Trustee shall permit payment of benefits to Participants in accordance with Article IV of this Trust Agreement only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent). If the Trustee discontinues payments from the Trust Fund and subsequently resumes such payments, the first payments following such discontinuance shall include the aggregate amount of all payment's which would have been made to Participants under Article IV during the period of such discontinuance (together with interest based upon the daily average, as determined by the Trustee, of the Average Prime Rate Charged by Banks (Percent) as published in the Business Conditions Digest, or any successor publication, of the Social and Economic Statistics Administration, Bureau of Economic Analysis, of the U.S. Department of Commerce, or any successor governmental agency), less the aggregate amount of payments made to any such persons by or on behalf of PPL in lieu of the payments provided for in Article IV during any such period of discontinuance.

3.7Except as provided in Paragraph 3.3 or 3.4, or unless the Trustee has actual knowledge that PPL is Insolvent, the Trustee shall have no duty to inquire whether PPL is Insolvent. The Trustee may in all events rely on such evidence concerning PPL's insolvency as may be a furnished to the Trustee which will give the Trustee a reasonable basis for making a determination concerning PPL's insolvency.

3.8Nothing in this Trust Agreement shall in any way diminish any rights of a person to pursue his rights as a general creditor of PPL under the Plans.

Article IV

Payments from Trust Fund While Company Solvent

4.1All payments from the Trust Fund while PPL is solvent shall be made by the Trustee only to such persons who at any time prior to the occurrence of a Change in Control were employees of PPL, or any of its subsidiaries, and, in such manner, at such times, and in such amounts as required by the terms of each respective Plan in effect when such payment is made or, if such payment is made after a Change in Control occurs, as required by the terms of each respective Plan in effect when any such Change in Control occurs.

4.2Immediately preceding the occurrence of a Change in Control, PPL shall deliver to the Trustee: a) a schedule (the "Payment Schedule") that indicates the amounts payable in respect of each Participant, that provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable, the form in which such amount is to be paid (as provided for or available under the Plans), and the time of commencement for payment of such amounts, and b) copies of all then current Plans and any subsequent amendments thereto. Except as otherwise provided herein, the Trustee shall make payments to the Participants in accordance with such Payment Schedule. The Trustee shall make provision for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by PPL.

4.3PPL hereby agrees that the Accounting Party (as defined in Section 2.4) shall have the exclusive responsibility, and the Trustee shall not have any responsibility or duty under this Trust Agreement for determining that any change in the Payment Schedule is in accordance with the terms of the Plan and applicable law, including without limitation, the amount, timing or method of payment and the identity of each person to whom such payments shall be made. The Trustee shall have no responsibility or duty to determine the tax effect of any payment or to see to the application of any payment.

4.4The entitlement of a Participant to benefits under the Plans shall be determined under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures, if any, set out in the Plans.

4.5Notwithstanding anything contained in Paragraph 4.1, PPL may make payment of benefits directly to Participants as they become due under the terms of the Plans. PPL shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, PPL shall make the balance of each such payment as it falls due. The Trustee shall notify PPL where principal and earnings are not sufficient. The Trustee shall have no responsibility to inquire whether payments have been made pursuant to the Plans in question.

4.6In no event shall the Trustee knowingly cause any payment or distribution to be made from the Trust Fund pursuant to the terms of any Plan for any purpose in an amount which is in excess of the then current balance of the Plan Account (as defined in Section 2.3) attributable to that Plan.

4.7After the occurrence of a Change in Control, if a Participant does not receive a payment that the Participant believes he or she has become entitled to under any Plan, he or she shall notify the Trustee of such entitlement. Within thirty (30) days of its receipt of such notice, the Trustee shall determine whether the terms of the Plan dictate that the Participant is entitled to a payment. If the Trustee determines that a payment is required, the Trustee shall make the payment to the Participant as soon as practicable, but in no event shall the payment be made later than thirty (30) days after the expiration of the initial thirty-day period. The Trustee shall provide PPL with written confirmation of the fact and amount of such payment after it is made. The Trustee's decision shall be final and binding, and the Participant shall be notified of the decision in writing within ten (10) days. The notice shall include specific reasons for the decision, including specific references to the pertinent Plan provisions on which the decision is based, and shall be written in a manner calculated to be understood by the Participant. The provisions of this Paragraph 4.7 shall apply only after the occurrence of a Change in Control. The Trustee may rely upon direction from the Accounting Party in making such determinations.

4.8The Trustee shall not be liable for any payment made in good faith without actual notice or knowledge of the changed condition or status of any recipient thereof. If the Trustee has responsibility for benefit payments and if any payment is not claimed, the Trustee shall retain the payment as part of the Trust Fund.

4.9Except as provided in this Article IV, after the Trust has become irrevocable, PPL shall have no right or power to direct the Trustee to return to PPL or to divert to others any of the Trust assets before all payments of benefits have been made to Participants and their beneficiaries pursuant to the terms of the Plans and all expenses of the Trust have been paid. At any time prior to the Trust becoming irrevocable, however, PPL shall have the right or power to direct the Trustee to return to PPL any of the assets of the Trust.

Article V

Responsibilities of the Trustee

5.1The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims (the "Prudent Man Standard of Care"); provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by PPL or the Accounting Party which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by PPL or the Accounting Party. In the event of a dispute between PPL and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument believed by it to be genuine and delivered by the proper party or parties. Under no circumstances shall the Trustee be liable for consequential, special, or speculative damages under the Trust Agreement even if the Trustee is advised as to the possibility thereof. It is understood and agreed that the Trustee shall be under no duty to take any action other than herein specified with respect to any securities or other property at any time deposited hereunder unless specifically agreed to by the Trustee in writing or as otherwise provided in this Trust Agreement. Subject to the Accounting Party's power of investment direction under Article X, the Trustee shall have exclusive authority and discretion to hold, manage, care for and protect the Trust Fund and shall have the following powers and discretions in addition to those conferred by law:

(a)To invest and reinvest the Trust Fund in such equities (of any classification, including common and preferred stocks), fixed income, cash, cash equivalents or other property (real, personal or mixed) and interests in investment companies and investment trusts as the Trustee shall deem advisable, excluding any obligations or security, or other property of PPL, whether or not such investments and reinvestments be authorized by any state law for the investment of Trust Funds generally;

(b)To sell, exchange, convey, transfer or dispose of, and also to grant options with respect to, any property, whether real or personal, at any time held by it by private contract or by public auction, for cash or upon credit, or partly for cash and partly upon credit, as the Trustee may deem best, and no person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity, expediency or propriety of any such sale or other disposition;

(c)To compromise, compound and settle any debt or obligation due to or from it as the Trustee and to reduce the rate of interest thereon, to extend or otherwise modify, or to foreclose upon default or otherwise enforce or act with respect to any such obligation;

(d)If directed by the Accounting Party, Trustee shall vote as instructed by Accounting Party, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting.

(e)To vote, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting; to exercise any options appurtenant to any stocks, bonds or other securities for the conversion thereof into other stocks, bonds or securities; to exercise or sell any conversion or subscription rights appurtenant to any stocks, bonds or other securities at any time held in the Trust Fund, and to make any and all necessary payments therefor; to join in, and to approve, or to dissent from and to oppose, any corporate act or proceeding, including any reorganization, recapitalization, consolidation, merger, dissolution, liquidation, sale of assets or other action by or plan in respect of corporations or properties, the stocks or securities of which may at any time be held in the Trust Fund; to deposit with any committee or depository, pursuant to any plan or agreement of protection, reorganization, consolidation, sale, merger, or other readjustment, any property held in the Trust Fund; and to make payment from the Trust Fund of any charges or assessments imposed by the terms of any such plan or agreement;

(f)To accept and hold any securities or other property received by it under the provisions of any of the subdivisions of this Article whether or not the Trustee would be authorized hereunder then to invest therein;

(g)To borrow money on behalf of the Trust upon such terms and conditions as the Trustee shall deem advisable to carry out the purposes of the Trust and to pledge securities or other property of the Trust Fund in repayment of any such loan;

(h)To enforce any right, obligation or claim in its discretion and in general to protect in any way the interests of the Trust Fund, either before or after default, and in case the Trustee shall, in its discretion, consider such action for the best interest of the Trust Fund, to abstain from the enforcement of any right, obligation or claim and to abandon any property, whether real or personal, which at any time may be held by the Trustee;

(i)To make, execute, acknowledge and deliver any and all deeds, leases, assignments, transfers, conveyances and any and all other instruments necessary or appropriate to carry out any powers herein granted;

(j)To cause any investments from time to time held by it hereunder to be registered in, or transferred into, its name as the Trustee or the name of its nominee or nominees, and with or without designation of fiduciary capacity, or to retain any investments unregistered or in form permitting transfer by delivery, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;

(k)To hold any part or all of the Trust Fund uninvested;

(l)The Trustee may not invest in securities (including stock and the rights to acquire stock) or obligations issued by PPL or an Employer as that term is defined in the Plan, except by reason of the inclusion of such securities in a broadly inclusive index, mutual fund, or collective investment medium.

Notwithstanding anything else in this Agreement to the contrary, including, without limitation, any specific or general power granted to the Trustee, including the power to invest in real property, no portion of the Trust Fund shall be invested in real estate. For this purpose, “real estate” includes, but is not limited to, any direct or indirect interest in real property, leaseholds or mineral interests.

5.2If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Trustee shall act only under the Prudent Man Standard of Care, and PPL agrees to indemnify the Trustee against the Trustee’s costs, expenses and liabilities (including, without limitation, attorney’s fees and expenses) relating thereto and to be primarily liable for such payments if the following conditions are met: (a) theTrustee shall notify the Accounting Party as soon as practicable after it has received actual notice of litigation, or when the Trustee has reached a decision to undertake litigation but prior to filing a complaint or other written notice to any party or agency, and (b) the Trustee shall at all times afford the Accounting Party the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such litigation. If PPL does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. In no event shall the Trustee have any liability or responsibility to undertake or defend any litigation unless the Trustee is reasonably assured of receiving payment of related fees and expenses. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person other than PPL the proceeds of any borrowing against such policy. Subject to the foregoing, the Trustee shall have the exclusive authority:

(a)to retain an actuary to calculate the amount of any benefit payments due pursuant to Paragraph 1.4 of Article I; and

(b)to do all acts which the Trustee may deem necessary or proper and to exercise any and all of the powers of the Trustee under this Trust Agreement upon such terms and conditions as to the Trustee may seem in the best interests of the Trust Fund.

5.3The Trustee, at the expense of the Trust or PPL, may consult with legal counsel (who prior to the occurrence of a Change in Control may also be counsel for PPL generally) with respect to any of its duties or obligations hereunder. The Trustee may consult with counsel, and the Trustee shall not be deemed imprudent by reason of its taking or refraining from taking any action, prior to the occurrence of a Change in Control, in accordance with the opinion of counsel for PPL. PPL agrees to indemnify and hold the Trustee harmless from and against any loss, costs and expenses including without limitation reasonable attorneys' fees and other costs and expenses incident to any suit, action, investigation, claim or proceeding that the Trustee may incur in the administration of the Trust Fund, and this provision shall survive termination of this Trust Agreement and the Trust, provided the following conditions are met: (a) the Trustee shall act at all times under the Prudent Man Standard of Care, (b) the Trustee shall notify the Accounting Party as soon as practicable after it has received actual notice of the suit, action, investigation, claim or proceeding, and (c) the Trustee shall at all times afford the Accounting Party the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such matter. The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Trust Agreement, except such as may be required by any law which prohibits the waiver thereof.

5.4Trustee, at the reasonable and prudent expense of the Trust or PPL, may hire agents, accountant, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder.The Trustee shall be entitled, as it may deem appropriate from time to time, to require of PPL such certifications and proofs of facts or other information and/or cooperation as shall permit the Trustee to perform its duties or to exercise the powers granted the Trustee under this Trust Agreement and shall be entitled to rely thereon.

5.5The Trustee shall not be responsible in any manner whatsoever for the correctness of the recitals of fact herein (other than recitals of fact relating solely to the Trustee and its power and authority to enter into and perform this Trust Agreement) all of which have been made by PPL solely; and the Trustee shall not be responsible or accountable in any manner whatsoever for or with respect to the validity or sufficiency of this Trust Agreement and makes no representation with respect thereto. The Trustee shall not be responsible for the sufficiency of the Trust to pay the benefits contemplated by the Plans or for the use or application by PPL of any monies held in the Trust when disbursed in conformity with this Trust Agreement.

