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 March 31, 2014
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, 631,744,500 shares outstanding at April 25, 2014.
     
 
PPL Energy Supply, LLC
PPL Corporation indirectly holds all of the membership interests in PPL Energy Supply, LLC.
     
 
PPL Electric Utilities Corporation
Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at April 25, 2014.
     
 
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 April 25, 2014.
     
 
Kentucky Utilities Company
Common stock, no par value, 37,817,878 shares outstanding and all held by LG&E and KU Energy LLC at April 25, 2014.

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 MARCH 31, 2014


Table of Contents

This combined Form 10-Q is separately filed by the following Registrants in their individual capacity:  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 subsidiaries of PPL Corporation 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 in 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 subsidiaries 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
     
i 
  
1
  
PART I.  FINANCIAL INFORMATION
    
 
Item 1.  Financial Statements
    
   
PPL Corporation and Subsidiaries
    
     
3
  
     
4
  
     
5
  
     
6
  
     
8
  
   
PPL Energy Supply, LLC and Subsidiaries
    
     
9
  
     
10
  
     
11
  
     
12
  
     
14
  
   
PPL Electric Utilities Corporation and Subsidiaries
    
     
16
  
     
17
  
     
18
  
     
20
  
   
LG&E and KU Energy LLC and Subsidiaries
    
     
22
  
     
23
  
     
24
  
     
26
  

 
 
 


   
Louisville Gas and Electric Company
  
     
28
     
29
     
30
     
32
   
Kentucky Utilities Company
  
     
34
     
35
     
36
     
38
 
Combined Notes to Condensed Financial Statements (Unaudited)
  
   
39
   
39
   
40
   
41
   
42
   
43
   
47
   
49
   
49
   
50
   
64
   
65
   
65
   
72
   
83
   
83
   
83
   
84
   
86
 
Item 2.  Combined Management's Discussion and Analysis of Financial Condition and Results of Operations
  
   
87
     
87
     
89
     
90
       
90
       
90
       
91
   
93
     
94
     
102
     
104
     
106
     
107
     
109
   
110
     
110
     
115
     
119
     
119
     
119
     
119
   
122
   
122

 
 
 


 
123
 
123
PART II.  OTHER INFORMATION
  
 
123
 
123
 
123
 
124
126
127
 
133
 
145



 
 
 




























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GLOSSARY OF TERMS AND ABBREVIATIONS

PPL Corporation and its subsidiaries

KU - Kentucky Utilities Company, a public utility subsidiary of LKE engaged in the regulated generation, transmission, distribution and sale of electricity, primarily in Kentucky.

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.

LKE - LG&E and KU Energy LLC, a subsidiary of PPL and the parent of LG&E, KU and other subsidiaries.

LKS - LG&E and KU Services Company, a subsidiary of LKE that provides services to LKE and its subsidiaries.

PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding, PPL Capital 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 financing subsidiary of PPL that provides financing for the operations of PPL and certain subsidiaries.  Debt issued by PPL Capital Funding is guaranteed as to payment by PPL.

PPL Electric - PPL Electric Utilities Corporation, a public utility subsidiary of PPL engaged in the regulated transmission and distribution of electricity in its Pennsylvania service area and that provides electricity supply to its 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 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.

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 through its subsidiaries, owns and operates WPD, PPL's regulated electricity distribution businesses in the U.K.

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 to PPL and its subsidiaries.

PPL Susquehanna - PPL Susquehanna, LLC, a subsidiary of PPL Generation that owns a nuclear-powered generating station.

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

PPL WW - PPL WW Holdings Limited, an indirect U.K. subsidiary of PPL Global.  PPL WW Holdings indirectly owns WPD (South Wales) and WPD (South West).

Registrant(s) - refers to the Registrants named on the cover of this Report (each a "Registrant" and collectively, the "Registrants").

 
i
 

Subsidiary Registrant(s) - Registrants that are direct or indirect wholly owned subsidiaries of PPL:  PPL Energy Supply, PPL Electric, LKE, LG&E and KU.

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.

WPD Midlands - refers to WPD (East Midlands) and WPD (West Midlands), collectively.

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.

WKE - Western Kentucky Energy Corp., a subsidiary of LKE that leased certain non-utility generating plants in western Kentucky until July 2009.


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 requiring holders to purchase shares of PPL common stock on or prior to July 1, 2013.

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

2013 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2013.

