Text

Presentation in Support of PPL Meeting with NRC Staff License Transfer Pre-Application Meeting to Be Held July 2, 2014
	ML14182A322
Person / Time
Site:	Susquehanna
Issue date:	06/10/2014
From:	Jeffrey Whited; PPL Corp, Susquehanna
To:	; Office of Nuclear Reactor Regulation
	Whited J
References
	TAC MF4297, TAC MF4298
	Download: ML14182A322 (39)
	v • d • e

Completing the Transformation PPL Energy Supply to Combine with Riverstones Generation Business to Form Talen Energy Corporation June 10, 2014

Cautionary Statements and Factors That May Affect Future Results Forward Looking Statements Any statements made in this presentation about future operating results or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from such forward-looking statements. A discussion of factors that could cause actual results or events to vary is contained in the Appendix to this presentation and in the Companys SEC filings.

Agenda Transaction Overview Bill Spence Chairman, President & CEO, PPL Corporation Talen Energy Overview Paul Farr President, PPL Energy Supply, LLC President & CEO, Talen Energy, at Close Transaction Structure, Process Jeremy McGuire and Timing Vice President - Strategic Development, PPL Strategic Development, LLC Chief Financial Officer, Talen Energy, at Close PPL Corporation Update Bill Spence Concluding Remarks Bill Spence

Transaction Overview

PPL Energy Supply, LLC (PPL Energy Supply) will be spun off from PPL Corporation (PPL) and combined with Riverstones power generation business (RJS Power Holdings LLC) to form Talen Energy Corporation (Talen Energy)

Creates a highly competitive 15 GW IPP with attractive assets in the right markets

With a strong balance sheet and continuing Riverstone involvement, Talen Energy is well positioned to deliver best-in-class growth and shareholder returns

PPLs shareholders will own 65% of Talen Energy with Riverstone owning 35%

- PPL will have no ongoing ownership interest, control or affiliation (1)

Paul Farr has been named President of PPL Energy Supply and will become President and CEO of Talen Energy at closing

- Vince Sorgi, currently Vice President and Controller, PPL Corporation, has been named Senior Vice President and CFO of PPL Corporation

- Jeremy McGuire, currently Vice President - Strategic Development, will become CFO of Talen Energy at closing (1) Other than under certain limited contracts such as a Transition Services Agreement and ongoing arms-length commercial arrangements.

Transaction Benefits

15 GW of capacity focused primarily in PJM and ERCOT, two highly attractive markets Creates a Highly

Highly diversified fleet; environmentally well positioned Attractive IPP

Robust cash flow generation capability

Conservative capitalization positions company well for future growth

Move to pure-play businesses

Permits the utility operations and competitive power operations to make operating and capital decisions as separate businesses Significant Shareholder

Significant synergy potential: estimated at $155 million on an annual run-rate basis Value Creation

- Cost savings plus additional benefits from improved asset commercialization across the fleet

Tax-free transaction structure Transaction

Necessary regulatory approvals well understood Timing and

Expected closing in Q1 or Q2 2015 Certainty

Talen Energy Overview

Talen Energy Market Presence Presence in Most Attractive and Liquid U.S. Power Markets PPL Energy Supply (1)

WECC 7%

MT VT NH 93% NY MA CT PJM RI PA NJ RJS Power Holdings LLC (1) MD DE ISO-NE ERCOT MT 2%

35%

VT 63% NH PJM NY MA TX Talen Energy (1),(2) CT Ownership RI WECC ISO-NE 1% PPL Energy Supply RJS Pow er Holdings LLC ERCOT 4% PA Fuel Type NJ 12%

Gas Oil Coal Nuclear Hydro MD DE Operating Capacity (MW) 83% < 300 300 - 750 750 - 1,000 > 1,000 PJM (1) Based on percentage of generating capacity. Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation.

(2) Does not account for any market mitigation that will be required to achieve regulatory approvals.

Talen Energy Asset Profile Compelling IPP with Significant Scale and Diversity PPL Energy Supply RJS Power Holdings LLC Talen Energy (1),(2)

Generating Capacity:

10.0 GW 5.3 GW 15.3 GW (2) (2)

Operating Facilities: 12 15 27 States: PA, MT (2) + NJ, PA, MD, TX, MA

= NJ, PA, MD, TX, MT, MA (2)

Renewables Oil Oil Renewables Nuclear 3% 8% Nuclear 3% 2%

23% 15%

Fuel Mix: 41% 40% 40%

Coal 52%

33% Coal 40% Coal Natural Gas Natural Gas Natural Gas Well positioned to grow in key markets Note: Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation.

(1) Does not account for any market mitigation that will be required to achieve regulatory approvals.

(2) Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation. Excludes PPL Energy Supply peakers, landfill gas, wind and solar sites.

