Edgar Filing: KENTUCKY UTILITIES CO

form10q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 September 30, 2012
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

1-32944	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

333-173665	LG&E and KU Energy LLC (Exact name of Registrant as specified in its charter) (Kentucky) 220 West Main Street Louisville, KY 40202-1377 (502) 627-2000	20-0523163

1-2893	Louisville Gas and Electric Company (Exact name of Registrant as specified in its charter) (Kentucky) 220 West Main Street Louisville, KY 40202-1377 (502) 627-2000	61-0264150

1-3464	Kentucky Utilities Company (Exact name of Registrant as specified in its charter) (Kentucky and Virginia) One Quality Street Lexington, KY 40507-1462 (502) 627-2000	61-0247570

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
LG&E and KU Energy LLC	Yes X	No
Louisville Gas and Electric Company	Yes X	No
Kentucky Utilities Company	Yes X	No

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

PPL Corporation	Yes X	No
PPL Energy Supply, LLC	Yes X	No
PPL Electric Utilities Corporation	Yes X	No
LG&E and KU Energy LLC	Yes X	No
Louisville Gas and Electric Company	Yes X	No
Kentucky Utilities Company	Yes X	No

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company
PPL Corporation	[ X ]	[ ]	[ ]	[ ]
PPL Energy Supply, LLC	[ ]	[ ]	[ X ]	[ ]
PPL Electric Utilities Corporation	[ ]	[ ]	[ X ]	[ ]
LG&E and KU Energy LLC	[ ]	[ ]	[ X ]	[ ]
Louisville Gas and Electric Company	[ ]	[ ]	[ X ]	[ ]
Kentucky Utilities Company	[ ]	[ ]	[ 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
LG&E and KU Energy LLC	Yes	No X
Louisville Gas and Electric Company	Yes	No X
Kentucky Utilities Company	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, $0.01 par value, 581,705,916 shares outstanding at October 31, 2012.

	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 October 31, 2012.

	LG&E and KU Energy LLC	PPL Corporation directly holds all of the membership interests in LG&E and KU Energy LLC.

	Louisville Gas and Electric Company	Common stock, no par value, 21,294,223 shares outstanding and all held by LG&E and KU Energy LLC at October 31, 2012.

	Kentucky Utilities Company	Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at October 31, 2012.

This document is available free of charge at the Investor Center on PPL Corporation's website at www.pplweb.com. However, information on this website does not constitute a part of this Form 10-Q.

PPL CORPORATION

PPL ENERGY SUPPLY, LLC

PPL ELECTRIC UTILITIES CORPORATION

LG&E AND KU ENERGY LLC

LOUISVILLE GAS AND ELECTRIC COMPANY

KENTUCKY UTILITIES COMPANY

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2012

Table of Contents

This combined Form 10-Q is separately filed by the following individual registrants: PPL Corporation, PPL Energy Supply, LLC, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company. Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf, and no registrant makes any representation as to information relating to any other registrant, except that information under "Forward-Looking Information" relating to PPL Corporation subsidiaries is also attributed to PPL Corporation and information relating to the subsidiaries of LG&E and KU Energy LLC is also attributed to LG&E and KU Energy LLC.

Unless otherwise specified, references within this Report, individually, to PPL Corporation, PPL Energy Supply, LLC, PPL Electric Utilities Corporation, LG&E and KU Energy LLC, Louisville Gas and Electric Company and Kentucky Utilities Company are references to such entities directly or to one or more of their subsidiaries, as the case may be, the financial results of which are consolidated into such Registrants in accordance with GAAP. This presentation has been applied where identification of particular subsidiaries is not material to the matter being disclosed, and to conform narrative disclosures to the presentation of financial information on a consolidated basis.

					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	3
			Condensed Consolidated Statements of Comprehensive Income	4
			Condensed Consolidated Statements of Cash Flows	5
			Condensed Consolidated Balance Sheets	6
			Condensed Consolidated Statements of Equity	8
		PPL Energy Supply, LLC and Subsidiaries
			Condensed Consolidated Statements of Income	9
			Condensed Consolidated Statements of Comprehensive Income	10
			Condensed Consolidated Statements of Cash Flows	11
			Condensed Consolidated Balance Sheets	12
			Condensed Consolidated Statements of Equity	14
		PPL Electric Utilities Corporation and Subsidiaries
			Condensed Consolidated Statements of Income	16
			Condensed Consolidated Statements of Cash Flows	17
			Condensed Consolidated Balance Sheets	18
			Condensed Consolidated Statements of Shareowners' Equity	20
		LG&E and KU Energy LLC and Subsidiaries
			Condensed Consolidated Statements of Income	22
			Condensed Consolidated Statements of Cash Flows	23
			Condensed Consolidated Balance Sheets	24
			Condensed Consolidated Statements of Equity	26
		Louisville Gas and Electric Company
			Condensed Statements of Income	28
			Condensed Statements of Cash Flows	29
			Condensed Balance Sheets	30
			Condensed Statements of Equity	32