Act 11 - Act 11 of 2012 that became effective on April 16, 2012.  The Pennsylvania legislation authorizes the PUC to approve two specific ratemaking mechanisms:  the use of a fully projected future test year in base rate proceedings and, subject to certain conditions, a DSIC.

Act 129 - Act 129 of 2008 that 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 changes to the AEPS.

AEPS - 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.

 
ii
 


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

CAIR - the EPA's Clean Air Interstate Rule.

Cane Run Unit 7 - a natural gas combined-cycle unit under construction in Kentucky, jointly owned by LG&E and KU, which is expected to provide additional electric generating capacity of 640 MW (141 MW and 499 MW to LG&E and KU) in 2015.

CCR - Coal Combustion Residuals.  CCRs include fly ash, bottom ash and sulfur dioxide scrubber wastes.

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

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 certain plant, equipment, property or facility for the furnishing of utility service to the public.

CSAPR - Cross-State Air Pollution Rule.

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.

DNO - Distribution Network Operator.

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.

DSIC - the distribution system improvement charge authorized under Act 11, which is an alternative ratemaking mechanism providing more-timely cost recovery of qualifying distribution system capital expenditures.

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 costs and revenues lost by implementing DSM 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, 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 that apply to coal combustion wastes and by-products from the production of energy from coal.

EEI - Electric Energy, Inc., owns and operates a coal-fired plant and a natural gas facility in southern Illinois.  KU's 20% ownership interest in EEI is accounted for as an equity method investment.

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.

 
iii
 


FERC - Federal Energy Regulatory Commission, the U.S. 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 that 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 between two pricing locations, known as source and sink.

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

GBP - British pound sterling.

GHG - greenhouse gas(es).

GLT - Gas Line Tracker.  The KPSC approved LG&E's recovery of costs associated with gas service lines, gas risers, leak mitigation, and gas main replacements.  Rate recovery became effective on January 1, 2013.

IBEW - International Brotherhood of Electrical Workers.

If-Converted Method - A method applied to calculate diluted EPS for a company with outstanding convertible debt.  The method is applied as follows:  Interest charges (after tax) applicable to the convertible debt are added back to net income and  the convertible debt is assumed to have been converted to equity at the beginning of the period, and the resulting common shares are treated as outstanding shares.  Both adjustments are made only for purposes of calculating diluted EPS.  This method was applied in 2013 to PPL's Equity Units prior to settlement.

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

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.

LIBOR - London Interbank Offered Rate.

LTIIP - Long Term Infrastructure Improvement Plan.

MATS - Mercury and Air Toxics Standards.

MDEQ - Montana Department of Environmental Quality.

MEIC - Montana Environmental Information Center.

MMBtu - One million British Thermal Units.

Montana Power - The Montana Power Company, a Montana-based company that sold its generating assets to PPL Montana in December 1999.  Through a series of transactions consummated during the first quarter of 2002, Montana Power sold its electricity delivery business to NorthWestern.

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

MW - megawatt, one thousand kilowatts.

MWh - megawatt-hour, one thousand kilowatt-hours.

NDT - PPL Susquehanna's nuclear plant decommissioning trust.

 
iv
 

NERC - North American Electric Reliability Corporation.

NGCC - Natural gas-fired combined-cycle generating plant.

NorthWestern - NorthWestern Corporation, a Delaware corporation, and successor in interest to Montana Power's electricity delivery business, including Montana Power's rights and obligations under contracts with PPL Montana.

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

NRC - Nuclear Regulatory Commission, the U.S. 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 of 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 summer rating capacities of 2,120 MW.

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

PJM - PJM Interconnection, L.L.C., operator of the electricity transmission network and electricity 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 within its delivery area to retail customers who have not chosen to select an alternative electricity supplier under the Customer Choice Act.

PP&E - property, plant and equipment.

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, which are components of the 2010 and 2011 Equity Units.

RAV - regulatory asset value.  This term, used within the U.K. regulatory environment, is also commonly known as RAB or regulatory asset base.  RAV is based on historical investment costs at time of privatization, plus subsequent allowed additions less annual regulatory depreciation, and represents the value on which DNOs earn a return in accordance with the regulatory cost of capital.  RAV is indexed to Retail Price Index in order to allow for the effects of inflation.  Since the beginning of DPCR5 in April 2010, RAV additions have been based on a percentage of annual total expenditures.

RCRA - Resource Conservation and Recovery Act of 1976.

RECs - renewable energy credits.