Talen Energy Peer Positioning

Sufficient scale to be efficient

Strong EBITDA production per MW of capacity

3 IPP and #5 Competitive Generator in the U.S.

60 54 Competitive Generation Capacity (GW) 50 40 35 30 26 20 18 (1) 15 14 13 13 (2) 10 10 6

4 0

NRG EXC CPN NEE Talen FE DYN PEG PPL ETR D (1) Does not account for any market mitigation that will be required to achieve regulatory approvals.

(2) Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation.

Talen Energy Hedging Profile (As of May 31, 2014) 2014 2015 2016 PPL Energy RJS Power PPL Energy RJS Power PPL Energy RJS Power Baseload Supply Holdings LLC Supply Holdings LLC Supply Holdings LLC (1)

Expected Generation (Millions MWhs) 50.2 9.1 45.1 8.3 44.0 7.9 East 43.2 9.1 40.8 8.3 40.0 7.9 West(2) 7.1 NA 4.3 NA 4.0 NA (3)

Current Hedges (%) 96-98% 48-50% 75-77% 0% 13-15% 0%

East (%) 96-98% 48-50% 75-77% 0% 11-13% 0%

West (%) (2) 95-97% NA 73-75% NA 33-35% NA (4)

Average Hedged Price (Energy Only) ($/MWh)

East ($) $39-41 $45-48 $39-41 NA $42-44 NA West ($) (2) $38-40 NA $42-43 NA $44-46 NA Current Coal Hedges (%) 97% 100% 86% 89% 65% 93%

East (%) 96% 100% 84% 89% 53% 93%

West (%) (2) 100% NA 92% NA 100% NA Average Consumed Coal Price (Delivered $/Ton)

East ($) $76-78 Variable $72-76 Variable $72-78 Variable West ($) (2) $26-30 NA $26-32 NA $26-32 NA Intermediate / Peaking (1)

PJM Expected Generation (Million MWhs) 9.5 2.3 8.5 2.3 9.4 1.8 (5)

PJM Current Hedges (%) 79% 72-75% 10% 72-75% 0% 72-75%

ERCOT Expected Generation (Million MWhs) NA 4.5 NA 5.6 NA 5.9 ERCOT Current Hedges (%) NA 74-76% NA 10-12% NA 0%

Expected Capacity Revenue (6) ($mm) $560 $205 $505 $169 $455 $162 (1) Represents expected sales of PPL Energy Supply and RJS Power Holdings LLC. Does not account for any market mitigation that will be required to achieve regulatory approvals.

(2) Includes PPL Montana's hydroelectric facilities through the 3rd quarter of 2014. On September 26, 2013, PPL Montana, LLC agreed to sell all 11 of its hydroelectric power plants. The sale is subject to regulatory approvals and currently is not expected t o close before the second half of 2014.

(3) 2015 RJS Power Holdings LLC basis hedges only (BGE/PJMW). Includes January to April at 100%.

(4) The 2015 & 2016 average energy prices for existing hedges were estimated by determining the impact on the existing collars resulting from power prices at the 5th and 95th percentile confidence levels; RJS Power Holdings LLC values represent BGE hedges adjusted to be consistent with PJM West Hub using 5-year historical basis, and average hedge price is ~75% weighted to peak volume.

(5) Based on sold heat rate call options for RJS Power Holdings LLC.

(6) Expected capacity revenue includes all MWs cleared during PJMs RPM Auctions or during incremental auctions at the respective prices and any uncleared MWs at expected incremental auction prices; RJS Power Holdings LLC capacity revenues include Exelon top-up payments.

Enhanced Value from Significant Synergy Potential

($mm) Services / HQ Operating Total (1)

Pre-Synergies 2015E O&M (2) (3) (3)

PPL Energy Supply $192 $712 $904 RJS Power Holdings LLC 13 217 230

$205 $929 $1,134 Subtotal Full Year Run-Rate Synergies O&M $85 $60 $145 Margin from improved 0 10 10 Commercialization Total Run-Rate Transaction Benefits $85 $70 $155 (1) Does not account for any market mitigation that will be required to achieve regulatory approvals.

(2) Excludes certain allocated costs that are not part of O&M and non-cash compensation.

(3) Excludes non-cash compensation.

Talen Energy Financial Highlights

($mm) PPL Energy Supply RJS Power Holdings LLC Total (1) 2015E Adjusted EBITDA $627 $285 $912 Run-Rate Annual Synergies 155 Model Year Adjusted EBITDA 1,067 (2) 2015E CapEx 369 54 423 (3) (4)

Debt 2,713 1,250 3,963 (5) (6)

Cash 520 NA 520

Anticipate a BB area credit rating

Will commence a process to obtain necessary liquidity facilities to support Talens operations

- Targeting $1.85 billion

- Expect to close on commitments by end of July 2014

- Facility to become active upon closing (1) Before synergies, not pro forma. Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation. Does not account for any market mitigation that will be required to achieve regulatory approvals. See description of Adjusted EBITDA and reconciliation to Net Income in Appendix.

(2) Excludes nuclear fuel CapEx.