5.6During the term of this Trust, all of the income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

5.7Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

5.8The Trustee shall not be liable for any expense, loss, claim or damage (including counsel fees) suffered by the Plan or Participant arising out of or caused by any delay in, or failure of, performance by the Trustee, in whole or in part, arising out of, or caused by, unforseeable circumstances beyond the Trustee’s control, including without limitation: acts of God, interruption, delay in, or loss (partial or complete) of electrical power or external computer (hardware or software) or communication services (including access to book-entry securities systems maintained by Federal Reserve Bank of New York and/or any clearing corporation); act of civil or military authority; sabotage; natural emergency; epidemic; war or other government actions; civil disturbance; flood, earthquake, fire, other catastrophe; strike or other labor disturbance by employees of nonaffiliates; government, judicial, or self regulatory organization order, rule or regulation; riot; energy or natural resource difficulty or shortage; and inability to obtain materials, equipment, or transportation, provided, in all cases, Trustee has acted under the Prudent Man Standard of Care to mitigate, control, and prevent losses and expenses due to such circumstances.

5.9The Trustee is not a party to, and has no duties or responsibilities under, the Plan other than those that may be expressly contained in this Trust Agreement. In any case in which a provision of this Trust Agreement conflicts with any provision in the Plan, this Trust Agreement shall control. The Trustee shall have no duties, responsibilities or liability with respect to the acts or omissions of any prior or successor trustee.

5.10The Trustee shall have no responsibility with respect to: (i) the selection or monitoring of any insurance policies or insurance contracts held in the Trust or the insurers issuing such policies or contracts; or (ii) the payment of any premiums with respect to such policies or contracts.

5.11 The duties of the Trustee shall be limited to the assets held in the Trust, and the Trustee shall have no duties with respect to assets held by any other person including, without limitation, any other trustee for the Plan. The Accounting Party may request the Trustee to perform a recordkeeping service with respect to property held by others and not otherwise subject to the terms of this Trust Agreement. To the extent the Trustee shall agree to perform this service, its sole responsibility shall be to accurately reflect information on its books which it has received from an authorized party.

Article VI

Fees, Expenses and Taxes

6.1PPL shall pay the reasonable expenses incurred by the Trustee in or as a result of the performance of its duties hereunder, including reasonable fees and expenses for services rendered to the Trustee, and such compensation to the Trustee as may be agreed upon in writing from time to time between PPL and the Trustee. After the occurrence of a Change in Control, the compensation of the Trustee shall be determined by the application of the current rates then charged by the Trustee for the provision of the types of investment and trustee services contemplated in this Trust Agreement to trusts of a similar character and size.

6.2PPL shall pay the reasonable expenses incurred by the Accounting Party, if other than PPL, in or as a result of the performance by its members of their duties hereunder. Such expenses shall include but not be limited to the cost of travel as well as the cost of any communications with the Trustee or Participants. PPL shall also pay to the Accounting Party, if other than PPL, such compensation as may be provided for by resolution of the Board of Directors of PPL prior to the occurrence of a Change in Control.

6.3If PPL fails to pay any such expenses and compensation as provided for in Paragraphs 6.1 and 6.2, the Trustee shall pay them from the Trust Fund.

6.4Any taxes, including personal property taxes, income taxes, transfer taxes and other taxes of any kind whatsoever that may under any existing or future laws be assessed against or levied upon or in respect of the Trust Fund or its assets or any interest therein shall be paid by PPL. The word "taxes" in this Article VI shall be deemed to include any interest or penalties that may be levied or imposed in respect to any taxes.

6.5To the extent the Accounting Party has provided necessary information to the Trustee, the Trustee shall be responsible for any necessary withholding and reporting of federal taxes related to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities. In addition, to the extent the Accounting Party has provided necessary information to the Trustee, the Trustee shall use reasonable efforts to assist such Accounting Party with respect to any “Tax Obligations.” The term “Tax Obligations” means the responsibility for payment of taxes, withholding, certification and reporting requirements, claims for exemptions or refund, interest, penalties and other related expenses of the Trust, including but not limited to the requirements set forth in this Article VI. Notwithstanding the foregoing, the Trustee shall have no responsibility or liability for any Tax Obligations now or hereafter imposed on PPL or the Trust by any taxing authorities, domestic or foreign, except as provided by applicable law. To the extent the Trustee is responsible under any applicable law for any Tax Obligation, the Accounting Party shall inform the Trustee of all Tax Obligations, shall direct the Trustee with respect to the performance of such Tax Obligations. All such Tax Obligations shall be paid from the Trust unless paid by PPL.

Article VII

Accounts of the Trustee

7.1The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by any person or persons designated by the Accounting Party. The cost of any audit if requested by the Accounting Party shall be paid by PPL.

7.2Within ninety (90) days following the close of each calendar year, the Trustee shall file with the Accounting Party and PPL, if different, a written account setting forth all investments, receipts, disbursements, and other transactions of the Trust Fund effected by it during such fiscal year including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales, and showing all cash, securities and other property held, including values at the end of such calendar year.

7.3Upon the expiration of one hundred eighty days following the filing as above provided of such account, such account shall be considered as final and binding upon the Accounting Party, PPL, its subsidiaries, directors, former directors, Participants, employees, former employees, retired employees, their beneficiaries, and the Trustee, as if settled by a court of competent jurisdiction, and the Trustee shall be forever released and discharged from any liability or accountability to anyone in connection with or arising or resulting from any of the acts or transactions shown therein, except with respect to such acts or transactions as to which the Accounting Party shall within such one hundred eighty day period file with the Trustee written objections or which involve manifest error, gross negligence, willful misconduct or fraud.

7.4Accounts of the Trustee need only be settled with the Accounting Party. Subject to any express provision of applicable law as may be in effect from time to time to the contrary, no other person or party shall be entitled to any accounting by the Trustee.

7.5Nothing contained in this Trust Agreement shall, however, preclude the Trustee from having any of its accounts settled by a court of competent jurisdiction. In any action or proceeding for settlement of the accounts of the Trustee or concerning administration of the Trust Fund, the Accounting Party and the Trustee shall be the only necessary parties thereto. To the extent provided by law, service of any notice or process upon the Accounting Party shall be deemed for all purposes service upon PPL's subsidiaries, directors, former directors, Participants, employees, former employees, and retired employees of PPL, and their beneficiaries and any final judgment in any such action or proceeding shall be binding and conclusive on the Accounting Party, PPL, employees, former employees, directors, former directors and retired employees of PPL and their beneficiaries and the Trustee.

Article VIII

Resignation or Removal of the Trustee

8.1The Trustee may be removed by the Accounting Party to the extent provided in Article X at any time upon sixty days notice in writing. The Trustee shall have the right to resign at any time by giving sixty days notice in writing to the Accounting Party, provided that such resignation shall not become effective until a successor trustee has accepted its appointment. Upon such removal or notice of resignation of the Trustee, provided the Trust is not revoked, the Accounting Party shall appoint and designate a successor Trustee, which shall be a corporate trustee qualified to conduct trust business in Pennsylvania, which is independent of and not subject to control by PPL. Such successor trustee shall qualify as such by delivering a written acceptance of the trust to the Accounting Party and the retiring Trustee, and thereupon all the provisions hereof shall relate and be applicable to such successor Trustee. Until the effective date of the assumption by the successor Trustee of its duties under this Trust Agreement, the retiring Trustee shall continue to function and be bound hereunder as trustee hereof. Upon receipt of such written acceptance the retiring Trustee shall forthwith file with the Accounting Party a written account of its acts in the same form as its annual account above provided for in Article VII from the date of its last annual account to the date of the acceptance of the Trust by the successor trustee and settlement of such account shall be accomplished as in Article VII. Upon the filing of such account, the retiring Trustee shall transfer and deliver the Trust Fund to the successor Trustee but shall be entitled to reserve therefrom and hold such assets as it may reasonably deem necessary to provide for any and all expenses and payments properly chargeable against the Trust Fund or for which the Trust Fund may be liable or to which the retiring Trustee may be entitled by way of fees and expenses in the settlement of its account. If the assets so withheld are insufficient or excessive for such purposes, the retiring Trustee shall be entitled to reimbursement for any deficiency out of the Trust Fund from the successor Trustee, or shall deliver the excess to the successor Trustee, as the case may be. To the extent permitted by law, upon the transfer of the Trust Fund as above provided and the settlement of its account, the retiring Trustee's previous annual accounts having been settled as provided in Article VII, the retiring Trustee shall thereupon be discharged from any further duty, obligation or responsibility with respect to the operation of the Trust Fund or any matter connected therewith prior to the delivery of said written acceptance except matters which relate to manifest error, gross negligence, willful misconduct or fraud.

8.2If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 8.1 hereof, by the effective date of resignation or removal under Section 8.1. If no such appointment has been made, provided PPL has not revoked the Trust, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

Article IX

Action of PPL or the Accounting Party

9.1Any action of PPL pursuant to any of the provisions of this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature of: i) any officer or ii) other representative of PPL who shall have been certified to the Trustee by the President, Treasurer or Secretary of PPL as having such authority. The Trustee shall be fully protected in acting in accordance with such notices or directions. All communications from PPL to the Trustee shall be in writing, signed by the person designated as having such authority as PPL shall certify to the Trustee, and the Trustee shall act and be fully protected in acting in accordance with such communications.

9.2Any action of the Accounting Party pursuant to provisions of this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature of any one or more members of the Accounting Party. Prior to the occurrence of a Change in Control, the President, Treasurer or Secretary of PPL shall advise the Trustee of the name or names of the person or persons who will serve as members of the Accounting Party after the occurrence of such Change in Control. After such Change in Control, current members of the Accounting Party shall advise the Trustee of the name or names of any new person or persons serving as members of the Accounting Party.

9.3All communications from the Accounting Party to the Trustee shall be in writing, signed by the person designated as having such authority as PPL or member of the Accounting Party shall certify to the Trustee, and the Trustee shall be fully protected in acting in accordance with such communications.

9.4PPL shall furnish the Trustee with a written list of the names, signatures and extent of authority of all persons constituting the Accounting Party as defined in Section 2.4. The Trustee shall be entitled to rely on and shall be fully protected in acting upon direction from such person until notified in writing by PPL, as appropriate, of a change in the make up of the Accounting Party.

Article X

Reservation of Powers

10.1The Accounting Party expressly reserves the powers to:

(a)remove the Trustee;

(b)direct the investment and reinvestment of the principal and income of the Trust Fund; it shall be the duty of the Trustee to act strictly in accordance with such investment directions, and any changes therein, as so communicated to the Trustee from time to time in writing. Tothe maximum extent permitted by law, the Trustee shall have no duty or responsibility (i) to advise with respect to, or inquire as to the propriety of, any such investment direction or (ii) for any investment decisions made with respect to the Trust by PPL or the Accounting Party. In the absence of investment direction by the Accounting Party, the Trustee shall invest Trust assets in any manner permitted under Section 5.1; and

(c)following the occurrence of a Change in Control, modify, alter or amend this Trust Agreement, provided that no such modification, alteration or amendment may directly or indirectly (i) affect any Participant's entitlement to receive benefit payments under any Plan or under this Trust Agreement or the amount, form or timing of such benefit payments, (ii) alter the relative funding levels of the Plan Accounts, (iii) alter the method of allocation of Trust Fund earnings and losses among the Plan Accounts, (iv) eliminate the requirement under this Trust Agreement of separate accounting for the interests of each Plan in the Trust Fund, (v) impair or otherwise affect any claims which general creditors of PPL may have with respect to the Trust Fund in the event of PPL becomes Insolvent, (vi) change the rights, duties, powers, liabilities or immunities of the Trustee hereunder without the Trustee's written consent, except as provided upon the Trustee's removal in Article VIII, (vii) eliminate the restrictions set forth in this subparagraph 10.1(c), or (viii) confer upon the Trustee or any other person, directly or indirectly, the power or authority to effect any result prohibited under clauses (i)-(vii) of this subparagraph 10.1(c). No provision of this Trust Agreement may be amended by PPL in any manner adverse to Participants following a Change in Control.

10.2Subject to the provisions of Paragraphs 10.1 and 10.3 of this Article X, PPL expressly reserves the powers to:

(a)modify, alter, amend, terminate or revoke this Trust Agreement and the trust hereby created to any extent and in any respect deemed advisable by PPL, through an action of PPL that is in writing duly executed and acknowledged and delivered to the Trustee; provided however, that the rights, duties, powers, liabilities or immunities of the Trustee hereunder shall not be changed without its written consent, except as provided upon the Trustee's removal in Article VIII;

(b)withdraw from the Trust Fund any property forming a part of the Trust Fund, any such withdrawal shall be considered a revocation of this Trust solely with respect to such property;

(c)reallocate amounts among Plan Accounts in the Trust Fund;

(d)require the Trustee to furnish such information as may be reasonably requested in regard to the operations of the Trust Fund and the investment thereof;

(e)add to or delete from Appendix A one or more nonqualified deferred compensation plans or agreements for PPL's or its subsidiaries employees;

(f)add to or delete from Appendix A one or more individual employment agreements with employees of PPL or any of its subsidiaries; and

(g)contribute to the Trust Fund property other than cash or marketable securities to the extent not expressly prohibited by the Plans or within the terms of this Trust, if acceptable to the Trustee.