		Kentucky Utilities Company
			Condensed Statements of Income	34
			Condensed Statements of Cash Flows	35
			Condensed Balance Sheets	36
			Condensed Statements of Equity	38
	Combined Notes to Condensed Financial Statements (Unaudited)
		1. Interim Financial Statements		39
		2. Summary of Significant Accounting Policies		39
		3. Segment and Related Information		40
		4. Earnings Per Share		41
		5. Income Taxes		42
		6. Utility Rate Regulation		46
		7. Financing Activities		52
		8. Acquisitions, Development and Divestitures		56
		9. Defined Benefits		59
		10. Commitments and Contingencies		61
		11. Related Party Transactions		77
		12. Other Income (Expense) - net		79
		13. Fair Value Measurements and Credit Concentration		80
		14. Derivative Instruments and Hedging Activities		87
		15. Goodwill		100
		16. Asset Retirement Obligations		100
		17. Available-for-Sale Securities		101
		18. New Accounting Guidance Pending Adoption		102
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
			PPL Corporation and Subsidiaries	103
			PPL Energy Supply, LLC and Subsidiaries	132
			PPL Electric Utilities Corporation and Subsidiaries	146
			LG&E and KU Energy LLC and Subsidiaries	155
			Louisville Gas and Electric Company	164
			Kentucky Utilities Company	171
	Item 3. Quantitative and Qualitative Disclosures About Market Risk			178
	Item 4. Controls and Procedures			178
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings			179
	Item 1A. Risk Factors			179
	Item 4. Mine Safety Disclosures			179
	Item 6. Exhibits			180
SIGNATURES				182
COMPUTATIONS OF RATIO OF EARNINGS TO FIXED CHARGES				183
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002				189
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002				201

GLOSSARY OF TERMS AND ABBREVIATIONS

PPL Corporation and its current and former subsidiaries

Central Networks - collectively Central Networks East plc, Central Networks Limited and certain other related assets and liabilities. On April 1, 2011, PPL WEM Holdings plc (formerly WPD Investment Holdings Limited) purchased all of the outstanding ordinary share capital of these companies from E.ON AG subsidiaries. Central Networks West plc (subsequently renamed Western Power Distribution (West Midlands) plc), wholly owned by Central Networks Limited (subsequently renamed WPD Midlands Holdings Limited), and Central Networks East plc (subsequently renamed Western Power Distribution (East Midlands) plc) are British regional electricity distribution utility companies.

KU - Kentucky Utilities Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky. The subsidiary was acquired by PPL through the acquisition of LKE in November 2010.

LG&E - Louisville Gas and Electric Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity and the distribution and sale of natural gas in Kentucky. The subsidiary was acquired by PPL through the acquisition of LKE in November 2010.

LKE - LG&E and KU Energy LLC (formerly E.ON U.S. LLC), a subsidiary of PPL and the parent of LG&E, KU and other subsidiaries. PPL acquired E.ON U.S. LLC in November 2010 and changed the name to LG&E and KU Energy LLC. Within the context of this document, references to LKE also relate to the consolidated entity.

LKS - LG&E and KU Services Company (formerly E.ON U.S. Services Inc.), a subsidiary of LKE that provides services for LKE and its subsidiaries. The subsidiary was acquired by PPL through the acquisition of LKE in November 2010.

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

PPL Brunner Island - PPL Brunner Island, LLC, a subsidiary of PPL Generation that owns generating operations in Pennsylvania.

PPL Capital Funding - PPL Capital Funding, Inc., a wholly owned financing subsidiary of PPL.

PPL Electric - PPL Electric Utilities Corporation, a public utility subsidiary of PPL that transmits and distributes electricity in its Pennsylvania service area and provides electric supply to retail customers in this area as a PLR.

PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent holding company of PPL Energy Supply, PPL Global (effective January 2011) and other subsidiaries.

PPL EnergyPlus - PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply that markets and trades wholesale and retail electricity and gas, and supplies energy and energy services in competitive markets.

PPL Energy Supply - PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the parent company of PPL Generation, PPL EnergyPlus and other subsidiaries. In January 2011, PPL Energy Supply distributed its membership interest in PPL Global, representing 100% of the outstanding membership interests of PPL Global, to PPL Energy Supply's parent, PPL Energy Funding.

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 Funding that primarily owns and operates a business in the U.K., WPD, that is focused on the regulated distribution of electricity. In January 2011, PPL Energy Supply, PPL Global's former parent, distributed its membership interest in PPL Global, representing 100% of the outstanding membership interest of PPL Global, to its parent, PPL Energy Funding.

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

PPL Services - PPL Services Corporation, a subsidiary of PPL that provides services for PPL and its subsidiaries.

PPL Susquehanna - PPL Susquehanna, LLC, the nuclear generating subsidiary of PPL Generation.

PPL WEM - PPL WEM Holdings plc (formerly WPD Investment Holdings Limited), an indirect, wholly owned U.K. subsidiary of PPL Global. PPL WEM indirectly wholly owns both WPD (East Midlands) and WPD (West Midlands).

PPL WW - PPL WW Holdings Limited (formerly Western Power Distribution Holdings Limited), an indirect, wholly owned U.K. subsidiary of PPL Global. PPL WW Holdings indirectly wholly owns WPD (South Wales) and WPD (South West).

WPD - refers to PPL WW and PPL WEM and their subsidiaries.

WPD (East Midlands) - Western Power Distribution (East Midlands) plc, a British regional electricity distribution utility company. The company (formerly Central Networks East plc) was acquired and renamed in April 2011.

WPD Midlands - refers to Central Networks, which was renamed after the acquisition.

WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electricity distribution utility company.

WPD (South West) - Western Power Distribution (South West) plc, a British regional electricity distribution utility company.

WPD (West Midlands) - Western Power Distribution (West Midlands) plc, a British regional electricity distribution utility company. The company (formerly Central Networks West plc) was acquired and renamed in April 2011.

WKE - Western Kentucky Energy Corp., a subsidiary of LKE that leased certain non-utility generating plants in western Kentucky until July 2009. The subsidiary was acquired by PPL through the acquisition of LKE in November 2010.

Other terms and abbreviations

£ - British pound sterling.

2010 Equity Unit(s) - a PPL equity unit, issued in June 2010, consisting of a 2010 Purchase Contract and, initially, a 5.0% undivided beneficial ownership interest in $1,000 principal amount of PPL Capital Funding 4.625% Junior Subordinated Notes due 2018.

2010 Purchase Contract(s) - a contract that is a component of a 2010 Equity Unit that requires holders to purchase shares of PPL common stock on or prior to July 1, 2013.

2011 Bridge Facility - the £3.6 billion Senior Bridge Term Loan Credit Agreement between PPL Capital Funding and PPL WEM, as borrowers, and PPL, as guarantor, and lenders party thereto, used to fund the April 1, 2011 acquisition of Central Networks, as amended by Amendment No. 1 thereto dated April 15, 2011.

2011 Equity Unit(s) - a PPL equity unit, issued in April 2011, consisting of a 2011 Purchase Contract and, initially, a 5.0% undivided beneficial ownership interest in $1,000 principal amount of PPL Capital Funding 4.32% Junior Subordinated Notes due 2019.

2011 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2011.

2011 Purchase Contract(s) - a contract that is a component of a 2011 Equity Unit that requires holders to purchase shares of PPL common stock on or prior to May 1, 2014.

Act 129 - became effective in October 2008. The law amends the Pennsylvania Public Utility Code and creates an energy efficiency and conservation program and smart metering technology requirements, adopts new PLR electricity supply procurement rules, provides remedies for market misconduct and makes changes to the existing Alternative Energy Portfolio Standard.

AFUDC - Allowance for Funds Used During Construction, the cost of equity and debt funds used to finance construction projects of regulated businesses, which is capitalized as part of construction costs.

AOCI - accumulated other comprehensive income or loss.

ARO - asset retirement obligation.

Baseload generation - includes the output provided by PPL's nuclear, coal, hydroelectric and qualifying facilities.

Basis - when used in the context of derivatives and commodity trading, the commodity price differential between two locations, products or time periods.

Bcf - billion cubic feet.

Bluegrass CTs - three natural gas combustion turbines owned by Bluegrass Generation. In 2011, LG&E and KU entered into an asset purchase agreement with Bluegrass Generation for the purchase of these combustion turbines, subject to certain conditions including receipt of applicable regulatory approvals and clearances. In June 2012, LG&E and KU terminated the asset purchase agreement.

Bluegrass Generation - Bluegrass Generation Company, L.L.C., an exempt wholesale electricity generator in LaGrange, Kentucky.

BREC - Big Rivers Electric Corporation, a power-generating rural electric cooperative in western Kentucky.

CAIR - the EPA's Clean Air Interstate Rule.

Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions, including acid rain, ozone and toxic air emissions.

COLA - license application for a combined construction permit and operating license from the NRC for a nuclear plant.

CPCN - Certificate of Public Convenience and Necessity. Authority granted by the KPSC pursuant to Kentucky Revised Statute 278.020 to provide utility service to or for the public or the construction of any plant, equipment, property or facility for furnishing of utility service to the public.

CSAPR - Cross-State Air Pollution Rule, the CSAPR implements Clean Air Act requirements concerning the transport of air pollution from power plants across state boundaries. The CSAPR replaces the 2005 CAIR, which the U.S. Court of Appeals for the D.C. Circuit ordered the EPA to revise in 2008. The court has granted a stay allowing CAIR to remain in place pending a ruling on the legal challenges to the CSAPR. In August 2012, the court remanded CSAPR to the EPA for further action.

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.

Depreciation not normalized - the flow-through income tax impact related to the state regulatory treatment of depreciation-related timing differences.

Dodd-Frank Act - the Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law in July 2010.

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

DPCR4 - Distribution Price Control Review 4, the U.K. 5-year rate review period applicable to WPD that commenced April 1, 2005.

DPCR5 - Distribution Price Control Review 5, the U.K. 5-year rate review period applicable to WPD that commenced April 1, 2010.

DRIP - Dividend Reinvestment and Direct Stock Purchase Plan.

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DSM - Demand Side Management. Pursuant to Kentucky Revised Statute 278.285, the KPSC may determine the reasonableness of DSM plans proposed by any utility under its jurisdiction. Proposed DSM mechanisms may seek full recovery of DSM programs and revenues lost by implementing those programs and/or incentives designed to provide financial rewards to the utility for implementing cost-effective DSM programs. The cost of such programs shall be assigned only to the class or classes of customers which benefit from the programs.

ECR - Environmental Cost Recovery. Pursuant to Kentucky Revised Statute 278.183, effective January 1993, Kentucky electric utilities are entitled to the current recovery of costs of complying with the Clean Air Act, as amended, and those federal, state or local environmental requirements which apply to coal combustion and by-products from the production of energy from coal.