Regional Transmission Line Expansion Plan - PJM conducts a long-range Regional Transmission Expansion Planning process that identifies changes and additions to the grid necessary to ensure future needs are met for both the reliability and the economic performance of the grid.  Under PJM agreements, transmission owners are obligated to build transmission projects assigned to them by the PJM Board.

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.

 
v
 

RFC - ReliabilityFirst 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.

RIIO-ED1 - RIIO represents "Revenues = Incentive + Innovation + Outputs - Electricity Distribution."  RIIO-ED1 refers to the initial eight-year rate review period applicable to WPD commencing April 1, 2015.

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.

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

SEC - the U.S. Securities and Exchange Commission, a U.S. government agency primarily responsible to protect investors and maintain the integrity of the securities markets.

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 has the potential to strengthen network reliability.

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

Spark Spread - a measure of gross margin representing the price of power on a per MWh basis less the equivalent measure of the natural gas cost to produce that power.  This measure is used to describe the gross margin of PPL and its subsidiaries' competitive natural gas-fired generating fleet.  This term is also used to describe a derivative contract in which PPL and its subsidiaries sell power and buy natural gas on a forward basis in the same contract.

Superfund - federal environmental statute 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 electricity 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.

Treasury Stock Method - A method applied to calculate diluted EPS that assumes any proceeds that could be obtained upon exercise of options and warrants (and their equivalents) would be used to purchase common stock at the average market price during the relevant period.

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.

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.

 
vi
 

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 that 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 2013 Form 10-K and in "Item 2. Combined Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q, 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 duration of and cost, including lost revenue, associated with scheduled and unscheduled outages at our generating facilities;
·
transmission and distribution system conditions and operating costs;
·
expansion of alternative sources of electricity generation;
·
laws or regulations to reduce emissions of "greenhouse" gases or the physical effects of climate change;
·
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;
·
volatility in market demand and prices for energy, capacity, transmission services, emission allowances and RECs;
·
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, 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;
·
changes in foreign currency exchange rates for British pound sterling;
·
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;
·
changes in 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 or revenue filings by PPL Electric, LG&E, KU or WPD;
·
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 acquired businesses and realize expected benefits from business acquisitions.

 
1
 


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.

 
2
 

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 March 31,
 
 
 
 
 
 
 
 
 
 
2014 
 
 
2013 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
Utility
 
$
 2,162 
 
$
 1,950 
 
Unregulated wholesale energy
 
 
 (1,429)
 
 
 143 
 
Unregulated retail energy
 
 
 349 
 
 
 237 
 
Energy-related businesses
 
 
 141 
 
 
 127 
 
Total Operating Revenues
 
 
 1,223 
 
 
 2,457 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel
 
 
 758 
 
 
 529 
 
 
Energy purchases
 
 
 (1,494)
 
 
 57 
 
 
Other operation and maintenance
 
 
 697 
 
 
 676 
 
Depreciation
 
 
 305 
 
 
 284 
 
Taxes, other than income
 
 
 104 
 
 
 96 
 
Energy-related businesses
 
 
 138 
 
 
 122 
 
Total Operating Expenses
 
 
 508 
 
 
 1,764 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
 
 715 
 
 
 693 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense) - net
 
 
 (23)
 
 
 122 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
 
 
 264 
 
 
 251 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
 
 
 428 
 
 
 564 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Taxes
 
 
 112 
 
 
 151 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Attributable to PPL Shareowners
 
$
 316 
 
$
 413 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
Basic
 
$
0.50 
 
$
0.70 
 
 
Diluted
 
$
0.49 
 
$
0.65 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends Declared Per Share of Common Stock
 
$
0.3725 
 
$
0.3675 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Shares of Common Stock Outstanding (in thousands)
 
 
 
 
 
 
 
 
Basic
 
 
 630,749 
 
 
582,640 
 
 
Diluted
 
 
 663,939 
 
 
657,020 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

 
3
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
 
 
 
 
2014 
 
2013 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
 316 
 
$
 413 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, ($6)
 
 
 131 
 
 
 (245)
 
 
Available-for-sale securities, net of tax of ($6), ($25)
 
 
 5 
 
 
 23 
 
 
Qualifying derivatives, net of tax of $25, ($20)
 
 
 (46)
 
 
 62 
Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):
 
 
 
 
 
 
 
 
Available-for-sale securities, net of tax of $1, $1
 
 
 (1)
 
 
 (1)
 
 
Qualifying derivatives, net of tax of ($4), $35
 
 
 19 
 
 
 (80)
 
 
Defined benefit plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior service costs, net of tax of ($1), ($1)
 