10.3The right of PPL to exercise the powers reserved to it under Paragraph 10.2 of this Article shall expire upon the occurrence of a Change in Control. For purposes of this Trust Agreement, a Change in Control shall be deemed to have occurred

(a)if one of the following events occurs:

(I) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company's shareowners was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(II) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors;

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or other entity, other than (I) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or at least 60% of the combined voting power of the securities of such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (excluding in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities;

(IV) the shareowners of the Company approve a plan of complete liquidation or dissolution of the Company; or

(V) the Board of Directors adopts a resolution to the effect that a "Change in Control" has occurred or is anticipated to occur.

(b)For purposes of this Trust Agreement, a "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) PPL enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II) PPL or any Person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control;

(III) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in control has occurred; or

(IV) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of PPL representing 5% or more of the combined voting power of PPL's then outstanding securities entitled to vote generally in the election of directors.

Notwithstanding the foregoing, a "Potential Change in Control" shall not be deemed to occur if (i) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares but less than 20% and such Person has reported or is required to report such ownership on Schedule 13G under the Securities Exchange Act of 1934 (the "Exchange Act") (or any comparable or successor report); (ii) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares and such Person has reported or is required to report such ownership under Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common shares) and, within 10 business days of being requested by the Company to advise it regarding the same, certifies to the Company that such Person acquired common shares amounting to 5% or more of the Company's outstanding common shares inadvertently and who or which, together with all Affiliates thereof, thereafter does not acquire additional common shares while the Beneficial Owner, as such term is defined in or used by Regulation 13D-G as promulgated under the Exchange Act, of 5% or more of the common shares then outstanding; provided, however, that if the Person requested to so certify fails to do so within 10 business days, then a Potential Change in Control shall be deemed to have occurred immediately after such 10-Business-Day period; or (iii) any Person who becomes the Beneficial Owner of 5% or more of the common shares then outstanding due to the repurchase of common shares by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of 5% or more of the common shares then outstanding, acquires beneficial ownership of additional common shares representing 1% or more of the common shares then outstanding.

(d) For purposes of this Paragraph 10.3:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) PPL or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of PPL or any of its Affiliates (as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act), (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of PPL in substantially the same proportions as their ownership of stock of PPL.

10.4The Board of Directors or the Chief Executive Officer or any Participant may notify the Trustee in writing as promptly as practicable following the occurrence of a Change in Control or Potential Change in Control, and the Trustee shall not be charged with knowledge of such Change in Control or Potential Change in Control in the absence of written notification.

10.5The Trustee is not a party to any Plan except insofar as the Trustee has assumed duties under a Plan as specifically provided in this Trust Agreement. PPL retains the right to amend any provision of any Plan to the extent provided for in such Plan, including provisions relating to the Trustee; provided, however, that the allocation of responsibilities to the Trustee shall not be amended, altered or modified without the prior written consent of the Trustee, and no amendment to any Plan shall allocate responsibilities between the Trustee and PPL in a manner inconsistent with the terms of this Trust Agreement.

Article XI

Surplus Plan Accounts and Termination of Trust

11.1If this Trust Agreement is terminated under Article X with respect to any Plan at a time when there is a Plan Account attributable to such Plan or if the Trustee determines that certain amounts attributable to a Plan Account will not be required to make benefit payments under the Plan for which such Plan Account is maintained, the value of the Plan Account or portion thereof attributable to such Plan shall be allocated in the Trustee's discretion among the remaining Plan Accounts in a way that the Trustee believes best maximizes benefit payments under Article IV.

11.2Unless the Trust is revoked under Article X, the Trust shall not terminate until the date on which no person is or will ever be entitled to benefit payments under the Plans. Any assets remaining in the Trust shall be returned to PPL upon revocation or termination of the Trust.

Article XII

Merger or Consolidation of the Trustee

12.1Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger, reorganization or consolidation to which the Trustee may be a party, or any corporation to which all or substantially all of the trust business of the Trustee may be transferred shall be the successor of the Trustee hereunder without the execution or filing of any instrument or the performance of any further act; provided that in case of any such transfer of trust business the transferee corporation shall file with PPL written acceptance of the Trust hereby created.

Article XIII

Miscellaneous

13.1This Trust Agreement, as amended from time to time, shall be administered, construed and enforced according to the laws of the Commonwealth of Pennsylvania and in courts situated in that Commonwealth. The situs of the Trust shall be Lehigh County, Pennsylvania.

13.2This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

13.3Nothing in this Trust Agreement shall require PPL to retain any employee in its service or the service of any of its subsidiaries.

13.4The Trustee by joining in the execution of this Trust Agreement hereby signifies its acceptance of the Trust hereby created.

13.5Notwithstanding anything in this Trust Agreement to the contrary, this Trust shall terminate no later than twenty-one years after the death of the last survivor in being upon the cessation of PPL's powers under Article X of the class consisting of the persons entitled to receive benefits under the Plans.

13.6No attempt by any person entitled to benefits under the Plan to assign, alienate, anticipate, sell, transfer, pledge, encumber or place a charge upon any benefit or any installment thereof shall be recognized by the Trustee, nor shall the Trustee recognize any such attempt to attach or garnish or otherwise subject the Trust Fund or any benefit or any installment thereof to legal process, except as the Trustee may be required to do by law.

13.7Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

13.8This Trust Agreement shall be binding upon any successors or assigns of PPL and any transferee(s) of all or substantially all of PPL's assets.

13.9Any notice to the Trustee shall be sent to the following:

Wachovia Bank, N.A.

Attn: Heather E. Lineaweaver

600 Penn Street, 1^st Floor PA6450

Reading, PA 19602

Any notice to PPL shall be sent to the

PPL Corporation

Attn: James E. Abel

Two North Ninth Street

Allentown, Pennsylvania 18101

Either party hereto may designate a new representative for the purpose of receiving notices by notifying the other party in writing of the name and address of such new representative. An Accounting Party other than PPL shall notify both PPL and Trustee of the name and address of its designated representative authorized from time to time to receive notices.

IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the authorized officers of the parties hereto.

	PPL CORPORATION
ATTEST:
	By:
	Name:   James E. Abel
	Title:    Vice President-Finance and Treasurer
	Date:

	WACHOVIA BANK, N.A. AS TRUSTEE
ATTEST:
	By:
	Name:
	Title:
	Date:

APPENDIX A

Name of Plan	Designated Hereunder Effective
Robert J. Grey Severance Agreement of March 1, 2007	March 1, 2007
James H. Miller Severance Agreement of March 1, 2007	March 1, 2007
William H. Spence Severance Agreement of March 1, 2007	March 1, 2007
Paul Farr Severance Agreement of March 1, 2007	March 1, 2007
James E. Abel Severance Agreement of March 1, 2007	March 1, 2007
Joanne H. Raphael Severance Agreement of March 1, 2007	March 1, 2007
Paul E. Russell Severance Agreement of March 1, 2007	March 1, 2007
Joseph R. Schadt Severance Agreement of March 1, 2007	March 1, 2007
Ronald Schwarz Severance Agreement of March 1, 2007	March 1, 2007
Vijay Singh Severance Agreement of March 1, 2007	March 1, 2007
Edward T. Novak Severance Agreement of March 1, 2007	March 1, 2007
Jerry M. Simmons, Jr. Severance Agreement of March 1, 2007	March 1, 2007
Dennis J. Murphy Severance Agreement of March 1, 2007	March 1, 2007
Bryce L. Shriver Severance Agreement of March 1, 2007	March 1, 2007
George T. Jones Severance Agreement of March 1, 2007	March 1, 2007
Robert A. Saccone Severance Agreement of March 1, 2007	March 1, 2007
Britt T. McKinney Severance Agreement of March 1, 2007	March 1, 2007
Bradley E. Spencer Severance Agreement of March 1, 2007	March 1, 2007
Paul T. Champagne Severance Agreement of March 1, 2007	March 1, 2007
Michael E. Kroboth Severance Agreement of March 1, 2007	March 1, 2007
Clarence J. Hopf, Jr. Severance Agreement of March 1, 2007	March 1, 2007
Robert M. Geneczko Severance Agreement of March 1, 2007	March 1, 2007
David G. DeCampli Severance Agreement of March 1, 2007	March 1, 2007
Robert W. Burke, Jr. Severance Agreement of March 1, 2007	March 1, 2007
Rick L. Klingensmith Severance Agreement of March 1, 2007	March 1, 2007

EX-10.E

Exhibit 10(e)

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A. AS TRUSTEE

PPL REVOCABLE DIRECTOR NON-QUALIFIED PLANS TRUST

TABLE OF CONTENTS

ARTICLE

I	Establishment, Purpose and Nature of Trust Fund
II	Contributions to Trust Fund and Allocation to Plan Accounts
III	Cessation of Payments from Trust Fund While Company Insolvent
IV	Payments from Trust Fund While Company Solvent
V	Responsibilities of the Trustee
VI	Fees, Expenses and Taxes
VII	Accounts of the Trustee
VIII	Resignation or Removal of the Trustee
IX	Action of PPL
X	Reservation of Powers
XI	Surplus Plan Accounts and Termination of Trust
XII	Merger or Consolidation of the Trustee
XIII	Miscellaneous

TRUST AGREEMENT

Between

PPL CORPORATION

And

WACHOVIA BANK, N.A., AS TRUSTEE

This Agreement and Declaration of Trust (hereinafter called the "Trust Agreement") made as of the 1st day of January, 2007, by and between PPL Corporation, a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business at Allentown, Pennsylvania, hereinafter referred to as “PPL" or the "Company,” and Wachovia Bank, N.A., with its principal place of business at Charlotte, North Carolina, hereinafter called the "Trustee",

WITNESSETH:

WHEREAS, PPL has heretofore adopted the Directors Deferred Compensation Plan for certain of the members of its Board of Directors (such members and their designated beneficiaries where applicable being hereinafter referred to collectively as the "Participants" and individually as a "Participant") and may hereafter adopt other such plans or other agreements; and

WHEREAS, PPL has heretofore entered into a trust agreement dated April 1, 2001 between PPL, as grantor, and Wachovia Bank, as trustee, titled the PPL Director Nonqualified Plans Trust (the "Director Plans Trust"); and

WHEREAS, PPL wishes to establish this grantor trust, hereinafter called the "Trust," for the collective investment of such property as may from time to time be contributed thereto, subject only to the claims of PPL's general creditors in the event of PPL's Insolvency (as defined in Article III); and

WHEREAS, PPL wishes the Trust to be used in connection with such plans or agreements as have been designated under Article X and Appendix A of the Director Plans Trust (which plans and agreements are hereinafter called the "Plans" collectively or the "Plan" individually), although the Trust may not necessarily hold sufficient assets to satisfy all of the benefits to be provided under the Plans, and which together with the Director Plans Trust is intended to fund certain benefits provided under the Plans in connection with a "Change in Control" (as defined in Paragraph 10.3); and

WHEREAS, the Trustee is willing to hold and administer such trust assets pursuant to the terms of this Trust Agreement.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, PPL and the Trustee intending to be legally bound hereby, do covenant and agree as follows:

Article I

Establishment, Purpose and Nature of Trust Fund

1.1PPL hereby establishes with the Trustee a trust consisting of such cash and/or marketable securities as shall be paid to the Trustee with respect to the Plans pursuant to Article II, Paragraph 2.1. The Trust shall be known as the PPL REVOCABLE NONQUALIFIED DIRECTOR PLANS TRUST. The creation of this Trust is not intended to create an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974. The Trust is intended to constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

1.2The Trust shall consist of all contributions to the Trust by PPL and the earnings and losses thereon (including unrealized gains and losses), less disbursements therefrom (hereinafter called the "Trust Fund"). The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of PPL and shall be used exclusively for the uses and purposes of Participants, and general creditors as herein set forth. Participants shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be mere unsecured contractual rights of Participants against PPL. Any assets held by the Trust will be subject to the claims of PPL's general creditors under federal and state law in the event PPL becomes Insolvent.

1.3The Trust hereby established is revocable and amendable by PPL] at all times.