E.ON AG - a German corporation and the parent of E.ON UK plc, the former parent of Central Networks, and the indirect parent of E.ON US Investments Corp., the former parent of LKE.

EPA - Environmental Protection Agency, a U.S. government agency.

EPS - earnings per share.

Equity Units - refers collectively to the 2011 and 2010 Equity Units.

ESOP - Employee Stock Ownership Plan.

Euro - the basic monetary unit among participating members of the European Union.

E.W. Brown - a generating station in Kentucky with capacity of 1,631 MW.

FERC - Federal Energy Regulatory Commission, the federal agency that regulates, among other things, interstate transmission and wholesale sales of electricity, hydroelectric power projects and related matters.

Fitch - Fitch, Inc., a credit rating agency.

FTRs - 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 require the holder to remit payment for certain congestion-related transmission charges based on the level of congestion in the transmission grid.

Fundamental Change - as it relates to the terms of the 2011 and 2010 Equity Units, will be deemed to have occurred if any of the following occurs with respect to PPL, subject to certain exceptions: (i) a change of control; (ii) a consolidation with or merger into any other entity; (iii) common stock ceases to be listed or quoted; or (iv) a liquidation, dissolution or termination.

GAAP - Generally Accepted Accounting Principles in the U.S.

GBP - British pound sterling.

GHG - greenhouse gas(es).

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

Intermediate and peaking generation - includes the output provided by PPL's oil- and natural gas-fired units.

Ironwood Acquisition - In April 2012, PPL Ironwood Holdings, LLC, an indirect, wholly owned subsidiary of PPL Energy Supply, completed the acquisition from a subsidiary of The AES Corporation of all of the equity interests of AES Ironwood, L.L.C. (subsequently renamed PPL Ironwood, LLC) and AES Prescott, L.L.C. (subsequently renamed PPL Prescott, LLC), which own and operate, respectively, the Ironwood Facility.

Ironwood Facility - a natural gas-fired power plant in Lebanon, Pennsylvania with a summer rating of 657 MW.

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

ISO - Independent System Operator.

KPSC - Kentucky Public Service Commission, the state agency that has jurisdiction over the regulation of rates and service of utilities in Kentucky.

kV - kilovolt

LIBOR - London Interbank Offered Rate.

Long Island generation business - includes a 79.9 MW gas-fired plant in the Edgewood section of Brentwood, New York and a 79.9 MW oil-fired plant in Shoreham, New York and related tolling agreements. This business was sold in February 2010.

Moody's - Moody's Investors Service, Inc., a credit rating agency.

MW - megawatt, one thousand kilowatts.

NDT - PPL Susquehanna's nuclear plant decommissioning trust.

NERC - North American Electric Reliability Corporation.

NGCC - natural gas-fired combined-cycle turbine.

NPDES - National Pollutant Discharge Elimination System.

NPNS - the normal purchases and normal sales exception as permitted by derivative accounting rules. Derivatives that qualify for this exception receive accrual accounting treatment.

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

OCI - other comprehensive income or loss.

Ofgem - Office of Gas and Electricity Markets, the British agency that regulates transmission, distribution and wholesale sales of electricity and related matters.

Opacity - the degree to which emissions reduce the transmission of light and obscure the view of an object in the background. There are emission regulations that limit the opacity in power plant stack gas emissions.

OVEC - Ohio Valley Electric Corporation, located in Piketon, Ohio, an entity in which LKE indirectly owns an 8.13% interest (consists of LG&E's 5.63% and KU's 2.50% interests), which is accounted for as a cost-method investment. OVEC owns and operates two coal-fired power plants, the Kyger Creek plant in Ohio and the Clifty Creek plant in Indiana, with combined nameplate capacities of 2,390 MW.

PADEP - the Pennsylvania Department of Environmental Protection, a state government agency.

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 default electricity supply to retail customers within its delivery area who have not chosen to select an alternative electricity supplier under the Customer Choice Act.

PP&E - property, plant and equipment.

Predecessor - refers to the LKE, LG&E and KU pre-acquisition activity covering the time period prior to November 1, 2010.

PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.

Purchase Contract(s) - refers collectively to the 2010 and 2011 Purchase Contracts.

RAV - regulatory asset value. This term is also commonly known as RAB or regulatory asset base.

RECs - renewable energy credits.

Registrants - PPL, PPL Energy Supply, PPL Electric, LKE, LG&E and KU, collectively.

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.

RFC - Reliability First Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.

Rev. Proc(s). - Revenue Procedure(s), an official published statement by the IRS of a matter of procedural importance to both taxpayers and the IRS concerning administration of the tax laws.

RMC - Risk Management Committee.

S&P - Standard & Poor's Ratings Services, a credit rating agency.

Sarbanes-Oxley - Sarbanes-Oxley Act of 2002, which sets requirements for management's assessment of internal controls for financial reporting. It also requires an independent auditor to make its own assessment.

SCR - selective catalytic reduction, a pollution control process for the removal of nitrogen oxide from exhaust gases.

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

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

Securities Act of 1933 - the Securities Act of 1933, 15 U.S. Code, Sections 77a-77aa, as amended.

SERC - SERC Reliability Corporation, one of eight regional entities with delegated authority from NERC that work to safeguard the reliability of the bulk power systems throughout North America.

