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

© PPL Corporation 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.

1

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

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.

3

Creates a Highly Attractive IPP Significant Shareholder Value Creation Transaction Timing and Certainty

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

Highly diversified fleet; environmentally well positioned

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

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

Tax-free transaction structure

Necessary regulatory approvals well understood

Expected closing in Q1 or Q2 2015

Presence in Most Attractive and Liquid U.S. Power Markets 4%

12%

83%

ISO-NE 1%

PJM ERCOT WECC Talen Energy (1),(2) 2%

ISO-NE PJM ERCOT RJS Power Holdings LLC (1) 7%

PJM WECC PPL Energy Supply (1)

(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.

MD TX MT NY PA NH MA CT NJ DE RI VT

< 300 300 - 750 750 - 1,000

> 1,000 Operating Capacity (MW)

PPL Energy Supply Ownership RJS Pow er Holdings LLC Gas Oil Coal Nuclear Hydro Fuel Type MD MT NY PA NH MA CT NJ DE RI VT 93%

63%

35%

Talen Energy Asset Profile 7

PPL Energy Supply RJS Power Holdings LLC Talen Energy (1),(2)

Generating Capacity:

10.0 GW 5.3 GW 15.3 GW Operating Facilities:

12 15 27 States:

PA, MT NJ, PA, MD, TX, MA NJ, PA, MD, TX, MT, MA

+

=

(2)

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.

Compelling IPP with Significant Scale and Diversity (2)

Well positioned to grow in key markets 40%

52%

8%

Oil Coal Natural Gas 41%

33%

23%

3%

Renewables Natural Gas Nuclear Coal 40%

40%

15%

3% 2%

Oil Renewables Coal Nuclear Natural Gas (2)

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

(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.

54 35 26 18 15 14 13 13 10 6

4 0

10 20 30 40 50 60 NRG EXC CPN NEE Talen FE DYN PEG PPL ETR D

Sufficient scale to be efficient Strong EBITDA production per MW of capacity (1)

Competitive Generation Capacity (GW)

(2)

(As of May 31, 2014) 2014 2015 2016 Baseload PPL Energy Supply RJS Power Holdings LLC PPL Energy Supply RJS Power Holdings LLC PPL Energy Supply RJS Power Holdings LLC Expected Generation (1) (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 Current Hedges (%) (3) 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 Average Hedged Price (Energy Only) ($/MWh) (4)

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 PJM Expected Generation (1) (Million MWhs) 9.5 2.3 8.5 2.3 9.4 1.8 PJM Current Hedges (%) (5) 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 to 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.

($mm)

Services / HQ Operating Total (1)

Pre-Synergies 2015E O&M PPL Energy Supply

$192

$712

$904 RJS Power Holdings LLC 13 217 230 Subtotal

$205

$929

$1,134 Full Year Run-Rate Synergies O&M

$85

$60

$145 Margin from improved Commercialization 0

10 10 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.

(3)

(2)

© PPL Corporation 2014 Talen Energy Financial Highlights 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 11

($mm)

PPL Energy Supply RJS Power Holdings LLC Total 2015E Adjusted EBITDA

$627

$285

$912 Run-Rate Annual Synergies 155 Model Year Adjusted EBITDA 1,067 2015E CapEx 369 54 423 Debt 2,713 1,250 3,963 Cash 520 NA 520 (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.

(4)

(5)

(6)

(2)

(3)

(1)

Value is built on a foundation of excellence in operations

Safety is a core value Disciplined Capital Investment

Investment to maintain safe operations

Investment to sustain current fleet made on an economic basis

Investment for growth subject to rigorous returns-based analysis Balance Sheet Management

The balance sheet is a strategic asset

Enhanced flexibility and capacity

Absorb volatility and pursue growth opportunities Active Hedging &

Portfolio Management

Primary focus on delivering visibility 1-year forward

Manage and monetize intra-year volatility

Retail activities will be oriented to hedge the generation fleet Cash Returns

Business will be run to maximize cash flow

Cash generation fuels growth and investment opportunities Growth Posture

Growth in value, not size alone

Right assets in the right markets

Evolve with opportunity

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

65% PPL shareholders / 35% Riverstone Holdings Governance

Talen board will have eight directors upon closing

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

Regulatory approvals include Federal Energy Regulatory Commission (FERC),

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

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

Expected close: Q1 or Q2 2015

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

PPL shareholders continue to own 100%

of PPL Corporation

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

Riverstone will contemporaneously contribute RJS Power Holdings LLC (owners of Raven, Sapphire and Jade) in exchange for 35% of Talen common stock

RJS Power Holdings LLC will be combined with PPL Energy Supply Pro Forma Corporate Structure PPL Shareholders Riverstone Holdings Talen Energy PPL Energy Supply Raven PPL Energy Supply Subs Sapphire Jade 35%

65%

PPL Corporation 100%

New Entity Transaction Summary Credit Facilities and Term Debt (1)

(1)

Existing debt at PPL Ironwood and PPL Renewables will remain at these entities.