(3) Balance as of May 31, 2014. Includes $2,525mm of long-term debt, including current portion, and $188mm short term borrowings.

(4) Gives effect to planned RJS Power Holdings LLC refinancing.

(5) Balance as of May 31, 2014, consists of $108mm of unrestricted cash and $412mm of restricted cash. Restricted cash includes cash posted in support of hedge positions.

(6) RJS Power Holdings LLC not expected to maintain significant cash balances.

Talen Energy Strategy: Delivering Future Value Safety and Plant

Value is built on a foundation of excellence in operations Performance

Safety is a core value

Investment to maintain safe operations Disciplined Capital

Investment to sustain current fleet made on an economic basis Investment

Investment for growth subject to rigorous returns-based analysis

The balance sheet is a strategic asset Balance Sheet

Enhanced flexibility and capacity Management

Absorb volatility and pursue growth opportunities

Primary focus on delivering visibility 1-year forward Active Hedging &

Manage and monetize intra-year volatility Portfolio Management

Retail activities will be oriented to hedge the generation fleet

Business will be run to maximize cash flow Cash Returns

Cash generation fuels growth and investment opportunities

Growth in value, not size alone Growth Posture

Right assets in the right markets

Evolve with opportunity

Transaction Structure, Process and Timing

Key Transaction Terms Topic Commentary

PPL Energy Supply will be distributed to PPL shareholders to form Talen Energy through a Structure and tax-free spin off; Riverstone will then contemporaneously contribute RJS Power Holdings Consideration LLC to Talen Energy in exchange for Talen common stock Pro Forma Talen

65% PPL shareholders / 35% Riverstone Holdings Ownership

Talen board will have eight directors upon closing

- Four PPL independent directors to step down from the PPL board and onto the Talen board Governance

One of which will become non-executive chairman

- One independent director appointed by Riverstone

- Two non-independent board members from Riverstone

- Paul Farr (Talen CEO) will be a director

Regulatory approvals include Federal Energy Regulatory Commission (FERC),

Department of Justice (DOJ), Nuclear Regulatory Commission (NRC), certain PA PUC Approvals regulatory and other customary approvals

Estimate required mitigation of approximately 1,000 MW of baseload-equivalent capacity

Expected close: Q1 or Q2 2015 Timing

Contract outside date: 12 months (June 30, 2015) + 6 months if only awaiting regulatory approval

Simplified Corporate Structure Transaction Summary Pro Forma Corporate Structure

PPL shareholders continue to own 100%

of PPL Corporation PPL Shareholders Riverstone Holdings

100% of PPL Energy Supply will be spun off to PPL shareholders to form Talen 100% 65% 35%

Energy

Riverstone will contemporaneously PPL Corporation Talen Energy New Entity contribute RJS Power Holdings LLC (owners of Raven, Sapphire and Jade) in exchange for 35% of Talen common Credit stock PPL Energy Supply Facilities and Term Debt (1)

RJS Power Holdings LLC will be combined with PPL Energy Supply PPL Energy Supply Raven Sapphire Jade Subs (1) Existing debt at PPL Ironwood and PPL Renewables will remain at these entities.

Talen Energy Capitalization and Liquidity Overview Expected Talen Capitalization and Liquidity

($mm)

Targeting $1,850 million of liquidity facilities active upon close, committed by New Talen Revolving Credit Facility $1,850 end of July

Existing PPL Energy Supply term debt to Short Term Debt (1)

$188 remain in place Term Debt

Riverstones Raven, Jade, and Sapphire are (1),(2)

PPL Energy Supply Debt $2,525 combining under a single parent company, (3)

RJS Power Holdings LLC, and will refinance RJS Power Holdings LLC Senior Notes 1,250 all of their existing indebtedness with a Total Term Debt $3,775

$1,250 million Senior Unsecured Note

New RJS Power Holdings LLC debt will travel to Talen upon transaction close with covenants expected to be consistent with existing PPL Energy Supply term debt (1) As of May 31, 2014.

(2) Includes PPL Ironwood debt of $52mm and PPL Renewables debt of $5mm.

(3) Reflects RJS Power Holdings LLC refinancing; May 31, 2014 debt balances are $318mm at Raven, $251mm at Sapphire and $588mm atJade.

Transaction Timeline Principal Required Approvals Required Approval Expected Timing Federal Energy Regulatory Commission (FERC) 3-6 months Hart-Scott-Rodino - Federal Trade Commission (FTC) 4-8 months and Department of Justice (DOJ)

Nuclear Regulatory Commission (NRC) 7-9 months Pennsylvania Public Utility Commission (PA PUC) (1) 6-9 months Expected Transaction Closing in Q1 or Q2 2015 (1) Approval with regards to change in control over PPL Interstate Energy Company, and certain property transfers or other agreements to the extent necessary to effectuate the separation ofPPL Energy Supply.