1.4The Trust Fund shall be held by the Trustee, subject to the reservation of powers under Paragraphs 10.1 and 10.2 of Article X, for the purpose of providing, immediately prior to a Change in Control, or at such other time or times as PPL may in its sole discretion determine, funds to the Trustee under the Director Plans Trust. The Trustee shall pay to the Director Plans Trust, on notice from PPL that the time identifiable as immediately prior to a Change in Control has occurred, all or such other amount of assets from the Trust Fund to the Director Plans Trust, as directed by PPL. Notwithstanding the foregoing, the Trust Fund shall be treated as an asset of PPL and shall remain subject to the claims of PPL's general creditors in the event of PPL becomes Insolvent.

1.5The rights, powers, titles, duties, discretions and immunities of the Trustee shall be governed solely by this Trust Agreement and applicable state and federal law.

1.6The Trust is intended to be a grantor trust, of which PPL is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, Sections 671-678, and any successor statute thereto, and shall be construed accordingly.

1.7The Director Plans Trust and any persons who may be entitled to benefit payments under the terms of the Plans shall not have any preferred claim on the Trust Fund.

1.8Notwithstanding anything else in this Agreement to the contrary: (1) the Trustee is not a party to, and has, except as expressly provided herein, no duties or responsibilities under, the Plans; (2) PPL shall be required to certify in writing to the Trustee the identity of any party or person, whether or not a fiduciary named in any Plans, which has the power to manage and control Plan assets, and the Trustee shall be entitled to rely upon such certification until notified otherwise in writing by PPL; and (3) in any case in which a provision of this Agreement conflicts with any provision in any Plans, this Agreement shall control. Notwithstanding the preceding sentence, the Trustee reserves the right to seek a judicial and/or administrative determination as to its proper course of action under this Agreement.

1.9The intent of this Trust Agreement is to provide PPL with a revocable trust that holds funds that may be available to pay to the Director Plans Trust at any time, or should a Change in Control be imminent. The Trustee under this Trust Agreement shall have no responsibility concerning the Plans except for the requirement set forth in Paragraph 1.4. Although this Trust Agreement may be funded upon the occurrence of a Potential Change in Control (as defined in Paragraph 10.3), PPL, in its sole discretion, at any time, may instruct the Trustee to return all Trust Funds to PPL, or may revoke the Trust.

Article II

Contributions to Trust Fund and Allocation to Plan Accounts

2.1Subject to the provisions of Paragraph 2.2, PPL may from time to time make, or cause to be made, such contributions to the Trust Fund of cash and/or marketable securities as it determines to be appropriate in its sole discretion and are acceptable to the Trustee, which shall be held by the Trustee for the benefit of the Director Plans Trust, subject to the reservation of powers under Article X and the claims of PPL's general creditors in the event PPL becomes Insolvent. The Trustee shall be accountable for all such contributions, but shall have no duty to determine that the amounts thereof comply with the provisions of the Plans.

2.2Upon the occurrence of a Potential Change in Control, the Chief Executive Officer of PPL (or his or her designee) may authorize a cash contribution to be made to the Trust in an amount that, in the determination of PPL, is sufficient to pay each Participant or beneficiary the benefits to which Participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date of the Change in Control assuming each Participant ceased providing services as of such date under circumstances giving rise to payment of benefits under the Plans or any other amount determined by PPL, in its sole discretion.

2.3The Trustee shall hold the Trust Fund without distinction as to principal or income as a single commingled fund. The Trustee shall advise PPL of the Fair Market Value (as defined in Paragraph 2.4 below) of assets in the Trust Fund as of the close of each calendar year of the Trust, or at such more frequent intervals as may be mutually agreed upon between PPL and the Trustee.

2.4For purposes of this Trust Agreement, "Fair Market Value" for any security shall be determined as follows:

(a)securities listed on the New York Stock Exchange, the American Stock Exchange or any other recognized exchange shall be valued at their last sale prices on the exchange on which securities are principally traded on the valuation date (NYSE-Composite Transactions or AMEX-Composite Transactions prices to prevail on any security listed on either of these exchanges as well as on another exchange); and where no sale is reported for that date, the last bid price shall be used.

(b)all other securities and assets shall be valued at their market values as fixed by the Trustee's staff regularly engaged in such activities.

Article III

Cessation of Payments from

Trust Fund While Company Insolvent

3.1The Trust Fund shall be subject to claims of general creditors of PPL in the event PPL becomes Insolvent, and at any time the Trustee has actual knowledge, or has determined, that PPL is Insolvent, the Trustee shall deliver the Trust Fund to satisfy such claims as a court of competent jurisdiction may direct. PPL shall be considered "Insolvent" for purposes of this Trust Agreement if (1) PPL is unable to pay its debts as they become due or (2) PPL is subject to a pending proceeding as a debtor or a debtor-in-possession under the federal Bankruptcy Code, 11 U.S.C. 101 et seq. (or any successor federal statute).

3.2At all times during the continuance of this Trust, as provided in Section 1.3 hereof, the principal and income of the Trust shall be subject to claims of general creditors of PPL under federal and state law as set forth below.

3.3The Board of Directors and the Chief Executive Officer of PPL shall have the duty to inform the Trustee in writing that PPL has become Insolvent and the basis on which they consider PPL to be Insolvent. If a person claiming to be a creditor of PPL alleges in writing to the Trustee that PPL has become Insolvent, the Trustee shall determine whether PPL is Insolvent and, pending such determination, the Trustee shall be excused from compliance with any instruction by PPL for payment of funds to any person.

3.4If the Board of Directors or the Chief Executive Officer of PPL informs the Trustee in writing that PPL has become Insolvent, the Trustee shall independently determine, within a reasonable time that in no event shall exceed sixty days after receipt of such notice, whether PPL is Insolvent and, pending such determination, the Trustee shall make no payments from the Trust Fund (unless otherwise required by applicable law), shall hold the Trust Fund for the benefit of PPL's general creditors, and shall resume payments from the Trust Fund only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent, if the Trustee initially determined PPL to be Insolvent).

3.5If at any time the Trustee has determined that PPL is Insolvent, the Trustee shall make no payments to Participants and shall hold the assets of the Trust for the benefit of PPL's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their beneficiaries to pursue their rights as general creditors of PPL with respect to benefits due under the Plans or otherwise.

3.6The Trustee shall permit payment of Trust Funds in accordance with Article IV of this Trust Agreement only after the Trustee has determined that PPL is not Insolvent (or is no longer Insolvent). If the Trustee discontinues payments from the Trust Fund and subsequently resumes such payments, the first payments following such discontinuance shall include the aggregate amount of all payments which would have been made under Article IV during the period of such discontinuance (together with interest based upon the daily average, as determined by the Trustee, of the Average Prime Rate Charged by Banks (Percent) as published in the Business Conditions Digest, or any successor publication, of the Social and Economic Statistics Administration, Bureau of Economic Analysis, of the U.S. Department of Commerce, or any successor governmental agency).

3.7Except as provided in Paragraph 3.3 or 3.4, or unless the Trustee has actual knowledge that PPL is Insolvent, the Trustee shall have no duty to inquire whether PPL is Insolvent. The Trustee may in all events rely on such evidence concerning PPL's insolvency as may be a furnished to the Trustee which will give the Trustee a reasonable basis for making a determination concerning PPL's insolvency.

3.8Nothing in this Trust Agreement shall in any way diminish any rights of a person to pursue his rights as a general creditor of PPL under the Plans.

Article IV

Payments from Trust Fund While Company Solvent

4.1All payments from the Trust Fund while PPL is solvent shall be made by the Trustee only as directed by PPL.

4.2PPL shall have the right and the power at all times to direct the Trustee to return to PPL or to divert to others any of the Trust assets, and the right and the power to revoke the Trust and amend this Trust Agreement at any time.

Article V

Responsibilities of the Trustee

5.1The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims (the "Prudent Man Standard of Care"); provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by PPL which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by PPL. In the event of a dispute between PPL and another party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument believed by it to be genuine and delivered by the proper party or parties. Under no circumstances shall the Trustee be liable for consequential, special, or speculative damages under the Trust Agreement even if the Trustee is advised as to the possibility thereof. It is understood and agreed that the Trustee shall be under no duty to take any action other than herein specified with respect to any securities or other property at any time deposited hereunder unless specifically agreed to by the Trustee in writing or as otherwise provided in this Trust Agreement. Subject to PPL's power of investment direction under Article X, the Trustee shall have exclusive authority and discretion to hold, manage, care for and protect the Trust Fund and shall have the following powers and discretions in addition to those conferred by law:

(a)To invest and reinvest the Trust Fund in such equities (of any classification, including common and preferred stocks), fixed income, cash, cash equivalents or other property (real, personal or mixed) and interests in investment companies and investment trusts as the Trustee shall deem advisable, excluding any obligations or security, or other property of PPL, whether or not such investments and reinvestments be authorized by any state law for the investment of Trust Funds generally;

(b)To sell, exchange, convey, transfer or dispose of, and also to grant options with respect to, any property, whether real or personal, at any time held by it by private contract or by public auction, for cash or upon credit, or partly for cash and partly upon credit, as the Trustee may deem best, and no person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity, expediency or propriety of any such sale or other disposition;

(c)To compromise, compound and settle any debt or obligation due to or from it as the Trustee and to reduce the rate of interest thereon, to extend or otherwise modify, or to foreclose upon default or otherwise enforce or act with respect to any such obligation;

(d)If directed by PPL, the Trustee shall vote as instructed by PPL, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting.

(e)To vote, in person or by general or limited proxy, any stocks or other securities at any time held in the Trust Fund, at any meeting of stockholders or security holders, in respect to any business which may come before the meeting; to exercise any options appurtenant to any stocks, bonds or other securities for the conversion thereof into other stocks, bonds or securities; to exercise or sell any conversion or subscription rights appurtenant to any stocks, bonds or other securities at any time held in the Trust Fund, and to make any and all necessary payments therefor; to join in, and to approve, or to dissent from and to oppose, any corporate act or proceeding, including any reorganization, recapitalization, consolidation, merger, dissolution, liquidation, sale of assets or other action by or plan in respect of corporations or properties, the stocks or securities of which may at any time be held in the Trust Fund; to deposit with any committee or depository, pursuant to any plan or agreement of protection, reorganization, consolidation, sale, merger, or other readjustment, any property held in the Trust Fund; and to make payment from the Trust Fund of any charges or assessments imposed by the terms of any such plan or agreement;

(f)To accept and hold any securities or other property received by it under the provisions of any of the subdivisions of this Article whether or not the Trustee would be authorized hereunder then to invest therein;

(g)To borrow money on behalf of the Trust upon such terms and conditions as the Trustee shall deem advisable to carry out the purposes of the Trust and to pledge securities or other property of the Trust Fund in repayment of any such loan;

(h)To enforce any right, obligation or claim in its discretion and in general to protect in any way the interests of the Trust Fund, either before or after default, and in case the Trustee shall, in its discretion, consider such action for the best interest of the Trust Fund, to abstain from the enforcement of any right, obligation or claim and to abandon any property, whether real or personal, which at any time may be held by the Trustee;

(i)To make, execute, acknowledge and deliver any and all deeds, leases, assignments, transfers, conveyances and any and all other instruments necessary or appropriate to carry out any powers herein granted;

(j)To cause any investments from time to time held by it hereunder to be registered in, or transferred into, its name as the Trustee or the name of its nominee or nominees, and with or without designation of fiduciary capacity, or to retain any investments unregistered or in form permitting transfer by delivery, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund;

(k)To hold any part or all of the Trust Fund uninvested;

(l)The Trustee may not invest in securities (including stock and the rights to acquire stock) or obligations issued by PPL [or an Employer as that term is defined in the Plan], except by reason of the inclusion of such securities in a broadly inclusive index, mutual fund, or collective investment medium.

Notwithstanding anything else in this Agreement to the contrary, including, without limitation, any specific or general power granted to the Trustee, including the power to invest in real property, no portion of the Trust Fund shall be invested in real estate. For this purpose, “real estate” includes, but is not limited to, any direct or indirect interest in real property, leaseholds or mineral interests.

5.2If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Trustee shall act only under the Prudent Man Standard of Care, and PPL agrees to indemnify the Trustee against the Trustee’s costs, expenses and liabilities (including, without limitation, attorney’s fees and expenses) relating thereto and to be primarily liable for such payments if the following conditions are met: (a) the Trustee shall notify PPL as soon as practicable after it has received actual notice of litigation, or when the Trustee has reached a decision to undertake litigation but prior to filing a complaint or other written notice to any party or agency, and (b) the Trustee shall at all times afford PPL the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such litigation. If PPL does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. In no event shall the Trustee have any liability or responsibility to undertake or defend any litigation unless the Trustee is reasonably assured of receiving payment of related fees and expenses. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person other than PPL the proceeds of any borrowing against such policy.