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 at Jade.

Targeting $1,850 million of liquidity facilities active upon close, committed by end of July Existing PPL Energy Supply term debt to remain in place Riverstones Raven, Jade, and Sapphire are combining under a single parent company, RJS Power Holdings LLC, and will refinance all of their existing indebtedness with a

$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

($mm)

New Talen Revolving Credit Facility

$1,850 Short Term Debt

$188 Term Debt PPL Energy Supply Debt

$2,525 RJS Power Holdings LLC Senior Notes 1,250 Total Term Debt

$3,775 (1),(2)

(1)

(3)

© PPL Corporation 2014 Transaction Timeline 17 Principal Required Approvals Required Approval Expected Timing Federal Energy Regulatory Commission (FERC) 3-6 months Hart-Scott-Rodino - Federal Trade Commission (FTC) and Department of Justice (DOJ) 4-8 months 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 of PPL Energy Supply.

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)

Regulatory Asset Base (5)

($bn)

$12.2

$18.8

$20.9

$20.9 +

(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) 84%

16%

Commitment to Creating Shareholder Value 19 Source: FactSet, Company Filings.

(1)

As of December 31, 2010.

(2)

As of December 31, 2012.

(3)

As of December 31, 2013.

(4)

Proportion of earnings from ongoing operations.

2008 2009 2010 2011 2012 2014 Future

% Utility

% Competitive Energy 100%

Evolution of PPL (5)

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

(6)

Based on PHLX UTY Index TTM multiples.

(7)

As of June 05, 2014.

2013 27%

73%

72%

28%

© PPL Corporation 2014 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 20 (1) Based on 2014 hypothetical midpoint of $2.05 as shown on Slide 22.

$110mm

$75mm

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

$0.00

$1.00

$2.00

$3.00 2014E 2014E (ex-Supply) 2015E 2014 and 2015 Earnings Forecast 22 Per Share Segment 2014E Ongoing Midpoint(2) 2014E Ongoing Midpoint (ex-Supply) (2) 2015E Midpoint U.K. Regulated

$1.34

$1.36 Kentucky Regulated 0.45 0.45 0.48 PA Regulated 0.39 0.39 0.39 Supply 0.11 Corporate and Other (0.06)

(0.13)

(0.08)

Total

$2.23

$2.05

$2.15

$2.30

$2.25

$2.05

$2.15

$2.10

$2.00 Hypothetical (1)

(1)

(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.

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

Highly diversified fleet; environmentally well positioned

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

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

Tax-free transaction structure

Necessary regulatory approvals well understood

Expected closing in Q1 or Q2 2015

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 Montana Coal (4)

MT Coal 25% (Colstrip) /

100%

(J.E. Corette) 677 1968 - 1986 WECC Renewables NH, NJ, PA, VT Renewables 100%

65 Various Various Total 9,995 Talen Energy Asset Overview 26 (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.

PPL Energy Supply Assets (1),(2)

Sapphire Portfolio Jade Portfolio Raven Portfolio Asset Location Fuel Type Ownership Owned Capacity (MW)

COD Region Brandon Shores MD Coal 100%

1,273 1984 - 1991 PJM H.A. Wagner MD Coal / Natural Gas / Oil 100%

976 1956 - 1972 PJM 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 Elmw ood Park NJ Natural Gas / Oil 100%

71 1989 PJM 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 Nueces Bay 7 TX Natural Gas 100%

678 2010 ERCOT 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.

Baghouse /

FGD Dry Injection Closed-Cycle Cooling Tower Dry Handling /

Disposal /

Beneficial Use Pollutant Addressed NOx NOx SO2 Mercury PM Acid Gases Water Intake Coal Combustion Residuals (CCRs)

Unit 1

NR

(1)

Unit 2

NR

(1)

Unit 3

NR

(1)

Unit 1

Unit 2

Units 1 & 2 (2)

(2)

NR

(3)

Units 3 & 4

NR

(3)

Keystone Units 1 & 2

Conemaugh Units 1 & 2

Corette Unit 1

NR (4)

(4)

NR (4)

(4)

Unit 1

NR

Unit 2

NR

Unit 2

(5)

(6)

(5)

(7)

Unit 3

(5)

(6)

(5)

(7)

Unit 1 (8)

(5)

(7)

Unit 2 (8)

(5)

(7)

= Installed

Crane Wagner Brandon Shores Colstrip Montour

= Under Consideration Brunner Island Talen Energy Merchant Coal Fleet Environmental Controls 28

1. Recently finalized 316(b) regulations w ill require intake structure modifications for sites with once-through cooling tow ers. Pending ELG revisions could require additional controls on other w aste w ater streams.