PPL Corporation Update

Commitment to Creating Shareholder Value Evolution of PPL 2008 2009 2010 2011 2012 2013 2014 Future 2010 (1) 2012 (2) 2013 (3) Pro-Forma PPL Corporation Market Cap ($bn) $12.8 $16.4 $18.8 Enterprise Value ($bn) $17.2 $35.1 $37.8 FY+1 P/E 10.6x 13.0x 13.7x Business Profile (4)

% Utility 16%

27% 28%

% Competitive Energy 100%

73% 84%

72%

Regulatory Asset Base (5) $12.2 $18.8 $20.9 $20.9 +

($bn) (6.7% CAGR from 2014 - 2018)

Reg. Jurisdictions KY, PA, UK KY, PA, UK KY, PA, UK KY, PA, UK UTY P/E Multiple (6) ~12.4x ~14.1x ~15.1x ~16.3x (7)

Source: FactSet, Company Filings. (5) Represents capitalization for LKE, as LG&E and KU rate constructs are based on capitalization. Represents (1) As of December 31, 2010. Regulatory Asset Value (RAV) for WPD.

(2) As of December 31, 2012. (6) Based on PHLX UTY Index TTM multiples.

(3) As of December 31, 2013. (7) As of June 05, 2014.

(4) Proportion of earnings from ongoing operations.

PPL Corporation Investment Highlights

100% rate-regulated business model provides earnings and dividend growth potential

- Substantial projected growth in rate base: ~7% CAGR from 2014-2018

- Target EPS compound annual growth rate of at least 4%, excluding PPL Energy Supply (1)

- Maintain current dividend level until PPL Energy Supply transaction is completed; intended growth thereafter

Operates in premium regulatory jurisdictions that provide substantial opportunity for real-time recovery of capital investments

- Approximately two-thirds of regulated capital expenditures earn returns subject to minimal or no regulatory lag

Strong management team with track record of execution

- U.K. team best-in-class among U.K. peers

- PPL Electric Utilities, Kentucky Utilities and LG&E have earned a combined 35 J.D. Power awards for superior performance in reliability and customer service (1) Based on 2014 hypothetical midpoint of $2.05 as shown on Slide 22.

Managing Corporate Costs Total Supply Cost Allocations ~ $215 million (1)

Direct Charges transferred to Talen Targeted Cost Reduction

$75mm

$110mm Remaining cost allocation

$30mm limited to systems and A portion of these hardware supporting utility costs will be reduced businesses through Talen synergy plan Depreciation (1) Excludes approximately $50mm of interest expense that was allocated to the Supply segment and will remain at PPL afte r closing.

2014 and 2015 Earnings Forecast

$3.00 Hypothetical

$2.30 $2.25

$2.10

$2.00

$2.15

$2.00 $2.05 Per Share $1.00

$0.00 (1) 2014E 2014E (ex-Supply) 2015E 2014E Ongoing 2014E Ongoing 2015E Segment Midpoint Midpoint(2) Midpoint (ex-Supply) (2)

U.K. Regulated $1.34 $1.34 $1.36 Kentucky Regulated 0.45 0.45 0.48 PA Regulated 0.39 0.39 0.39 (1)

Supply 0.11 -- --

Corporate and Other (0.06) (0.13) (0.08)

Total $2.23 $2.05 $2.15 (1) 2015E earnings provided here assume no contribution from PPL Energy Supply. However, PPL Energy Supply is expected to continue to be part of PPL Corporations consolidated earnings for a portion of 2015 based on an expected closing date of Q1 or Q2 2015.

(2) See reconciliation of ongoing earnings to reported earnings in the Appendix.

Closing Remarks and Q&A

Transaction Benefits

15 GW of capacity focused primarily in PJM and ERCOT, two highly attractive markets Creates a Highly

Highly diversified fleet; environmentally well positioned Attractive IPP

Robust cash flow generation capability

Conservative capitalization positions company well for future growth

Move to pure-play businesses

Permits the utility operations and competitive power operations to make operating and capital decisions as separate businesses Significant Shareholder

Significant synergy potential: estimated at $155 million on an annual run-rate basis Value Creation

- Cost savings plus additional benefits from improved asset commercialization across the fleet

Tax-free transaction structure Transaction

Necessary regulatory approvals well understood Timing and

Expected closing in Q1 or Q2 2015 Certainty

Appendix

Talen Energy Asset Overview PPL Energy Supply Assets (1),(2)

Owned Asset Location Fuel Type Ownership Capacity (MW) COD Region Montour PA Coal 100% 1,505 1972 - 1973 PJM Brunner Island PA Coal 100% 1,437 1961 - 1969 PJM Keystone PA Coal 12% 210 1967 - 1968 PJM Conemaugh PA Coal 16% 276 1970 - 1971 PJM Martins Creek 3 & 4 PA Natural Gas / Oil 100% 1,400 (Gas) / 1,700 (Oil) 1975 - 1977 PJM Ironwood PA Natural Gas 100% 660 2001 PJM Lower Mt. Bethel Energy PA Natural Gas 100% 551 2004 PJM Peakers PA Natural Gas / Oil 100% 354 1967 - 1973 PJM Susquehanna PA Nuclear 90% 2,268 1983 - 1985 PJM Eastern Hydro (3) PA Hydro 100% 292 1910 - 1926 PJM 25% (Colstrip) /

(4)

Montana Coal MT Coal 100% 677 1968 - 1986 WECC (J.E. Corette)

Renewables NH, NJ, PA, VT Renewables 100% 65 Various Various Total 9,995 (1) Excludes 11 Montana hydro assets to be sold under a September 26, 2013 Purchase and Sale Agreement with NorthWestern Corporation.