5.3The Trustee, at the expense of the Trust or PPL, may consult with legal counsel (who prior to the occurrence of a Change in Control may also be counsel for PPL generally) with respect to any of its duties or obligations hereunder. The Trustee may consult with counsel, and the Trustee shall not be deemed imprudent by reason of its taking or refraining from taking any action, prior to the occurrence of a Change in Control, in accordance with the opinion of counsel for PPL. PPL agrees to indemnify and hold the Trustee harmless from and against any loss, costs and expenses including without limitation reasonable attorneys' fees and other costs and expenses incident to any suit, action, investigation, claim or proceeding that the Trustee may incur in the administration of the Trust Fund, and this provision shall survive termination of this Trust Agreement and the Trust, provided the following conditions are met: (a) the Trustee shall act at all times under the Prudent Man Standard of Care, (b) the Trustee shall notify PPL as soon as practicable after it has received actual notice of the suit, action, investigation, claim or proceeding, and (c) the Trustee shall at all times afford PPL the reasonable opportunity to approve (which approval shall not be unreasonably withheld) the hiring or discharge of legal counsel and the settlement or other conclusion of any such matter. The Trustee shall not be required to give any bond or any other security for the faithful performance of its duties under this Trust Agreement, except such as may be required by any law which prohibits the waiver thereof.

5.4The Trustee shall not be responsible in any manner whatsoever for the correctness of the recitals of fact herein (other than recitals of fact relating solely to the Trustee and its power and authority to enter into and perform this Trust Agreement) all of which have been made by PPL solely; and the Trustee shall not be responsible or accountable in any manner whatsoever for or with respect to the validity or sufficiency of this Trust Agreement and makes no representation with respect thereto. The Trustee shall not be responsible for the sufficiency of the Trust to pay the benefits contemplated by the Plans or for the use or application by PPL of any monies held in the Trust when disbursed in conformity with this Trust Agreement.

5.5During the term of this Trust, all of the income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

5.6Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

5.7The Trustee shall not be liable for any expense, loss, claim or damage (including counsel fees) suffered by the Plan or Participant arising out of or caused by any delay in, or failure of, performance by the Trustee, in whole or in part, arising out of, or caused by, unforseeable circumstances beyond the Trustee’s control, including without limitation: acts of God, interruption, delay in, or loss (partial or complete) of electrical power or external computer (hardware or software) or communication services (including access to book-entry securities systems maintained by Federal Reserve Bank of New York and/or any clearing corporation); act of civil or military authority; sabotage; natural emergency; epidemic; war or other government actions; civil disturbance; flood, earthquake, fire, other catastrophe; strike or other labor disturbance by employees of nonaffiliates; government, judicial, or self regulatory organization order, rule or regulation; riot; energy or natural resource difficulty or shortage; and inability to obtain materials, equipment, or transportation, provided, in all cases, the Trustee has acted under the Prudent Man Standard of Care to mitigate, control, and prevent losses and expenses due to such circumstances.

5.8The Trustee shall have no responsibility with respect to: (i) the selection or monitoring of any insurance policies or insurance contracts held in the Trust or the insurers issuing such policies or contracts; or (ii) the payment of any premiums with respect to such policies or contracts.

5.9 The duties of the Trustee shall be limited to the assets held in the Trust, and the Trustee shall have no duties with respect to assets held by any other person including, without limitation, any other trustee for the Plan.

Article VI

Fees, Expenses and Taxes

6.1PPL shall pay the reasonable expenses incurred by the Trustee in or as a result of the performance of its duties hereunder, including reasonable fees and expenses for services rendered to the Trustee, and such compensation to the Trustee as may be agreed upon in writing from time to time between PPL and the Trustee.

6.2If PPL fails to pay any such expenses and compensation as provided for in Paragraphs 6.1, the Trustee shall pay them from the Trust Fund.

6.3Any taxes, including personal property taxes, income taxes, transfer taxes and other taxes of any kind whatsoever that may under any existing or future laws be assessed against or levied upon or in respect of the Trust Fund or its assets or any interest therein shall be paid by PPL. The word "taxes" in this Article VI shall be deemed to include any interest or penalties that may be levied or imposed in respect to any taxes.

Article VII

Accounts of the Trustee

7.1The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open at all reasonable times to inspection and audit by any person or persons designated by PPL. The cost of any audit if requested by PPL shall be paid by PPL.

7.2Within ninety (90) days following the close of each calendar year, the Trustee shall file with PPL a written account setting forth all investments, receipts, disbursements, and other transactions of the Trust Fund effected by it during such fiscal year including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales, and showing all cash, securities and other property held, including values at the end of such calendar year.

7.3Upon the expiration of one hundred eighty days following the filing as above provided of such account, such account shall be considered as final and binding upon PPL, its subsidiaries, directors, former directors, Participants, employees, former employees, retired employees, their beneficiaries, and the Trustee, as if settled by a court of competent jurisdiction, and the Trustee shall be forever released and discharged from any liability or accountability to anyone in connection with or arising or resulting from any of the acts or transactions shown therein, except with respect to such acts or transactions as to which PPL shall within such one hundred eighty day period file with the Trustee written objections or which involve manifest error, gross negligence, willful misconduct or fraud.

7.4Accounts of the Trustee need only be settled with PPL. Subject to any express provision of applicable law as may be in effect from time to time to the contrary, no other person or party shall be entitled to any accounting by the Trustee.

7.5Nothing contained in this Trust Agreement shall, however, preclude the Trustee from having any of its accounts settled by a court of competent jurisdiction. In any action or proceeding for settlement of the accounts of the Trustee or concerning administration of the Trust Fund, PPL and the Trustee shall be the only necessary parties thereto. To the extent provided by law, service of any notice or process upon PPL shall be deemed for all purposes service upon PPL's subsidiaries, directors, former directors, Participants, employees, former employees, and retired employees of PPL, and their beneficiaries and any final judgment in any such action or proceeding shall be binding and conclusive on PPL, employees, former employees, directors, former directors and retired employees of PPL and their beneficiaries and the Trustee.

Article VIII

Resignation or Removal of the Trustee

8.1The Trustee may be removed by PPL to the extent provided in Article X at any time upon sixty days notice in writing. The Trustee shall have the right to resign at any time by giving sixty days notice in writing to PPL, provided that such resignation shall not become effective until a successor trustee has accepted its appointment. Upon such removal or notice of resignation of the Trustee, provided the Trust is not revoked, PPL shall appoint and designate a successor Trustee, which shall be a corporate trustee qualified to conduct trust business in Pennsylvania, which is independent of and not subject to control by PPL. Such successor trustee shall qualify as such by delivering a written acceptance of the trust to PPL and the retiring Trustee, and thereupon all the provisions hereof shall relate and be applicable to such successor Trustee. Until the effective date of the assumption by the successor Trustee of its duties under this Trust Agreement, the retiring Trustee shall continue to function and be bound hereunder as trustee hereof. Upon receipt of such written acceptance the retiring Trustee shall forthwith file with PPL a written account of its acts in the same form as its annual account above provided for in Article VII from the date of its last annual account to the date of the acceptance of the Trust by the successor trustee and settlement of such account shall be accomplished as in Article VII. Upon the filing of such account, the retiring Trustee shall transfer and deliver the Trust Fund to the successor Trustee but shall be entitled to reserve therefrom and hold such assets as it may reasonably deem necessary to provide for any and all expenses and payments properly chargeable against the Trust Fund or for which the Trust Fund may be liable or to which the retiring Trustee may be entitled by way of fees and expenses in the settlement of its account. If the assets so withheld are insufficient or excessive for such purposes, the retiring Trustee shall be entitled to reimbursement for any deficiency out of the Trust Fund from the successor Trustee, or shall deliver the excess to the successor Trustee, as the case may be. To the extent permitted by law, upon the transfer of the Trust Fund as above provided and the settlement of its account, the retiring Trustee's previous annual accounts having been settled as provided in Article VII, the retiring Trustee shall thereupon be discharged from any further duty, obligation or responsibility with respect to the operation of the Trust Fund or any matter connected therewith prior to the delivery of said written acceptance except matters which relate to manifest error, gross negligence, willful misconduct or fraud.

8.2If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 8.1 hereof, by the effective date of resignation or removal under Section 8.1. If no such appointment has been made, provided PPL has not revoked the Trust, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

Article IX

Action of PPL

Any action of PPL pursuant to any of the provisions of this Trust Agreement shall be evidenced by a written notice or direction to such effect over the signature of: i) any officer or ii) other representative of PPL who shall have been certified to the Trustee by the President, Treasurer or Secretary of PPL as having such authority. The Trustee shall be fully protected in acting in accordance with such notices or directions. All communications from PPL to the Trustee shall be in writing, signed by the person designated as having such authority as PPL shall certify to the Trustee, and the Trustee shall act and be fully protected in acting in accordance with such communications.

Article X

Reservation of Powers

10.1PPL expressly reserves the powers to:

(a)remove the Trustee;

(b)direct the investment and reinvestment of the principal and income of the Trust Fund; it shall be the duty of the Trustee to act strictly in accordance with such investment directions, and any changes therein, as so communicated to the Trustee from time to time in writing. Tothe maximum extent permitted by law, the Trustee shall have no duty or responsibility (i) to advise with respect to, or inquire as to the propriety of, any such investment direction or (ii) for any investment decisions made with respect to the Trust by PPL. In the absence of investment direction, the Trustee shall invest Trust assets in any manner permitted under Section 5.1.

10.2PPL expressly reserves the powers to:

(a)modify, alter, amend, terminate or revoke, in whole or in part, this Trust Agreement and the trust hereby created to any extent and in any respect deemed advisable by PPL, through an action of PPL that is in writing duly executed and acknowledged and delivered to the Trustee; providedhowever, that the rights, duties, powers, liabilities or immunities of the Trustee hereunder shall not be changed without its written consent, except as provided upon the Trustee's removal in Article VIII;

(b)withdraw from the Trust Fund any property forming a part of the Trust Fund, any such withdrawal shall be considered a revocation of this Trust solely with respect to such property;

(c)reallocate amounts among Plan Accounts in the Trust Fund;

(d)require the Trustee to furnish such information as may be reasonably requested in regard to the operations of the Trust Fund and the investment thereof;

(e)contribute to the Trust Fund property other than cash or marketable securities to the extent not expressly prohibited by the Plans or within the terms of this Trust, if acceptable to the Trustee.

10.3For purposes of this Trust Agreement, a Change in Control shall be deemed to have occurred

(a)if one of the following events occurs:

(I) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board of Directors and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company's shareowners was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(II) any Person becomes the Beneficial Owner, as defined below, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors;

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or other entity, other than (I) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or at least 60% of the combined voting power of the securities of such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (excluding in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities;

(IV) the shareowners of the Company approve a plan of complete liquidation or dissolution of the Company; or

(V) the Board of Directors adopts a resolution to the effect that a "Change in Control" has occurred or is anticipated to occur.

(b)For purposes of this Trust Agreement, a "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II) the Company or any Person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control;

(III) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred; or

(IV) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors.

Notwithstanding the foregoing, a "Potential Change in Control" shall not be deemed to occur if (i) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares but less than 20% and such Person has reported or is required to report such ownership on Schedule 13G under the Securities Exchange Act of 1934 (the "Exchange Act") (or any comparable or successor report); (ii) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares and such Person has reported or is required to report such ownership under Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common shares) and, within 10 business days of being requested by the Company to advise it regarding the same, certifies to the Company that such Person acquired common shares amounting to 5% or more of the Company's outstanding common shares inadvertently and who or which, together with all Affiliates thereof, thereafter does not acquire additional common shares while the Beneficial Owner, as such term is defined in or used by Regulation 13D-G as promulgated under the Exchange Act, of 5% or more of the common shares then outstanding; provided, however, that if the Person requested to so certify fails to do so within 10 business days, then a Potential Change in Control shall be deemed to have occurred immediately after such 10-Business-Day period; or (iii) any Person who becomes the Beneficial Owner of 5% or more of the common shares then outstanding due to the repurchase of common shares by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of 5% or more of the common shares then outstanding, acquires beneficial ownership of additional common shares representing 1% or more of the common shares then outstanding.

(c)For purposes of this Paragraph 10.3:

"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) PPL or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of PPL or any of its Affiliates (as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act), (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of PPL in substantially the same proportions as their ownership of stock of PPL.

10.4The Board of Directors or the Chief Executive Officer may notify the Trustee in writing as promptly as practicable following the occurrence of a Change in Control or Potential Change in Control, and the Trustee shall not be charged with knowledge of such Change in Control or Potential Change in Control in the absence of written notification.