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

3. Pending CCR regulations could require additional controls and/or costs throughout the fleet depending on final requirements.

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

5. Wagner and Crane are sw itching to Ultra-low Sulfur Coal from Indonesia (Adaro) in 2015 w hich will only require DSI capital expenditure for Crane to meet the MATS HCL standard.

6. Wagner injects activated carbon to control Mercury emissions to achieve Maryland Air Act requirements and comply w ith the proposed MATS rules requirements.

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

8. Crane has over-fired air w ith ash-reburn for NOx RACT Control.

NR = Not Required by Current or Proposed Regulations Talen Energy Environmental Controls

($mm)

Brunner Island Montour Colstrip Keystone Conemaugh Corette Brandon Shores H.A.

Wagner C.P. Crane Total 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 Modification (6)

$26.0

$26.0 Total

$117.8 (1)

To be completed by 2017.

(2)

Maryland Healthy Air Act.

(3)

Mercury and Air Toxics Standard to be completed by 2015.

(4)

Cross-State Air Pollution Rule.

Total Capital Expenditure Plan

($mm) 369 282 139 149 54 71 0

100 200 300 400 500 600 2015E 2016E PPL Energy Supply (ex-Nuclear Fuel)

PPL Energy Supply Nuclear Fuel CapEx RJS Power Holdings LLC (5)

Estimated cost and timing will be refined based upon analysis driven by final standard.

(6)

Driven by permit timing; to be completed by 2017.

Projected Major Environmental Spend

© PPL Corporation 2014 PPL Corporate Structure Post Spin 30 PPL Global LKE PPL Electric Utilities Kentucky Utilities Louisville Gas & Electric PPL Corporation PPL Capital Funding Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P NR BBB-NR Stable Moodys NR Baa3 Baa3 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P NR NR BBB Stable Moodys NR NR Baa3 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P NR BBB BBB Stable Moodys NR Baa1 Baa1 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P NR BBB-BBB Stable Moodys NR Baa2 Baa2 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P A-NR BBB Stable Moodys A2 Baa1 Baa1 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P A-NR BBB Stable Moodys A1 A3 A3 Stable Credit Rating Secured Unsecured Long-Term Issuer Outlook S&P A-NR BBB Stable Moodys A1 A3 A3 Stable

Customers: 1.4 million Electric

Allowed Distribution ROE: 10.40%

Rate Base: $4.2 billion (1)

5-Year Transmission Rate Base CAGR: 13.4%

5-Year Distribution Rate Base CAGR: 6.2%

Regulatory Entity: Pennsylvania PUC PPL Electric Utilities

Customers: 0.9 million Electric; 0.3 million Natural Gas

KU Allowed ROE: 10.25% (KY), 10.00% (VA)

LG&E Allowed ROE: 10.25%

Rate Base: $7.6 billion (1),(2)

5-Year Rate Base CAGR: 6.5%

Regulated Capacity: 8.1 GW

Regulatory Entities: Kentucky PSC, Virginia SCC Kentucky Utilities

Customers: 7.8 million Electric

Rate Base: $9.1 billion (1),(2)

5-Year Rate Base CAGR: 5.6%

Regulatory Entity: Ofgem U.K. Delivery (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.

© PPL Corporation 2014 U.K. Regulated Segment Overview Investment Highlights Highly attractive rateregulated business Regulatorapproved multiyear forwardlooking revenues based on future business plan, including capital expenditures and O&M plus adjustments for inflation Realtime return of and return on capital investment - no lag No volumetric risk Additional incentives for operational efficiency and highquality service Bestinclass management team with track record of delivering results 32 Capital Expenditure Plan (1)

($bn)

United Kingdom Delivery Territories Projected Rate Base Growth (1),(2)

($bn)

(1)

Figures based on assumed exchange rate of $1.58 / GBP.