(2) Does not account for any market mitigation that will be required to achieve regulatory approvals.

(3) Includes Holtwood and Wallenpaupack.

(4) Includes Colstrip and J.E. Corette plants.

Talen Energy Asset Overview (contd)

RJS Power Holdings LLC Assets(1)

Ow ned Asset Location Fuel Type Ow nership Capacity (MW) COD Region Brandon Shores MD Coal 100% 1,273 1984 - 1991 PJM Raven H.A. Wagner MD Coal / Natural Gas / Oil 100% 976 1956 - 1972 PJM Portfolio C.P. Crane MD Coal 100% 399 1961 -1967 PJM Bayonne NJ Natural Gas / Oil 100% 171 1988 PJM Camden NJ Natural Gas / Oil 100% 151 1993 PJM Dartmouth MA Natural Gas / Oil 100% 89 1996 ISO-NE Sapphire Elmw ood Park NJ Natural Gas / Oil 100% 71 1989 PJM Portfolio New ark Bay NJ Natural Gas / Oil 100% 129 1993 PJM Pedricktow n NJ Natural Gas / Oil 100% 131 1992 PJM York PA Natural Gas 100% 52 1989 PJM Barney Davis 1 TX Natural Gas 100% 335 1974 ERCOT Barney Davis 2 TX Natural Gas 100% 674 2010 ERCOT Jade Nueces Bay 7 TX Natural Gas 100% 678 2010 ERCOT Portfolio Laredo 4 TX Natural Gas 100% 98 2008 ERCOT Laredo 5 TX Natural Gas 100% 98 2008 ERCOT Total 5,325 (1) Does not account for any market mitigation that will be required to achieve regulatory approvals.

Talen Energy Environmental Controls

1. Recently finalized 316(b) regulations w ill require Talen Energy Merchant Coal Fleet Environmental Controls intake structure modifications for sites with once-Updated ESP / Closed-Cycle Dry Handling /

Low NOx Chemical through cooling tow ers. Pending ELG revisions Control Devices Burners SCR/SNCR Scrubbers Additive Baghouse / Dry Injection Cooling Disposal /

FGD Tower Beneficial Use could require additional controls on other w aste w ater streams. Coal Combustion Pollutant Addressed NOx NOx SO2 Mercury PM Acid Gases Water Intake

2. The Regional Haze FIP for Montana w ould Residuals (CCRs) require low NOx Burners and SOFA as w ell as SNCRs for Colstrip 1 & 2 by 2017; PPL is Unit 1 NR (1) litigating EPA's final FIP. Brunner Island Unit 2 NR (1)

3. Pending CCR regulations could require Unit 3 NR (1) additional controls and/or costs throughout the fleet depending on final requirements. Montour Unit 1

4. In March 2013, PPL announced its intention to Unit 2 mothball Corette SES starting in April 2015.

Colstrip Units 1 & 2 (2) (2) NR (3)

5. Wagner and Crane are sw itching to Ultra-low Units 3 & 4 NR NR (3)

Sulfur Coal from Indonesia (Adaro) in 2015 Keystone Units 1 & 2 w hich will only require DSI capital expenditure for Crane to meet the MATS HCL standard.

Conemaugh Units 1 & 2

6. Wagner injects activated carbon to control Corette Unit 1 NR (4) (4) NR (4) (4)

Mercury emissions to achieve Maryland Air Act Brandon Shores Unit 1 NR NR requirements and comply w ith the proposed Unit 2 NR NR MATS rules requirements.

7. Crane and Wagner utilize once-through cooling Wagner Unit 2 (5) (6) (5) (7) w ater systems. Wagner is expected to install Unit 3 (5) (6) (5) (7) necessary equipment to comply w ith 316(b) rule.

Crane Unit 1 (8) (5) (7)

8. Crane has over-fired air w ith ash-reburn for NOx Unit 2 (8) (5) (7)

RACT Control.

NR = Not Required by Current or Proposed Regulations

= Installed = Under Consideration

Talen Projected Capital Expenditure Detail Projected Major Environmental Spend Brunner Brandon H.A.