SIFMA Index - the Securities Industry and Financial Markets Association Municipal Swap Index.

Smart meter - an electric meter that utilizes smart metering technology.

Smart metering technology - technology that can measure, among other things, time of electricity consumption to permit offering rate incentives for usage during lower cost or demand intervals. The use of this technology also strengthens network reliability.

SMGT - Southern Montana Electric Generation & Transmission Cooperative, Inc., a Montana cooperative and purchaser of electricity under a long-term supply contract with PPL EnergyPlus that was terminated effective April 1, 2012.

SNCR - selective non-catalytic reduction, a pollution control process for the removal of nitrogen oxide from exhaust gases using ammonia.

Successor - refers to the LKE, LG&E and KU post-acquisition activity covering the time period after October 31, 2010.

Superfund - federal environmental legislation that addresses remediation of contaminated sites; states also have similar statutes.

TC2 - Trimble County Unit 2, a coal-fired plant located in Kentucky with a net summer capacity of 732 MW. LKE indirectly owns a 75% interest (consists of LG&E's 14.25% and KU's 60.75% interests) in TC2 or 549 MW of the capacity.

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 electricity for delivery back to the third party.

TRA - Tennessee Regulatory Authority, the state agency that has jurisdiction over the regulation of rates and service of utilities in Tennessee.

Utilization Factor - a measure reflecting the percentage of electricity actually generated by plants compared with the electricity the plants could produce at full capacity when available.

VaR - value-at-risk, a statistical model that attempts to estimate the value of potential loss over a given holding period under normal market conditions at a given confidence level.

VIE - variable interest entity.

Volumetric risk - the risk that the actual load volumes provided under full-requirement sales contracts could vary significantly from forecasted volumes.

VSCC - Virginia State Corporation Commission, the state agency that has jurisdiction over the regulation of Virginia corporations, including utilities.

VWAP - as it relates to the 2011 and 2010 Equity Units issued by PPL, the per share volume-weighted-average price as displayed under the heading Bloomberg VWAP on Bloomberg page "PPL <EQUITY> AQR" (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading on the relevant trading day until the scheduled close of trading on the relevant trading day (or if such volume-weighted-average price is unavailable, the market price of one share of PPL common stock on such trading day determined, using a volume-weighted-average method, by a nationally recognized independent investment banking firm retained for this purpose by PPL).

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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 fact are "forward-looking statements" within the meaning of the federal securities laws. Although the Registrants 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. Forward-looking statements are subject to many risks and uncertainties, and actual results may differ materially from the results discussed in forward-looking statements. In addition to the specific factors discussed in each Registrant's 2011 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.

·	fuel supply cost and availability;

·	continuing ability to recover fuel costs and environmental expenditures in a timely manner at LG&E and KU, and natural gas supply costs at LG&E;

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

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

·	the length and cost of scheduled and unscheduled outages at our generating facilities;

·	transmission and distribution system conditions and operating costs;

·	expansion of alternative sources of electricity generation;

·	collective labor bargaining negotiations;

·	the outcome of litigation against the Registrants and their subsidiaries;

·	potential effects of threatened or actual terrorism, war or other hostilities, cyber-based intrusions or natural disasters;

·	the commitments and liabilities of the Registrants and their subsidiaries;

·	market demand and prices for energy, capacity, transmission services, emission allowances, RECs and delivered fuel;

·	competition in retail and wholesale power and natural gas markets;

·	liquidity of wholesale power markets;

·	defaults by counterparties under energy, fuel or other power product contracts;

·	market prices of commodity inputs for ongoing capital expenditures;

·	capital market conditions, including the availability of capital or credit, changes in interest rates and certain economic indices, and decisions regarding capital structure;

·	stock price performance of PPL;

·	volatility in the fair value of debt and equity securities and its impact on the value of assets in the NDT funds and in defined benefit plans, and the potential cash funding requirements if fair value declines;

·	interest rates and their effect on pension, retiree medical, and nuclear decommissioning liabilities, and interest payable on certain debt securities;

·	volatility in or the impact of other changes in financial or commodity markets and economic conditions;

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

·	changes in securities and credit ratings;

·	foreign currency exchange rates;

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

·	legal, regulatory, political, market or other reactions to the 2011 incident at the nuclear generating facility at Fukushima, Japan, including additional NRC requirements;

·	political, regulatory or economic conditions in states, regions or countries where the Registrants or their subsidiaries conduct business;

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

·	new state, federal or foreign legislation or regulatory developments;

·	the outcome of any rate cases or other cost recovery filings by PPL Electric at the PUC or the FERC, by LG&E at the KPSC or the FERC, by KU at the KPSC, VSCC, TRA or the FERC, or by WPD at Ofgem in the U.K.;

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

·	the effect of any business or industry restructuring;

·	development of new projects, markets and technologies;

·	performance of new ventures; and

·	business dispositions or acquisitions and our ability to successfully operate such acquired businesses and realize expected benefits from business acquisitions, including PPL's 2011 acquisition of WPD Midlands and 2010 acquisition of LKE.

Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of the Registrants 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 the Registrants to predict all 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 the Registrants undertake no obligation 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 share data)

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
				2012		2011			2012		2011
Operating Revenues
	Utility			$	1,693	$	1,675	$	5,012	$	4,695
	Unregulated retail electric and gas				218		189		620		517
	Wholesale energy marketing
		Realized			1,076		907		3,367		2,677
		Unrealized economic activity (Note 14)			(716)		216		(322)		229
	Net energy trading margins				(11)		(7)		7		14
	Energy-related businesses				143		140		380		387
	Total Operating Revenues				2,403		3,120		9,064		8,519

Operating Expenses
	Operation
		Fuel			570		603		1,405		1,492
		Energy purchases
			Realized		583		362		2,253		1,467
			Unrealized economic activity (Note 14)		(569)		176		(420)		49
		Other operation and maintenance			650		735		2,095		2,041
	Depreciation				278		252		813		697
	Taxes, other than income				90		90		268		238
	Energy-related businesses				137		135		363		368
	Total Operating Expenses				1,739		2,353		6,777		6,352

Operating Income					664		767		2,287		2,167

Other Income (Expense) - net					(44)		37		(31)		(2)

Other-Than-Temporary Impairments							5		1		6

Interest Expense					248		240		714		678

Income from Continuing Operations Before Income Taxes					372		559		1,541		1,481

Income Taxes					17		110		364		429

Income from Continuing Operations After Income Taxes					355		449		1,177		1,052

Income (Loss) from Discontinued Operations (net of income taxes)									(6)		2

Net Income					355		449		1,171		1,054

Net Income Attributable to Noncontrolling Interests							5		4		13

Net Income Attributable to PPL Shareowners				$	355	$	444	$	1,167	$	1,041

Amounts Attributable to PPL Shareowners:
	Income from Continuing Operations After Income Taxes			$	355	$	444	$	1,173	$	1,039
	Income (Loss) from Discontinued Operations (net of income taxes)								(6)		2
	Net Income			$	355	$	444	$	1,167	$	1,041

Earnings Per Share of Common Stock:
	Income from Continuing Operations After Income Taxes Available to PPL
	Common Shareowners:
		Basic		$	0.61	$	0.76	$	2.01	$	1.91
		Diluted		$	0.61	$	0.76	$	2.01	$	1.91
	Net Income Available to PPL Common Shareowners:
		Basic		$	0.61	$	0.76	$	2.00	$	1.92
		Diluted		$	0.61	$	0.76	$	2.00	$	1.91

Dividends Declared Per Share of Common Stock				$	0.36	$	0.35	$	1.08	$	1.05

Weighted-Average Shares of Common Stock Outstanding (in thousands)
		Basic			580,585		577,595		579,847		541,135
		Diluted			582,636		578,054		580,930		541,480

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
				2012		2011		2012		2011

Net income				$	355	$	449	$	1,171	$	1,054

Other comprehensive income (loss):
Amounts arising during the period - gains (losses), net of tax (expense)
	benefit:
		Foreign currency translation adjustments, net of tax of $1, ($2), $1, ($1)			152		(4)		49		156
		Available-for-sale securities, net of tax of ($14), $28, ($34), $15			13		(26)		28		(13)
		Qualifying derivatives, net of tax of $14, ($19), ($41), ($30)			(41)		41		27		48
		Equity investees' other comprehensive income (loss), net of
			tax of $0, $0, $2, $0						(3)		(1)
		Defined benefit plans:
			Net actuarial gain (loss), net of tax of $0, $0, $28, $0				1		(85)		1
Reclassifications to net income - (gains) losses, net of tax expense
	(benefit):
		Available-for-sale securities, net of tax of $0, $0, $3, $5					2		(4)		(6)
		Qualifying derivatives, net of tax of $51, $57, $222, $163			(61)		(94)		(323)		(252)
		Equity investees' other comprehensive (income) loss, net of
			tax of $0, $0, $0, $0								3
		Defined benefit plans:
			Prior service costs, net of tax of ($1), ($2), ($4), ($5)		1		2		6		7
			Net actuarial loss, net of tax of ($6), ($4), ($17), ($14)		17		13		54		36
Total other comprehensive income (loss) attributable to PPL
	Shareowners				81		(65)		(251)		(21)

Comprehensive income (loss)					436		384		920		1,033
		Comprehensive income attributable to noncontrolling interests					5		4		13

Comprehensive income (loss) attributable to PPL Shareowners				$	436	$	379	$	916	$	1,020