(2)

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

1.34 1.20 1.23 1.20 1.22 0.00 0.50 1.00 1.50 2.00 2014E 2015E 2016E 2017E 2018E 9.1 9.6 10.2 10.8 11.4 12.0 0.0 4.0 8.0 12.0 16.0 2013A 2014E 2015E 2016E 2017E 2018E

© PPL Corporation 2014 0.60 0.52 0.32 0.33 0.38 0.62 0.65 0.92 0.73 0.56 1.22 1.17 1.24 1.06 0.94 0.00 0.50 1.00 1.50 2.00 2014E 2015E 2016E 2017E 2018E LKE ECR LKE Base Kentucky Regulated Segment Overview Investment Highlights Efficient, wellrun utilities focused on safety, reliability and customer service Constructive regulatory environment that provides a timely return on a substantial amount of planned CapEx over the next 5 years Environmental Cost Recovery (ECR): ~$2.3 billion estimated spend on projects approved by the KPSC with a 10.25% ROE - virtually no regulatory lag Other supportive recovery mechanisms include Construction Work In Progress, Fuel Adjustment Clause, Gas Supply Clause Adjustment and Demand Side Management recovery 33 Capital Expenditure Plan

($bn)

Kentucky Delivery Territories Projected Rate Base Growth

($bn)

(1)

Expect between 80% and 90% to receive timely returns via ECR mechanism based on historical experience and future projections.

7.6 8.3 9.0 9.7 10.1 10.5 0.0 4.0 8.0 12.0 16.0 2013A 2014E 2015E 2016E 2017E 2018E (1)

© PPL Corporation 2014 Pennsylvania Regulated Segment Overview Investment Highlights Significant growth in transmission portion of business which earns a favorable rate of return on a near realtime basis

- CAGR of 13.4% in transmission rate base through 2018 driven by initiatives to improve aging infrastructure

- ROE of 11.68% earned through FERC Formula Rate Mechanism

- ROE of 12.93% and return on CWIP for $630 million SusquehannaRoseland project

- Return on CWIP for $310 million of Northeast Pocono Reliability project Reliability initiatives drive distribution rate base growth at a projected CAGR of over 6% through 2018 Act 11 - Alternative ratemaking legislation provides for more timely recovery of about $800 million in distribution plant costs that improve and maintain safety and reliability based upon a fiveyear plan filed with the PA PUC 34 Capital Expenditure Plan

($bn)

Pennsylvania Delivery Territories Projected Rate Base Growth

($bn) 0.63 0.55 0.53 0.57 0.57 0.32 0.33 0.35 0.42 0.43 0.95 0.88 0.88 0.99 1.00 0.0 0.5 1.0 1.5 2.0 2014E 2015E 2016E 2017E 2018E PA Transmission PA Distribution 1.6 2.0 2.3 2.7 2.8 3.0 2.6 2.8 2.9 3.1 3.3 3.5 4.2 4.8 5.2 5.8 6.1 6.5 0.0 2.0 4.0 6.0 8.0 2013A 2014E 2015E 2016E 2017E 2018E PA Transmission PA Distribution

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.

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.

(0.01)

Change in WPD line loss accrual (0.08)

(0.08)

(0.09)

(0.09) 1.25 0.45 0.39 (0.13) 1.96 2.01 1.91 Total Regulated Regulated Regulated and Other Other:

Total Special Items Reported Earnings Earnings from Ongoing Operations Special Items:

Foreign currency-related economic hedges 2014 Midpoint(1)

U.K.

Kentucky Pennsylvania Corporate Hypothetical Forecast (per share - diluted, ex-Supply) 2014 2014 High Low 1.36 0.48 0.39 (0.08) 2.15 2.25 2.05 1.36 0.48 0.39 (0.08) 2.15 2.25 2.05 2015 2015 High Low 2015 Midpoint U.K.

Kentucky Pennsylvania Corporate Forecast (per share - diluted)

Total Special Items Reported Earnings Earnings from Ongoing Operations Special Items:

Total Regulated Regulated Regulated and Other 1.34 0.45 0.39 0.11 (0.06) 2.23 2.30 2.15 (0.20)

(0.20)

(0.01)

(0.02)

Change in WPD line loss accrual (0.08)

(0.08)

(0.09)

(0.22)

(0.31)

(0.31) 1.25 0.45 0.39 (0.11)

(0.06) 1.92 1.99 1.84 2014 2014 High Low (After-Tax)

(Unaudited) 2014 Midpoint(1)

U.K.

Kentucky Pennsylvania Corporate Forecast (per share - diluted)

Other:

Total Special Items Reported Earnings Earnings from Ongoing Operations Special Items:

Adjusted energy-related economic activity, net Foreign currency-related economic hedges Kerr Dam Project impairment Total Regulated Regulated Regulated Supply and Other (1) 2014 forecasts reflect special items recorded in Q1 2014.

© PPL Corporation 2014 Other Non-GAAP Financial Measures 37 "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 making 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).

Workforce 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 market 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.

© PPL Corporation 2014 38 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.

Cautionary Statements and Factors That May Affect Future Results

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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