($mm) Montour Colstrip Keystone Conemaugh Corette C.P. Crane Total Island Shores Wagner Regional Haze (1) -- -- $11.4 -- -- -- -- -- -- $11.4 MD HAA (2) -- -- -- -- -- -- -- -- -- --

MATS (3) $22.8 -- $6.6 -- $3.2 -- -- $1.5 $8.3 $42.4 CSAPR (4) -- -- -- -- -- -- -- -- -- --

316(b) (5) $30.0 -- -- -- -- -- -- $8.0 -- $38.0 Ash Basin (6) -- $26.0 -- -- -- -- -- -- -- $26.0 Modification Total $117.8 Total Capital Expenditure Plan

($mm) 600 500 54 139 71 400 149 300 200 369 282 100 0

2015E 2016E PPL Energy Supply (ex-Nuclear Fuel) PPL Energy Supply Nuclear Fuel CapEx RJS Power Holdings LLC (1) To be completed by 2017. (5) Estimated cost and timing will be refined based upon analysis driven by final standard.

(2) Maryland Healthy Air Act. (6) Driven by permit timing; to be completed by 2017.

(3) Mercury and Air Toxics Standard to be completed by 2015.

(4) Cross-State Air Pollution Rule.

PPL Corporate Structure Post Spin PPL Corporation PPL Capital Funding Credit Rating S&P Moodys Credit Rating S&P Moodys Secured NR NR Secured NR NR Unsecured NR NR Unsecured BBB- Baa3 Long-Term Issuer BBB Baa3 Long-Term Issuer NR Baa3 Outlook Stable Stable Outlook Stable Stable PPL Global LKE PPL Electric Utilities Credit Rating S&P Moodys Credit Rating S&P Moodys Credit Rating S&P Moodys Secured NR NR Secured NR NR Unsecured BBB- Baa2 Secured A- A2 Unsecured BBB Baa1 Long-Term Issuer BBB Baa2 Unsecured NR Baa1 Long-Term Issuer BBB Baa1 Outlook Stable Stable Long-Term Issuer BBB Baa1 Outlook Stable Stable Outlook Stable Stable Louisville Gas & Electric Kentucky Utilities Credit Rating S&P Moodys Credit Rating S&P Moodys Secured A- A1 Secured A- A1 Unsecured NR A3 Unsecured NR A3 Long-Term Issuer BBB A3 Long-Term Issuer BBB A3 Outlook Stable Stable Outlook Stable Stable

PPL Overview PPL Electric Utilities

Cus tomers: 1.4 mi llion El ectric

Al l owed Distribution ROE: 10.40%

Ra te Base: $4.2 billion (1)

5-Yea r Tra nsmission Rate Base CAGR: 13.4%

5-Yea r Distribution Rate Base CAGR: 6.2%

Regulatory Enti ty: Pennsyl vania PUC U.K. Delivery

Cus tomers: 7.8 mi llion El ectric

Ra te Base: $9.1 billion (1),(2)

5-Yea r Rate Base CAGR: 5.6%

Regulatory Entity: Ofgem Kentucky Utilities

Cus tomers: 0.9 mi llion El ectric; 0.3 million Natural Gas

KU Al l owed ROE: 10.25% (KY), 10.00% (VA)

LG&E Al l owed ROE: 10.25%

Ra te Base: $7.6 billion (1),(2)

5-Yea r Rate Base CAGR: 6.5%

Regulated Ca pacity: 8.1 GW

Regulatory Entities: Kentucky PSC, Vi rginia SCC (1) Year-end Rate Base as of December 31, 2013.

(2) Represents capitalization for LKE, as LG&E and KU rate constructs are based on capitalization. Represents Regulatory Asset Value (RAV) for WPD.

U.K. Regulated Segment Overview Investment Highlights Capital Expenditure Plan (1)

Highly attractive rateregulated business ($bn)

- Regulatorapproved multiyear forwardlooking revenues based 2.00 on future business plan, including capital expenditures and O&M 1.50 1.34 plus adjustments for inflation 1.20 1.23 1.20 1.22

- Realtime return of and return on capital investment - no lag 1.00

- No volumetric risk

- Additional incentives for operational efficiency and highquality 0.50 service 0.00

Bestinclass management team with track record of 2014E 2015E 2016E 2017E 2018E delivering results United Kingdom Delivery Territories Projected Rate Base Growth (1),(2)

($bn) 16.0 11.4 12.0 12.0 10.2 10.8 9.1 9.6 8.0 4.0 0.0 2013A 2014E 2015E 2016E 2017E 2018E (1) Figures based on assumed exchange rate of $1.58 / GBP.

(2) Based on RIIO-ED1 business plan as filed on July 1, 2013.