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

				Nine Months Ended September 30,
				2012		2011
Cash Flows from Operating Activities
	Net income			$	1,171	$	1,054
	Adjustments to reconcile net income to net cash provided by operating activities
		Depreciation			813		697
		Amortization			144		180
		Defined benefit plans - expense			123		165
		Deferred income taxes and investment tax credits			298		403
		Unrealized (gains) losses on derivatives, and other hedging activities			21		(190)
		Other			34		110
	Change in current assets and current liabilities
		Accounts receivable			19		(134)
		Accounts payable			(175)		(164)
		Unbilled revenues			121		236
		Prepayments			(11)		286
		Counterparty collateral			13		(273)
		Taxes			29		(64)
		Accrued interest			43		111
		Other			15		87
	Other operating activities
		Defined benefit plans - funding			(526)		(565)
		Other assets			1		(22)
		Other liabilities			(39)		(71)
			Net cash provided by operating activities		2,094		1,846
Cash Flows from Investing Activities
	Expenditures for property, plant and equipment				(2,078)		(1,685)
	Proceeds from the sale of certain non-core generation facilities						381
	Ironwood Acquisition, net of cash acquired				(84)
	Acquisition of WPD Midlands						(5,763)
	Purchases of nuclear plant decommissioning trust investments				(112)		(144)
	Proceeds from the sale of nuclear plant decommissioning trust investments				102		134
	Proceeds from the sale of other investments				20		163
	Net (increase) decrease in restricted cash and cash equivalents				62		(51)
	Other investing activities				(26)		(74)
			Net cash provided by (used in) investing activities		(2,116)		(7,039)
Cash Flows from Financing Activities
	Issuance of long-term debt				824		5,245
	Retirement of long-term debt				(105)		(708)
	Issuance of common stock				54		2,281
	Payment of common stock dividends				(623)		(543)
	Redemption of preference stock of a subsidiary				(250)
	Debt issuance and credit facility costs				(10)		(84)
	Contract adjustment payments				(71)		(49)
	Net increase (decrease) in short-term debt				(51)		(322)
	Other financing activities				(8)		(16)
			Net cash provided by (used in) financing activities		(240)		5,804
Effect of Exchange Rates on Cash and Cash Equivalents					6		(25)
Net Increase (Decrease) in Cash and Cash Equivalents					(256)		586
Cash and Cash Equivalents at Beginning of Period					1,202		925
Cash and Cash Equivalents at End of Period				$	946	$	1,511

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

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
			September 30,		December 31,
			2012		2011
Assets

Current Assets
	Cash and cash equivalents		$	946	$	1,202
	Short-term investments					16
	Restricted cash and cash equivalents			88		152
	Accounts receivable (less reserve: 2012, $63; 2011, $54)
		Customer		763		736
		Other		51		91
	Unbilled revenues			711		830
	Fuel, materials and supplies			663		654
	Prepayments			167		160
	Price risk management assets			1,768		2,548
	Regulatory assets			21		9
	Other current assets			49		28
	Total Current Assets			5,227		6,426

Investments
	Nuclear plant decommissioning trust funds			711		640
	Other investments			67		78
	Total Investments			778		718

Property, Plant and Equipment
	Regulated utility plant			24,415		22,994
	Less: accumulated depreciation - regulated utility plant			4,011		3,534
		Regulated utility plant, net		20,404		19,460
	Non-regulated property, plant and equipment
		Generation		11,190		10,514
		Nuclear fuel		524		457
		Other		698		637
	Less: accumulated depreciation - non-regulated property, plant and equipment			5,875		5,676
		Non-regulated property, plant and equipment, net		6,537		5,932
	Construction work in progress			2,106		1,874
	Property, Plant and Equipment, net (a)			29,047		27,266
Other Noncurrent Assets
	Regulatory assets			1,323		1,349
	Goodwill			4,130		4,114
	Other intangibles (a)			913		1,065
	Price risk management assets			860		920
	Other noncurrent assets			962		790
	Total Other Noncurrent Assets			8,188		8,238

Total Assets			$	43,240	$	42,648

(a)

At September 30, 2012 and December 31, 2011, includes $428 million and $416 million of PP&E, consisting primarily of "Generation," including leasehold improvements, and $10 million and $11 million of "Other intangibles" from the consolidation of a VIE that is the owner/lessor of the Lower Mt. Bethel plant.

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

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
			September 30,		December 31,
			2012		2011
Liabilities and Equity

Current Liabilities
	Short-term debt		$	526	$	578
	Long-term debt due within one year			313
	Accounts payable			1,071		1,214
	Taxes			95		65
	Interest			335		287
	Dividends			210		207
	Price risk management liabilities			1,184		1,570
	Regulatory liabilities			65		73
	Other current liabilities			1,088		1,261
	Total Current Liabilities			4,887		5,255

Long-term Debt				18,711		17,993

Deferred Credits and Other Noncurrent Liabilities
	Deferred income taxes			3,705		3,326
	Investment tax credits			315		285
	Price risk management liabilities			884		840
	Accrued pension obligations			1,086		1,313
	Asset retirement obligations			500		484
	Regulatory liabilities			999		1,010
	Other deferred credits and noncurrent liabilities			921		1,046
	Total Deferred Credits and Other Noncurrent Liabilities			8,410		8,304

Commitments and Contingent Liabilities (Notes 6 and 10)

Equity
	PPL Shareowners' Common Equity
		Common stock - $0.01 par value (a)		6		6
		Additional paid-in capital		6,912		6,813
		Earnings reinvested		5,335		4,797
		Accumulated other comprehensive loss		(1,039)		(788)
		Total PPL Shareowners' Common Equity		11,214		10,828
	Noncontrolling Interests			18		268
	Total Equity			11,232		11,096

Total Liabilities and Equity			$	43,240	$	42,648

(a)	780,000 shares authorized; 580,970 and 578,405 shares issued and outstanding at September 30, 2012 and December 31, 2011.