Article XI

Surplus Plan Accounts and Termination of Trust

Unless the Trust is terminated or revoked under Article X, the Trust shall not terminate until the date that the Director Plans Trust terminates.

Article XII

Merger or Consolidation of the Trustee

Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger, reorganization or consolidation to which the Trustee may be a party, or any corporation to which all or substantially all of the trust business of the Trustee may be transferred shall be the successor of the Trustee hereunder without the execution or filing of any instrument or the performance of any further act; provided that in case of any such transfer of trust business the transferee corporation shall file with PPL written acceptance of the Trust hereby created.

Article XIII

Miscellaneous

13.1This Trust Agreement, as amended from time to time, shall be administered, construed and enforced according to the laws of the Commonwealth of Pennsylvania and in courts situated in that Commonwealth. The situs of the Trust shall be Lehigh County, Pennsylvania.

13.2This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

13.3Nothing in this Trust Agreement shall require PPL to retain any director or employee in its service or the service of any of its subsidiaries.

13.4The Trustee by joining in the execution of this Trust Agreement hereby signifies its acceptance of the Trust hereby created.

13.5Notwithstanding anything in this Trust Agreement to the contrary, this Trust shall terminate no later than twenty one years after the death of the last survivor in being upon the cessation of PPL's powers under Article X of the class consisting of the persons entitled to receive benefits under the Plans.

13.6No attempt by any person entitled to benefits under the Plans to assign, alienate, anticipate, sell, transfer, pledge, encumber or place a charge upon any benefit or any installment thereof shall be recognized by the Trustee, nor shall the Trustee recognize any such attempt to attach or garnish or otherwise subject the Trust Fund or any benefit or any installment thereof to legal process, except as the Trustee may be required to do by law.

13.7Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.

13.8This Trust Agreement shall be binding upon any successors or assigns of PPL and any transferee(s) of all or substantially all of PPL's assets.

13.9Any notice to the Trustee shall be sent to the following:

Wachovia Bank, N.A.

Attn: Heather E. Lineaweaver

600 Penn Street, 1^st Floor PA6450

Reading, PA 19602

Any notice to PPL shall be sent to the

PPL Corporation

Attn: James E. Abel

Two North Ninth Street

Allentown, Pennsylvania 18101

Either party hereto may designate a new representative for the purpose of receiving notices by notifying the other party in writing of the name and address of such new representative.

IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the authorized officers of the parties hereto.

	PPL CORPORATION
ATTEST:
	By:
	Name:   James E. Abel
	Title:    Vice President-Finance and Treasurer
	Date:

	WACHOVIA BANK, N.A. AS TRUSTEE
ATTEST:
	By:
	Name:
	Title:
	Date:

EX-10.F

Exhibit 10(f)

AMENDMENT NO. 3

TO

PPL CORPORATION

INCENTIVE COMPENSATION PLAN

WHEREAS, PPL Corporation, (“PPL”) has adopted the PPL Corporation Incentive Compensation Plan (“Plan”), effective January 1, 1987; and

WHEREAS, the Plan was amended and restated effective January 1, 2003; and subsequently amended by Amendment No. 1 and 2; and

WHEREAS, PPL desires to further amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

I.Effective January 1, 2007, Section 2(o) is amended to read:

SECTION 2. DEFINITIONS.

(o) “Fair Market Value” means the closing sale price of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the date as of which Fair Market Value is being determined or, if no Common Stock is traded on the date as of which Fair Market Value is being determined, Fair Market Value shall be the closing price of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the next preceding day on which the Common Stock was traded.

II.Except as provided for in this Amendment No. 3, all other provisions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, this Amendment No. 3 is executed this day of                                     , 2007.

PPL SERVICES CORPORATION		PPL CORPORATION
By:	__________________________________ John R. Biggar Executive Vice President and Chief Financial Officer	By:	__________________________________ John R. Biggar Executive Vice President and Chief Financial Officer

EX-10.G

Exhibit 10(g)

AMENDMENT NO. 3

TO

PPL CORPORATION INCENTIVE

COMPENSATION PLAN FOR KEY EMPLOYEES

WHEREAS, PPL Corporation, (“PPL”) has adopted the PPL Corporation Incentive Compensation Plan for Key Employees (“Plan”), effective January 1, 1997; and

WHEREAS, the Plan was amended and restated effective January 1, 2003, and subsequently amended by Amendment No. 1 and 2; and

WHEREAS, PPL desires to further amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

I.Effective January 1, 2007, Section 2(o) is amended to read:

SECTION 2. DEFINITIONS.

(o) "Fair Market Value" means the closing sale price of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the date as of which Fair Market Value is being determined or, if no Common Stock is traded on the date as of which Fair Market Value is being determined, Fair Market Value shall be the closing price of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the next preceding day on which the Common Stock was traded.

II.Except as provided for in this Amendment No. 3, all other provisions of the Plan shall remain in full force and effect.

IN WITNESS WHEREOF, this Amendment No. 3 is executed this day of ____________________, 2007.

PPL SERVICES CORPORATION		PPL CORPORATION
By:	__________________________________ John R. Biggar Executive Vice President and Chief Financial Officer	By:	__________________________________ John R. Biggar Executive Vice President and Chief Financial Officer

EX-10.H

Exhibit 10(h)

RETENTION AGREEMENT

THIS RETENTION AGREEMENT, effective as of _________, is made and entered into between PPL Corporation ("PPL") and ______________ (the "Executive").

WHEREAS, PPL recognizes the need to develop and retain the Executive; and

WHEREAS, PPL has determined that certain steps should be taken to encourage the Executive to remain with PPL;

WHEREAS, the Executive and PPL have entered into a Retention Agreement effective as of _______________ (the prior Retention Agreement), which the Executive and PPL desire to terminate, in its entirety, effective as of the date hereof, and in lieu thereof, enter into this Retention Agreement;

NOWTHEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound, PPL and the Executive agree as follows:

SECTION 1. DEFINITIONS.

The following definitions are applicable to this Retention Agreement:

1.1 “Affiliated Company” or “Affiliated Companies” means any parent or majority or 50% owned subsidiaries of PPL (or companies, limited liability companies or other legal entities under common control with PPL) including entities that are members of the same controlled group of corporations (within the meaning of Section 1563(a) of the Code) as PPL.

1.2 “Board” means the Board of Directors of PPL.

1.3 “Code” means the Internal Revenue Code of 1986, as may be amended from time to time.

1.4 “Committee” means two or more non-employee directors, unless otherwise determined by the Board, who have been designated by the Board to act as the Committee and qualify as non-employee directors under the Exchange Act.

1.5 “Common Stock” means the common stock of PPL.

1.6 “Disability” or “Disabled” means the inability of the Executive to perform each and every duty pertaining to the Executive's regular occupation by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six months.

1.7 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. Reference in this Retention Agreement to any section of the Exchange Act shall be deemed to include any amendments or successor provisions to such section and any rules promulgated thereunder.

1.8 “Fair Market Value” means the average of the high and low sale prices of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the date as of which Fair Market Value is being determined or, if no Common Stock is traded on the date as of which Fair Market Value is being determined, Fair Market Value shall be the average of the high and low sale prices of the Common Stock as reflected in the New York Stock Exchange Composite Transactions on the next preceding day on which the Common Stock was traded.

1.9 "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, a Person shall not include (i) PPL or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of PPL or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of PPL in substantially the same proportions as their ownership of stock of PPL.

1.10 “Termination for Cause” means the termination by PPL or an Affiliated Company of the Executive’s employment due to the willful violation of any PPL or an Affiliated Company policy (including PPL’s Standards of Conduct and Integrity or any successor thereto), violation of any lawful direction of PPL or an Affiliated Company, gross negligence in the performance of duties, or commission of a felony.

SECTION 2. RESTRICTED STOCK AWARDS

2.1 In order to induce the Executive to remain in the employ of PPL or an Affiliated Company, the Committee has authorized an award under Section 11 of the PPL Corporation Incentive Compensation Plan [for Key Employees] (the “Award”) to the Executive of _0,000 shares of Common Stock (“Shares”) with a restriction period that will lapse, unless the restrictions lapse sooner or later pursuant to Section 2.2 or 2.3 of this Retention Agreement, on [_date______] (the “Lapse Date”), provided the Executive has remained in continuous employment with PPL or an Affiliated Company until such date. Such Award shall constitute a "retention agreement amount" in the Executive's Severance Agreement concerning change in control.

2.2 In the event of the Executive's death or Disability while in the employ of PPL or an Affiliated Company prior to the Lapse Date, the Award will be prorated by multiplying the amount of shares that would have been free of restriction at the Lapse Date by a fraction, the numerator of which will be the years of actual service of the Executive from the date of the Award up to the date of death or Disability, and the denominator of which will be the number of years of service the Executive would have had if the Executive had maintained active employment from the date of the Award until the Lapse Date.

2.3 The restrictions on the Award shall lapse and the Shares underlying the Award will become nonforfeitable if PPL has a "Change in Control," as defined in the Executive's Severance Agreement concerning change in control, and, on or subsequent to such "Change in Control," the Executive's employment is terminated involuntarily but not as a Termination for Cause.

2.4As a condition of receiving the Award, the Executive shall agree in writing to notify PPL within 30 days of the date of execution of this Retention Agreement whether the Executive has made an election under Section 83(b) of the Code to report the value of the Shares as income on the date of the grant. An Award of Shares shall be restricted as provided herein. The Shares shall be issued without the payment of consideration by the Executive. The certificates for the Shares shall be issued in the name of the Executive to whom the Award is made, shall be retained by PPL on behalf of the Executive (together with a stock power endorsed in blank) and shall bear a restrictive legend prohibiting the sale, transfer, pledge or hypothecation of the Shares until the Lapse Date. The Committee may also impose such other restrictions and conditions on the Shares as it deems appropriate.

On the Lapse Date, if all conditions in this Retention Agreement have been met, all restrictions on the Award will expire and new certificates representing the Shares will be issued without the restrictive legend described in Section 5.11. As a condition precedent to the receipt of these new certificates, the Executive (or the Executive's designated beneficiary or personal representative) will agree to make payment to PPL or an Affiliated Company of the amount of any federal, state or local taxes, payable by the Executive, which are required to be withheld by PPL or an Affiliated Company with respect to the Award.

SECTION 3.FORFEITURE OF AWARD

3.1 The Executive shall forfeit all rights to the Award if the Executive retires or resigns employment with PPL or an Affiliated Company prior to the Lapse Date, unless, in the case of a resignation, the Executive resigns to immediately assume, and does assume, another position with PPL or an Affiliated Company.

3.2 If the Executive's employment ends as a result of a Termination for Cause, the Executive shall forfeit all rights to the Award.

3.3 Any Shares which are forfeited hereunder will be transferred to PPL.

SECTION 4. MISCELLANEOUS PROVISIONS.

4.1 Nontransferability. No benefit or right provided under this Retention Agreement shall be subject to alienation or assignment by an Executive (or by any person entitled to such benefit pursuant to the terms of the Retention Agreement) or subject to attachment or other legal process of whatever nature. Any attempted alienation, assignment or attachment shall be void and of no effect. Payment shall be made only to the Executive entitled to receive the same or to the Executive's authorized legal representative. PPL and all Affiliated Companies will observe the terms of this Retention Agreement unless and until ordered to do otherwise by a state or federal court. As a condition of participation, each Executive agrees to hold PPL and all Affiliated Companies harmless from any claim that arises out of PPL's or an Affiliated Company's obeying any such order whether such order affects a judgment of such court or is issued to enforce a judgment or order of another court.

4.2 No Employment Right. Neither this Retention Agreement nor any action taken hereunder shall be construed as giving any right to be retained as an employee of PPL or any Affiliated Company.

4.3Tax Withholding. PPL may require, as a condition of delivery of the Award, that the Executive remit an amount sufficient to satisfy all federal, state and local tax withholding requirements related thereto. In addition, PPL may deduct from any salary or other payment due to such Executive, an amount sufficient to satisfy all federal, state and local tax withholding requirements related to the Award. Without limiting the generality of the foregoing, the Executive may elect to satisfy all or part of the foregoing withholding requirements by delivery of unrestricted shares of Common Stock owned by the Executive for at least six months (or such other period as PPL may determine), having a Fair Market Value (determined as of the date of such delivery by Executive) equal to all or part of the amounts to be so withheld. As a condition of accepting such delivery, PPL may require the Executive to furnish an opinion of counsel acceptable to PPL to the effect that such delivery will not result in the Executive incurring any liability under Section 16(b) of the Exchange Act. Alternatively, PPL may permit any such delivery to be made by withholding certain shares of the Award from the shares otherwise issuable pursuant to the Award giving rise to the tax withholding obligation (in which event the shares shall be valued at their Fair Market Value on the date when the withholding taxes are otherwise due).