Kentucky Regulated Segment Overview Investment Highlights Capital Expenditure Plan

Efficient, wellrun utilities focused on safety, reliability and customer ($bn) service 2.00

Constructive regulatory environment that provides a timely return on 1.50 1.22 1.17 1.24 a substantial amount of planned CapEx over the next 5 years 1.06 0.94 1.00 0.62

- Environmental Cost Recovery (ECR): ~$2.3 billion estimated spend 0.65 0.92 0.73 0.56 on projects approved by the KPSC with a 10.25% ROE - virtually 0.50 no regulatory lag 0.60 0.52 0.38 0.32 0.33 0.00

- Other supportive recovery mechanisms include Construction 2014E 2015E 2016E 2017E 2018E Work In Progress, Fuel Adjustment Clause, Gas Supply Clause (1)

Adjustment and Demand Side Management recovery LKE ECR LKE Base Kentucky Delivery Territories Projected Rate Base Growth

($bn) 16.0 12.0 9.7 10.1 10.5 8.3 9.0 7.6 8.0 4.0 0.0 2013A 2014E 2015E 2016E 2017E 2018E (1) Expect between 80% and 90% to receive timely returns via ECR mechanism based on historical experience and future projections.

Pennsylvania Regulated Segment Overview Investment Highlights Capital Expenditure Plan

Si gnificant growth i n tra nsmission portion of business which earns a favorable ra te of return on a near realtime basis ($bn)

- CAGR of 13.4% i n tra nsmission rate base through 2018 dri ven by i nitiatives 2.0 to i mprove aging infrastructure

- ROE of 11.68% ea rned through FERC Formula Rate Mechanism 1.5

- ROE of 12.93% a nd return on CWIP for $630 million SusquehannaRoseland 0.95 0.88 0.88 0.99 1.00 project 1.0 0.32 0.33 0.35 0.42 0.43

- Return on CWIP for $310 mi llion of Northeast Pocono Reliability project 0.5

Rel iability i nitiatives drive distribution ra te base growth at a projected CAGR 0.63 0.55 0.53 0.57 0.57 of over 6% through 2018 0.0

Act 11 - Al ternative ra temaking l egislation provides for more timely recovery 2014E 2015E 2016E 2017E 2018E of a bout $800 mi llion i n distribution plant costs that improve and maintain PA Transmission PA Distribution s a fety a nd reliability based upon a fiveyear plan filed with the PA PUC Pennsylvania Delivery Territories Projected Rate Base Growth

($bn) 8.0 6.5 5.8 6.1 6.0 4.8 5.2 4.2 3.1 3.3 3.5 4.0 2.9 2.6 2.8 2.0 2.0 2.3 2.7 2.8 3.0 1.6 0.0 2013A 2014E 2015E 2016E 2017E 2018E PA Transmission PA Distribution

Reg G Reconciliation - Talen Energy 2015E Adjusted EBITDA

($mm) PPL Energy Supply RJS Power Holdings LLC Net Income/(Loss) $ 46 $ 75 Income Taxes (1) 31 50 Interest Expense 177 67 Depreciation & Amortization 493 93 EBITDA 747 285 Add: Non-Cash Compensation 27 --

Less: Nuclear Fuel Amortization 147 --

Adjusted EBITDA(2) $ 627 $ 285 Adjusted EBITDA, which is a non-GAAP financial measure, represents net income (loss) before interest expense, income taxes, depreciation and amortization, adjusted for certain items as detailed in the reconciliation. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by U.S. GAAP as an indicator of operating performance and is not necessarily comparable to similarly-titled measures reported by other companies. We believe Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that EBITDA is widely used by investors to measure a companys operating performance without regard to such items as interest expense, income taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Additionally, we believe that investors commonly adjust EBITDA information to eliminate the effect of restructuring and other expenses, which vary widely from company to company and impair comparability. We adjust for these and other items as our management believes that these items would distort their ability to efficiently view and assess our core operating trends.

In summary, our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, shareholders, creditors, analysts and investors concerning our financial performance.

(1) Calculated using estimated effective tax rate of 40%.

(2) Excludes $155mm of synergies resulting from the transaction, which are included in Model Year Adjusted EBITDA of $1,067mm for illustrative purposes.

Reg G Reconciliation - PPL Corp (After-Tax)

(Unaudited) Forecast (per share - diluted) 2014 Midpoint(1)

U.K. Kentucky Pennsylvania Corporate High Low Regulated Regulated Regulated Supply and Other Total 2014 2014 Earnings from Ongoing Operations $ 1.34 $ 0.45 $ 0.39 $ 0.11 $ (0.06) $ 2.23 $ 2.30 $ 2.15 Special Items:

Adjusted energy-related economic activity, net (0.20) (0.20) (0.20) (0.20)

Foreign currency-related economic hedges (0.01) (0.01) (0.01) (0.01)

Kerr Dam Project impairment (0.02) (0.02) (0.02) (0.02)

Other:

Change in WPD line loss accrual (0.08) (0.08) (0.08) (0.08)

Total Special Items (0.09) (0.22) (0.31) (0.31) (0.31)

Reported Earnings $ 1.25 $ 0.45 $ 0.39 $ (0.11) $ (0.06) $ 1.92 $ 1.99 $ 1.84 Hypothetical Forecast (per share - diluted, ex-Supply) 2014 Midpoint(1)