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

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
		PPL Shareowners
		Common
		stock								Accumulated
		shares				Additional				other		Non-
		outstanding		Common		paid-in		Earnings		comprehensive		controlling
		(a)		stock		capital		reinvested		loss		interests		Total

June 30, 2012		580,213	$	6	$	6,886	$	5,190	$	(1,120)	$	18	$	10,980
Common stock issued (b)		757				21								21
Stock-based compensation (c)						5								5
Net income								355						355
Dividends, dividend equivalents,
	redemptions and distributions (e)							(210)						(210)
Other comprehensive
	income (loss)									81				81
September 30, 2012		580,970	$	6	$	6,912	$	5,335	$	(1,039)	$	18	$	11,232

December 31, 2011		578,405	$	6	$	6,813	$	4,797	$	(788)	$	268	$	11,096
Common stock issued (b)		2,565				71								71
Stock-based compensation (c)						28								28
Net income								1,167				4		1,171
Dividends, dividend equivalents,
	redemptions and distributions (e)							(629)				(254)		(883)
Other comprehensive
	income (loss)									(251)				(251)
September 30, 2012		580,970	$	6	$	6,912	$	5,335	$	(1,039)	$	18	$	11,232

June 30, 2011		577,265	$	6	$	6,774	$	4,306	$	(435)	$	268	$	10,919
Common stock issued (b)		579				16								16
Stock-based compensation (c)						5								5
Net income								444				5		449
Dividends, dividend equivalents
	and distributions (e)							(203)				(5)		(208)
Other comprehensive
	income (loss)									(65)				(65)
September 30, 2011		577,844	$	6	$	6,795	$	4,547	$	(500)	$	268	$	11,116

December 31, 2010		483,391	$	5	$	4,602	$	4,082	$	(479)	$	268	$	8,478
Common stock issued (b)		94,453		1		2,328								2,329
Purchase Contracts (d)						(141)								(141)
Stock-based compensation (c)						6								6
Net income								1,041				13		1,054
Dividends, dividend equivalents
	and distributions (e)							(576)				(13)		(589)
Other comprehensive
	income (loss)									(21)				(21)
September 30, 2011		577,844	$	6	$	6,795	$	4,547	$	(500)	$	268	$	11,116

(a)	Shares in thousands. Each share entitles the holder to one vote on any question presented at any shareowners' meeting.

(b)	Each period includes shares of common stock issued through various stock and incentive compensation plans. The nine months ended September 30, 2011 includes the April issuance of 92 million shares of common stock.

(c)

The three and nine months ended September 30, 2012 include $7 million and $42 million and the three and nine months ended September 30, 2011 include $5 million and $27 million of stock-based compensation expense related to new and existing unvested equity awards. The three and nine months ended September 30, 2012 include $(2) million and $(14) million and the nine months ended September 30, 2011 includes $(21) million related primarily to the reclassification from "Stock-based compensation" to "Common stock issued" for the issuance of common stock after applicable equity award vesting periods and tax adjustments related to stock-based compensation.

(d)	The nine months ended September 30, 2011 include $123 million for the 2011 Purchase Contracts and $18 million of related fees and expenses, net of tax.

(e)

"Earnings reinvested" includes dividends and dividend equivalents on PPL Corporation common stock and restricted stock units. "Noncontrolling interests" includes dividends, redemptions and distributions to noncontrolling interests. In June 2012, PPL Electric redeemed all of its outstanding preference stock at par value, $250 million in the aggregate. See Note 7 for additional information.

The accompanying Notes to Condensed 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				Nine Months Ended
				September 30,				September 30,
				2012		2011		2012		2011
Operating Revenues
	Wholesale energy marketing
		Realized		$	1,076	$	907	$	3,367	$	2,677
		Unrealized economic activity (Note 14)			(716)		216		(322)		229
	Wholesale energy marketing to affiliate				23		5		61		15
	Unregulated retail electric and gas				219		190		623		518
	Net energy trading margins				(11)		(7)		7		14
	Energy-related businesses				128		130		336		354
	Total Operating Revenues				719		1,441		4,072		3,807

Operating Expenses
	Operation
		Fuel			321		358		728		826
		Energy purchases
			Realized		421		161		1,715		701
			Unrealized economic activity (Note 14)		(569)		176		(420)		49
		Energy purchases from affiliate			1		1		2		3
		Other operation and maintenance			220		208		769		741
	Depreciation				73		62		206		181
	Taxes, other than income				18		18		53		50
	Energy-related businesses				125		130		326		350
	Total Operating Expenses				610		1,114		3,379		2,901

Operating Income					109		327		693		906

Other Income (Expense) - net					4		2		14		20

Other-Than-Temporary Impairments							5		1		6

Interest Income from Affiliates					1		2		2		6

Interest Expense					43		52		123		150

Income from Continuing Operations Before Income Taxes					71		274		585		776

Income Taxes					16		104		202		305

Income from Continuing Operations After Income Taxes					55		170		383		471

Income (Loss) from Discontinued Operations (net of income taxes)											2

Net Income					55		170		383		473

Net Income Attributable to Noncontrolling Interests					1		1		1		1

Net Income Attributable to PPL Energy Supply Member				$	54	$	169	$	382	$	472

Amounts Attributable to PPL Energy Supply Member:
	Income from Continuing Operations After Income Taxes			$	54	$	169	$	382	$	470
	Income (Loss) from Discontinued Operations (net of income taxes)										2
	Net Income			$	54	$	169	$	382	$	472

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

PPL Energy Supply, LLC and Subsidiaries

(Unaudited)

(Millions of Dollars)

Three Months Ended

Nine Months Ended

September 30