4.4Government and Other Regulations. The obligation of PPL to make payment for the Award shall be subject to all applicable laws, rules and regulations, and to such approvals by any government agencies.

4.5 Changes in Capital Structure. In the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization, combination or exchange of shares or other similar changes in the Common Stock, appropriate adjustments shall be made to the number and/or kind of shares awarded under the Award, as may be determined by the Committee in its sole discretion. Such adjustments shall be conclusive and binding for all purposes. Additional Shares issued to the Executive as the result of any such change shall bear the same restrictions as the shares of Common Stock to which they relate. Without limiting the generality of the foregoing, in connection with a change in capital structure, the Committee may provide, in its sole discretion, for the cancellation of any outstanding Awards in exchange for payment in cash or other property of the Fair Market Value (on the date of such exchange) of the Shares covered by such Awards.

4.6Company Successors. In the event PPL becomes a party to a merger, consolidation, sale of substantially all of its assets or any other corporate reorganization in which PPL will not be the surviving corporation or in which the holders of the Common Stock will receive securities of another corporation, then such other corporation shall assume the rights and obligations of PPL under this Retention Agreement.

4.7 Governing Law. All matters relating to this Retention Agreement and to the Award granted hereunder shall be governed by the laws of the Commonwealth of Pennsylvania without regard to its conflict of laws principles.

4.8Relationship to Other Benefits. The Award shall not be taken into account in determining any benefits under any pension, retirement, profit sharing, disability or group insurance plan of PPL or any Affiliated Company except as may be required by federal tax law and regulation or to meet other applicable legal requirements.

4.9 Dividends and Voting Rights. Subject to the restrictions set forth in this Retention Agreement, the Executive shall possess all incidents of ownership of the Shares granted hereunder, including the right to receive dividends with respect to such Shares and the right to vote such Shares.

4.10 Administration. The Committee shall have final authority to interpret and construe this Retention Agreement and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Executive and his legal representative in respect of any questions arising under this Retention Agreement. The Committee shall have the authority to delegate any and all of its authority under this Retention Agreement to any employee or group of employees of PPL or an Affiliated Company.

4.11 Certificate; Restrictive Legend. The Executive agrees that any certificate issued for Shares prior to the lapse of any outstanding restrictions relating thereto shall be inscribed with the following legend:

This certificate and the shares of stock represented hereby are subject to the terms and conditions, including forfeiture provisions and restrictions against transfer (the "Restrictions"), contained in the Retention Agreement entered into between the registered owner and PPL. Any attempt to dispose of these shares in contravention of the Restrictions, including by way of sale, assignment, transfer, pledge, hypothecation or otherwise, shall be null and void and without effect.

4.12 Entire Agreement. [The prior Retention Agreement effective as of __________________ is hereby terminated and void.] This Retention Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersedes all prior communications, representations and negotiations in respect thereto.

4.13 Titles and Headings. The titles and headings of the sections in this Retention Agreement are for convenience of reference only, and in the event of any conflict, the text of the Retention Agreement, rather than such titles or headings, shall control.

PPL CORPORATION
By:	__________________________________ James H. Miller Chairman/President and CEO	__________________________________ Date
	__________________________________ Executive	__________________________________ Date

Individual Information for Named Executive Officers under Retention Agreements

Named Executive Officer	Retention Share Amount	Restriction Lapse Date
James H. Miller	60,000 Shares	October 1, 2008
Paul T. Champagne	60,000 Shares	May 23, 2018
Bryce L. Shriver	52,500 Shares	January 28, 2008
Paul A. Farr	40,000 Shares	April 27, 2027

EX-10.I

Exhibit 10(i)

AGREEMENT

THIS AGREEMENT, effective as of _______________, ____, is made by and between PPL Corporation, a Pennsylvania corporation and _______________ (the "Executive").

WHEREAS, the Company considers it essential to the best interests of its shareowners to foster the continued employment of key management personnel; and

WHEREAS, the Board of Directors of the Company (the "Board") recognizes that, as is the case with many publicly-held corporations, the possibility of a Change in Control (as defined in the last Section hereof) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareowners; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

WHEREAS, the Executive and the Company have entered into a Severance Agreement effective as of __________________ (the “Prior Severance Agreement”), which the Executive and the Company desire to terminate, in its entirety, effective as of the date hereof, and in lieu thereof enter into this Agreement;

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2008; provided, however, that commencing on January 1, 2008 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, either the Company or the Executive gives at least 15 months advance notice of termination by, not later than September 30 of the year preceding the year in which the Term is then scheduled to expire, giving notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than thirty-six (36) months beyond the month in which such Change in Control occurred. Notwithstanding the foregoing, and subject to any extensions pursuant to Section 7.3, in the event that prior to the occurrence of a Change in Control or Potential Change in Control, the Executive's employment is terminated for any reason then this Agreement shall terminate as of the date that the Executive's employment is terminated.

3. Company's Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive's employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed to in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4. The Executive's Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) the last day of the Potential Change in Control Period, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive's employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive's employment for any reason.

5. Compensation Other Than Severance Payments.

5.1 Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive's full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive's employment is terminated by the Company for Disability.

5.2 If the Executive's employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive (i) the Executive's full base salary through the Date of Termination at the rate in effect immediately prior to the Date of Termination, or if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company's compensation or benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination, or if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, (ii) the value of any annual bonus or cash incentive plan payment that would have been paid for service in the final calendar year of employment, as if 100% of target goals were achieved, but prorated by multiplying by a fraction equal to the number of full calendar months of service completed divided by 12, and (iii) the value of any Restricted Stock Units that would have been awarded for service in the final calendar year of employment, as if 100% of target goals were achieved, but prorated by multiplying by a fraction equal to the number of full calendar months of service completed divided by 12.

5.3 If the Executive's employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive's normal post-termination compensation and benefits due the Executive as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

6. Severance Payments.

6.1 The Company shall pay the Executive the payments, and provide the Executive the benefits, described in this Section 6.1 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the Term, in addition to the payments and benefits described in Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death, Disability or Retirement, or (iii) by the Executive without Good Reason. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason if (A) the Executive's employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control or (B) if the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (C) the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive including any payments under the Separation Policy (GP401) or any similar plan, policy or procedure or arrangement, if eligible, or the Executive’s Prior Severance Agreement or any employment agreement or arrangement between the Executive and the Company, to the extent provided in Section 11 of this Agreement, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to three times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the highest annual bonus earned by the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of any of the last three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason (including as an amount so paid any amount that would have been so paid but for the Executive's request that the amount not be paid), less (iii) the sum of the values on the date of the termination of Executive's employment, of the shares subject to the Retention Agreement entered into between the parties effective [enter date] ("Retention Agreement") that become nonforfeitable as a result of such termination of employment and any amounts designated under any other agreement or agreements with Executive as "Retention Agreement Amounts" for purposes of this Agreement. For purposes of determining the value of the annual bonus earned by the Executive in any calendar year, the value of any restricted stock awards or stock options earned by the Executive in any such year shall not be included in the value of the annual bonus for such year;

(B) For the thirty-six (36) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents, life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control which reduction constitutes Good Reason) or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after-tax cost to the Executive than the after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method (after taking into account the effect of such method on the calculation of "parachute payments" pursuant to Section 6.2 hereof), such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the thirty-six (36) month period following the Date of Termination (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

(C) Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation that has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) to the extent not otherwise paid or deferred at the Executive's election, pursuant to the terms of the applicable plan, a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the level that would produce the maximum award, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period.

(D) In addition to the retirement benefits to which the Executive may be entitled under each Pension Plan, if any, or any successor plan thereto, the Company shall pay the Executive a lump sum amount, in cash, equal to the excess of (i) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the third anniversary of the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive would have accrued under the terms of all Pension Plans (without regard to any amendment to any Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive were fully vested thereunder and had accumulated after the Date of Termination thirty-six (36) additional months of service credit thereunder (and if any Pension Plan imposes a maximum number of months for purposes of accrual of benefits thereunder, such thirty-six (36) additional months shall be reduced, but not below zero, to the extent necessary so that the total number of months of service credited thereunder, including the number of months credited pursuant to this Section 6.1(D), does not exceed such maximum number of months) and had been credited under each Pension Plan during such period with compensation equal to the Executive's compensation (as defined in such Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, over (ii) the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined as a straight life annuity commencing at the date (but in no event earlier than the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which the Executive had accrued pursuant to the provisions of the Pension Plans as of the Date of Termination. For purposes of this Section 6.1(D), "actuarial equivalent" shall be determined using the same assumptions utilized under the PPL Supplemental Executive Retirement Plan or any successor plan, immediately prior to the Date of Termination, or, if more favorable to the Executive, immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

(E) If the Executive would have become entitled to benefits under the Company's post-retirement health care or life insurance plans, as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive's employment terminated at any time during the period of thirty-six (36) months after the Date of Termination, the Company shall provide such post-retirement health care or life insurance benefits to the Executive and the Executive's dependents commencing on the later of (i) the date on which such coverage would have first become available and (ii) the date on which benefits described in subsection (B) of this Section 6.1 terminate.

(F) The Company shall provide the Executive with outplacement services suitable to the Executive's position for a period of three years or, if earlier, until the first acceptance by the Executive of an offer of employment.

6.2(A) Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment (whether pursuant to the terms of this Agreement, the Retention Agreement, or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (such payments or benefits, excluding the Gross-Up Payment, being hereinafter referred to as the "Total Payments") will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.

(B) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as "parachute payments" (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount (within the meaning of Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, (x) the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes, and (y) the Executive shall be deemed to be subject to the loss of itemized deductions and personal exemptions to the maximum extent provided by the Code for each dollar of incremental income.

(C) In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive, to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code). In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

6.3 The payments provided in subsection 6.1(A), (C) and (D) hereof and Section 6.2 hereof shall be made not later than the fifth day following the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of Section 6.1 hereof); provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive, or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment hereunder or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.

7. Termination Procedures and Compensation During Dispute.

7.1Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2Date of Termination. "Date of Termination", with respect to any purported termination of the Executive's employment after a Change in Control and during the Term, shall mean (i) if the Executive's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive's duties during such thirty (30) day period), and (ii) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4Compensation During Dispute. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement.

8. No Mitigation. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 or Section 7.4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than in Section 6.1(B) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9. Successors; Binding Agreement.

9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate.

10. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, to the Executive at the last known address maintained in the Company's personnel records, and to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

PPL Corporation

Two North Ninth Street

Allentown, Pennsylvania 18101

Attention: Corporate Secretary

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof, which have been made by either party, including but not limited to, the Prior Severance Agreement; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement that by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

14. Settlement of Disputes; Arbitration. The Board shall make all determinations as to the Executive's right to benefits under this Agreement. Any denial by the Board of a claim for benefits under this Agreement shall be stated in writing and delivered or mailed to the Executive and such notice shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon, and shall be written in a manner that may be understood without legal or actuarial counsel. In addition, the Board shall afford a reasonable opportunity to the Executive for a review of the decision denying the Executive's claim and, in the event of continued disagreement, the Executive may appeal within a period of 60 days after receipt of notification of denial. Failure to perfect an appeal within the 60-day period shall make the decision conclusive. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Philadelphia, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

15. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)"Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code.

(C)"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(D)"Board" shall mean the Board of Directors of the Company.

(E)"Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (a) no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company, and (b) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

(F)"Change in Control" means the occurrence of any one of the following events:

(I) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individ-uals who, on the date hereof, constitute the Board and any new direc-tor (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of direc-tors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareowners was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previ-ously so approved or recommended;

(II) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors;

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or other entity, other than (I) a merger or con-solidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation contin-uing to represent (either by remaining outstanding or by being con-verted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or at least 60% of the combined voting power of the securities of such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (excluding in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities;

(IV) the shareowners of the Company approve a plan of complete liquidation or dissolution of the Company; or

(V) the Board adopts a resolution to the effect that a "Change in Control" has occurred or is anticipated to occur.

(G)"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

(H)"Company" shall mean PPL Corporation and, except in determining, under Section 15(E) hereof, whether or not any Change in Control of the Company has occurred in connection with such succession, shall include its subsidiaries and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. For purposes of this Agreement, the Executive's employment by (including termination of such employment) and compensation from any subsidiary of the Company shall be deemed employment by and compensation from the Company.

(I)"Date of Termination" shall have the meaning set forth in Section 7.2 hereof.