U.K. Kentucky Pennsylvania Corporate High Low Regulated Regulated Regulated and Other Total 2014 2014 Earnings from Ongoing Operations $ 1.34 $ 0.45 $ 0.39 $ (0.13) $ 2.05 $ 2.10 $ 2.00 Special Items:

Foreign currency-related economic hedges (0.01) (0.01) (0.01) (0.01)

Other:

Change in WPD line loss accrual (0.08) (0.08) (0.08) (0.08)

Total Special Items (0.09) (0.09) (0.09) (0.09)

Reported Earnings $ 1.25 $ 0.45 $ 0.39 $ (0.13) $ 1.96 $ 2.01 $ 1.91 Forecast (per share - diluted) 2015 Midpoint U.K. Kentucky Pennsylvania Corporate High Low Regulated Regulated Regulated and Other Total 2015 2015 Earnings from Ongoing Operations $ 1.36 $ 0.48 $ 0.39 $ (0.08) $ 2.15 $ 2.25 $ 2.05 Special Items:

Total Special Items Reported Earnings $ 1.36 $ 0.48 $ 0.39 $ (0.08) $ 2.15 $ 2.25 $ 2.05 (1) 2014 forecasts reflect special items recorded in Q1 2014.

Other Non-GAAP Financial Measures "Earnings from ongoing operations," also referred to as "ongoing earnings," should not be considered as an alternative to reported earnings, or net income attributable to PPL shareowners, which is an indicator of operating performance determined in accordance with U.S. generally accepted accounting principles (GAAP). PPL believes that "earnings from ongoing operations," although a non-GAAP financial measure, is also useful and meaningful to investors because it provides management's view of PPL's fundamental earnings performance as another criterion in mak ing investment decisions. PPL's management also uses "earnings from ongoing operations" in measuring certain corporate performance goals. Other companies may use different measures to present financial performance.

"Earnings from ongoing operations" is adjusted for the impact of special items. Special items include:

Adjusted energy-related economic activity (as discussed below).

Unrealized gains or losses on foreign currency-related economic hedges.

Gains and losses on sales of assets not in the ordinary course of business.

Impairment charges (including impairments of securities in the company's nuclear decommissioning trust funds).

Work force reduction and other restructuring effects.

Acquisition-related adjustments.

Other charges or credits that are, in management's view, not reflective of the company's ongoing operations.

Adjusted energy-related economic activity includes the changes in fair value of positions used to economically hedge a portion of the economic value of the competitive generation assets, full-requirement sales contracts and retail activities. This economic value is subject to changes in fair value due to mark et price volatility of the input and output commodities (e.g., fuel and power) prior to the delivery period that was hedged.

Adjusted energy-related economic activity also includes the ineffective portion of qualifying cash flow hedges and premium amortization associated with options. This economic activity is deferred and included in earnings from ongoing operations over the delivery period of the item that was hedged or upon realization. Management believes that adjusting for such amounts provides a better matching of earnings from ongoing operations to the actual amounts settled for PPL's underlying hedged assets. Please refer to the Notes to the Consolidated Financial Statements and MD&A in PPL Corporation's periodic filings with the Securities and Exchange Commission for additional information on adjusted energy-related economic activity.

Cautionary Statements and Factors That May Affect Future Results Statements contained in this presentation, including statements with respect to future earnings, cash flows, financing, regulation, operating performance and corporate strategy, are forward-looking statements within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: Failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the proposed transaction; actions, including divestitures, that may be required to obtain necessary regulatory approvals; adverse effects on the market price of PPLs common stock and our operating results because of a failure to complete, or a delay in the completion of, the proposed transaction; failure to realize the expected benefits of the proposed transaction; negative effects of the announcement or consummation of the proposed transaction; market demand and prices for energy, capacity and fuel; weather conditions affecting customer energy usage and operating costs; competition in power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of generating plants and other facilities; the length of scheduled and unscheduled outages at our generating plants; environmental conditions and requirements and the related costs of compliance, including environmental capital expenditures and emission allowance and other expenses; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; asset or business acquisitions and dispositions; any impact of hurricanes or other severe weather on our business, including any impact on fuel prices; receipt of necessary government or other regulatory permits, approvals, rate relief and cost recovery; capital market conditions and decisions regarding capital structure; the impact of state, federal or foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation against PPL Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and credit ratings of PPL Corporation and its subsidiaries; political, regulatory or economic conditions in states, regions or countries where PPL Corporation or its subsidiaries conduct business, including any potential effects of threatened or actual terrorism or war or other hostilities; foreign exchange rates; new state, federal or foreign legislation, including new tax legislation; and the commitments and liabilities of PPL Corporation and its subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in conjunction with PPL Corporations Form 10-K and other reports on file with the Securities and Exchange Commission.

v t e Letter Sequence Meeting
TAC:MF4297, (Open) TAC:MF4298, (Open)
Initiation Acceptance... Administration Meeting, Meeting Questions Answers Results Approval... Other:
MONTHYEAR2014-06-10 [Table View]

ML14182A322

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