(J)"Disability" shall be deemed the reason for the termination by the Company of the Executive's employment, if, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive's duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive's duties.

(K)"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.

(L)"Excise Tax" shall mean any excise tax imposed under section 4999 of the Code.

(M)"Executive" shall mean the individual named in the first paragraph of this Agreement.

(N)"Good Reason" for termination of the Executive's employment with the Company by such Executive shall mean the occurrence (without the Executive's express written consent which specifically references this Agreement) after a Change in Control, or prior to a Change in Control under the circumstances described in clauses (B) and (C) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a "Change in Control" as references to a "Potential Change in Control"), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (I), (V), (VI), or (VII) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer or key employee of the Company or a substantial adverse alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control;

(II) a reduction by the Company of the Executive's annual base salary as in effect on the date of this Agreement, or as the same may be increased from time to time, except for across-the-board decreases uniformly affecting management, key employees and salaried employees of the Company or the business unit in which the Executive is then employed;

(III) the relocation of the Executive's principal work location to a location more than 30 miles from the vicinity of such work location immediately prior to a Change in Control or the Company's requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company's business to an extent substantially consistent with the Executive's present business travel obligations;

(IV) the failure by the Company to pay to the Executive any portion of the Executive's current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due, except for across-the-board compensation deferrals uniformly affecting management, key employees and salaried employees of the Company or the business unit in which the Executive is then employed;

(V) the failure by the Company to continue in effect any compensation or benefit plan in which the Executive participates immediately prior to a Change in Control which is material to the Executive's total compensation, or any substitute plans adopted prior to a Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive's participation relative to other participants, as existed immediately prior to the Change in Control;

(VI) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company's pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to a Change in Control, except for across-the-board changes to any such plans uniformly affecting all participants in such plans, the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy at the time of the Change in Control; or

(VII) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof. For purposes of this Agreement, no such purported termination shall be effective.

The Executive's right to terminate his or her employment with the Company for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed correct unless the Company established to the Board by clear and convincing evidence that Good Reason does not exist.

(O)"Notice of Termination" shall have the meaning stated in Section 7.1 hereof.

(P)"Pension Plan" shall mean any tax-qualified, supplemental or excess defined benefit pension plan maintained by the Company and any other agreement entered into between the Executive and the Company which is designed to provide the Executive with supplemental retirement benefits.

(Q)"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, a Person shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareowners of the Company in substantially the same proportions as their ownership of stock of the Company.

(R)"Potential Change in Control" shall be deemed to have occurred if the conditions or events set forth in any one of the following paragraphs shall have been satisfied or shall have occurred:

(I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II) the Company or any Person publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control;

(III) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(IV) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors.

Notwithstanding the foregoing, a "Potential Change of Control" shall not be deemed to occur if (i) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares but less than 20% and such Person has reported or is required to report such ownership on Schedule 13G under the Exchange Act (or any comparable or successor report); (ii) a Person acquired such beneficial ownership of 5% or more of the Company's outstanding common shares and such Person has reported or is required to report such ownership under Schedule 13D under the Exchange Act (or any comparable or successor report), which Schedule 13D does not state any intention to or reserve the right to control or influence the management or policies of the Company or engage in any of the actions specified in Item 4 of such Schedule (other than the disposition of the common shares) and, within 10 business days of being requested by the Company to advise it regarding the same, certifies to the Company that such Person acquired common shares amounting to 5% or more of the Company's outstanding common shares inadvertently and who or which, together with all Affiliates thereof, thereafter does not acquire additional common shares while the Beneficial Owner, as such term is defined in or used by Regulation 13D-G as promulgated under the Exchange Act, of 5% or more of the common shares then outstanding; provided, however, that if the Person requested to so certify fails to do so within 10 business days, then a Potential Change of Control shall be deemed to have occurred immediately after such 10-Business-Day period; or (iii) any Person who becomes the Beneficial Owner of 5% or more of the common shares then outstanding due to the repurchase of common shares by the Company unless and until such Person, after becoming aware that such Person has become the Beneficial Owner of 5% or more of the common shares then outstanding, acquires beneficial ownership of additional common shares representing 1% or more of the common shares then outstanding.

(S)"Potential Change in Control Period" shall mean the period commencing on the occurrence of a Potential Change in Control and ending upon the occurrence of a Change in Control or, if earlier (i) with respect to a Potential Change in Control occurring pursuant to Section 15(R)(I), immediately upon the abandonment or termination of the applicable agreement, (ii) with respect to a Potential Change in Control occurring pursuant to Section 15(R)(II), immediately upon a public announcement by the applicable party that such party has abandoned its intention to take or consider taking actions which if consummated would result in a Change in Control or (iii) with respect to a Potential Change in Control occurring pursuant to Section 15(R)(III) or (IV), upon the one year anniversary of the occurrence of such Potential Change in Control (or such earlier date as may be determined by the Board).

(T)"Retirement" shall be deemed the reason for the termination by the Executive of the Executive's employment if such employment is terminated in accordance with the Company's retirement policy, including early retirement, generally applicable to its salaried employees.

(U)"Severance Payments" shall have the meaning set forth in Section 6.1 hereof.

(V)"Term" shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(W)"Total Payments" shall mean those payments described in Section 6.2 hereof.

PPL CORPORATION
By:	__________________________________ James H. Miller Chairman/President and CEO	__________________________________ Date
	__________________________________ [Name of Executive]	__________________________________ Date

EX-12.A

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,
	2007		2006 (d)		2005 (d)		2004 (d)			2003 (d)			2002 (d)
Fixed charges, as defined:
Interest on long-term debt	$	491	$	482	$	465	$	491		$	417		$	486
Interest on short-term debt and   other interest		20		13		29		20			25			70
Amortization of debt discount,   expense and premium - net		10		11		23		8			41			25
Estimated interest component of   operating rentals		26		29		32		34			45			38
Preferred securities distributions of   subsidiaries on a pre-tax basis		24		24		5		5			45			79
Total fixed charges (a)	$	571	$	559	$	554	$	558		$	573		$	698
Earnings, as defined:
Net income (b)	$	807	$	850	$	703	$	682		$	791		$	401
Preferred security dividend requirements		18		14		2		2			29			66
Less undistributed income (loss)   of equity method investments		1		3		2		(1	)		(5	)		(9	)
		824		861		703		685			825			476
Add:
Income taxes		248		268		128		213			163			225
Total fixed charges as above   (excluding capitalized interest,   preferred security distributions of   subsidiaries on a pre-tax basis and   interest expense related to discontinued   operations)		487		481		512		525			500			579
Total earnings	$	1,559	$	1,610	$	1,343	$	1,423		$	1,488		$	1,280
Ratio of earnings to fixed charges		2.7		2.9		2.4		2.6			2.6			1.8
Ratio of earnings to combined fixed charges   and preferred stock dividends (c)		2.7		2.9		2.4		2.6			2.6			1.8

(a)	Interest on unrecognized tax benefits is not included in fixed charges.
(b)	Net income excludes minority interest, income (loss) from discontinued operations and the cumulative effects of changes in accounting principles.
(c)	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.
(d)	Certain line items have been revised due to the planned sale of the Latin American businesses and the related reclassification of prior period operating results to "(Loss) Income from Discontinued Operations."

EX-12.B

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,
	2007		2006 (c)			2005 (c)		2004 (c)			2003 (c)		2002 (c)
Fixed charges, as defined:
Interest on long-term debt	$	315	$	296		$	259	$	255		$	149	$	169
Interest on short-term debt and   other interest		21		16			26		23			25		52
Amortization of debt discount,   expense and premium - net		2		(1	)		7		(6	)		31		9
Estimated interest component of   operating rentals		15		15			15		17			31		21
Preferred securities distributions of   subsidiaries on a pre-tax basis												8		12
Total fixed charges (a)	$	353	$	326		$	307	$	289		$	244	$	263
Earnings, as defined:
Net income (b)	$	635	$	682		$	566	$	634		$	784	$	171
Preferred security dividend requirement												5		9
Less undistributed income (loss)   of equity method investments		4		4			2							(8	)
		631		678			564		634			789		188
Add:
Income taxes		158		183			82		217			178		280
Total fixed charges as above (excluding   capitalized interest, preferred security   distributions of subsidiaries on a pre-tax   basis and interest expense related to   discontinued operations)		295		276			272		262			209		212
Total earnings	$	1,084	$	1,137		$	918	$	1,113		$	1,176	$	680
Ratio of earnings to fixed charges		3.1		3.5			3.0		3.9			4.8		2.6

(a)	Interest on unrecognized tax benefits is not included in fixed charges.
(b)	Net income excludes minority interest, income (loss) from discontinued operations and the cumulative effects of changes in accounting principles.
(c)	Certain line items have been revised due to the planned sale of the Latin American businesses and the related reclassification of prior period operating results to "(Loss) Income from Discontinued Operations."

EX-12.C

Exhibit 12(c)
PPL ELECTRIC UTILITIES 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,
	2007		2006		2005		2004		2003		2002
Fixed charges, as defined:
Interest on long-term debt	$	124	$	131	$	151	$	176	$	201	$	209
Interest on short-term debt and   other interest		14		13		22		7		3		3
Amortization of debt discount,   expense and premium - net		8		8		9		7		8		7
Estimated interest component of   operating rentals		6		7		8		8		7		7
Preferred security distributions of   subsidiaries on a pre-tax basis												13
Total fixed charges (a)	$	152	$	159	$	190	$	198	$	219	$	239
Earnings, as defined:
Net income	$	199	$	194	$	147	$	76	$	28	$	55
Add:
Income taxes		105		104		69		8		18		18
Total fixed charges as above   (excluding capitalized interest and   preferred security distributions of   subsidiaries on a pre-tax basis)		150		158		190		197		219		225
Total earnings	$	454	$	456	$	406	$	281	$	265	$	298
Ratio of earnings to fixed charges		3.0		2.9		2.1		1.4		1.2		1.2
Preferred stock dividend requirements on a   pre-tax basis	$	27	$	24	$	4	$	4	$	5	$	7
Fixed charges, as above		152		159		190		198		219		239
Total fixed charges and preferred stock dividends	$	179	$	183	$	194	$	202	$	224	$	246
Ratio of earnings to combined fixed   charges and preferred stock dividends		2.5		2.5		2.1		1.4		1.2		1.2

(a) Interest on unrecognized tax benefits is not included in fixed charges.

EX-31.A

Exhibit 31(a)

CERTIFICATION
I, JAMES H. MILLER, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Corporation ("the registrant");
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	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
	d.	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 3, 2007			/s/  James H. Miller
			James H. Miller Chairman, President and Chief Executive Officer PPL Corporation

EX-31.B

Exhibit 31(b)

CERTIFICATION
I, PAUL A. FARR, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Corporation ("the registrant");
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	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
	d.	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 3, 2007			/s/  Paul A. Farr
			Paul A. Farr Executive Vice President and Chief Financial Officer PPL Corporation

EX-31.C

Exhibit 31(c)

CERTIFICATION
I, JAMES H. MILLER, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "registrant");
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 3, 2007			/s/  James H. Miller
			James H. Miller President PPL Energy Supply, LLC

EX-31.D

Exhibit 31(d)

CERTIFICATION
I, PAUL A. FARR, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "registrant");
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 3, 2007			/s/  Paul A. Farr
			Paul A. Farr Executive Vice President PPL Energy Supply, LLC

EX-31.E

Exhibit 31(e)

CERTIFICATION
I, DAVID G. DECAMPLI, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "registrant");
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 3, 2007			/s/  David G. DeCampli
			David G. DeCampli President PPL Electric Utilities Corporation

EX-31.F

Exhibit 31(f)

CERTIFICATION
I, J. MATT SIMMONS, JR., certify that:
1.	I have reviewed this quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "registrant");
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 3, 2007			/s/  J. Matt Simmons, Jr.
			J. Matt Simmons, Jr. Vice President and Controller PPL Electric Utilities Corporation

EX-32.A

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Corporation (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/  James H. Miller
	James H. Miller 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.B

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Corporation (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/ Paul A. Farr
	Paul A. Farr 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.C

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/  James H. Miller
	James H. Miller 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.D

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Energy Supply, LLC (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/  Paul A. Farr
	Paul A. Farr Executive Vice 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.E

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/  David G. DeCampli
	David G. DeCampli 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.F

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, 2007

In connection with the quarterly report on Form 10-Q of PPL Electric Utilities Corporation (the "Company") for the quarter ended March 31, 2007, 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 3, 2007	/s/  J. Matt Simmons, Jr.
	J. Matt Simmons, Jr. Vice President and Controller 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.