 
 1 
 
 
 1 
 
 
 
Net actuarial loss, net of tax of ($9), ($13)
 
 
 27 
 
 
 34 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other comprehensive income (loss) attributable to PPL Shareowners
 
 
 136 
 
 
 (206)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to PPL Shareowners
 
$
 452 
 
$
 207 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

 
4
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
2014 
 
2013 
Cash Flows from Operating Activities
 
 
 
 
 
 
 
Net income
 
$
 316 
 
$
 413 
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities
 
 
 
 
 
 
 
 
Depreciation
 
 
 305 
 
 
 284 
 
 
Amortization
 
 
 60 
 
 
 64 
 
 
Defined benefit plans - expense
 
 
 21 
 
 
 51 
 
 
Deferred income taxes and investment tax credits
 
 
 (26)
 
 
 80 
 
 
Unrealized (gains) losses on derivatives, and other hedging activities
 
 
 241 
 
 
 98 
 
 
Adjustment to WPD line loss accrual
 
 
 65 
 
 
   
 
 
Other
 
 
 33 
 
 
 30 
 
Change in current assets and current liabilities
 
 
 
 
 
 
 
 
Accounts receivable
 
 
 (185)
 
 
 (187)
 
 
Accounts payable
 
 
 93 
 
 
 (138)
 
 
Unbilled revenues
 
 
 (33)
 
 
 137 
 
 
Fuel, materials and supplies
 
 
 96 
 
 
 55 
 
 
Prepayments
 
 
 (70)
 
 
 (117)
 
 
Counterparty collateral
 
 
 2 
 
 
 (64)
 
 
Taxes payable
 
 
 126 
 
 
 122 
 
 
Other
 
 
 (51)
 
 
 (129)
 
Other operating activities
 
 
 
 
 
 
 
 
Defined benefit plans - funding
 
 
 (135)
 
 
 (429)
 
 
Other assets
 
 
 (3)
 
 
 33 
 
 
Other liabilities
 
 
 76 
 
 
 (59)
 
 
 
Net cash provided by (used in) operating activities
 
 
 931 
 
 
 244 
Cash Flows from Investing Activities
 
 
 
 
 
 
 
Expenditures for property, plant and equipment
 
 
 (892)
 
 
 (828)
 
Purchases of nuclear plant decommissioning trust investments
 
 
 (32)
 
 
 (28)
 
Proceeds from the sale of nuclear plant decommissioning trust investments
 
 
 27 
 
 
 24 
 
Proceeds from the receipt of grants
 
 
 56 
 
 
 1 
 
Net (increase) decrease in restricted cash and cash equivalents
 
 
 (334)
 
 
 (52)
 
Other investing activities
 
 
 (8)
 
 
 (16)
 
 
 
Net cash provided by (used in) investing activities
 
 
 (1,183)
 
 
 (899)
Cash Flows from Financing Activities
 
 
 
 
 
 
 
Issuance of long-term debt
 
 
   
 
 
 450 
 
Retirement of long-term debt
 
 
 (239)
 
 
 (8)
 
Payment of common stock dividends
 
 
 (234)
 
 
 (210)
 
Net increase (decrease) in short-term debt
 
 
 878 
 
 
 416 
 
Other financing activities
 
 
 (13)
 
 
 (27)
 
 
 
Net cash provided by (used in) financing activities
 
 
 392 
 
 
 621 
Effect of Exchange Rates on Cash and Cash Equivalents
 
 
 14 
 
 
 (14)
Net Increase (Decrease) in Cash and Cash Equivalents
 
 
 154 
 
 
 (48)
Cash and Cash Equivalents at Beginning of Period
 
 
 1,102 
 
 
 901 
Cash and Cash Equivalents at End of Period
 
$
 1,256 
 
$ 
 853 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

 
5
 

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
 
 
 
 
 
March 31,
 
December 31,
 
 
 
 
 
2014 
 
2013 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
 1,256 
 
$
 1,102 
 
Restricted cash and cash equivalents
 
 
 416 
 
 
 83 
 
Accounts receivable (less reserve:  2014, $66; 2013, $64)
 
 
 
 
 
 
 
 
Customer
 
 
 1,108 
 
 
 923 
 
 
Other
 
 
 103 
 
 
 97 
 
Unbilled revenues
 
 
 874 
 
 
 835 
 
Fuel, materials and supplies
 
 
 607 
 
 
 702 
 
Prepayments
 
 
 224 
 
 
 153 
 
Deferred taxes
 
 
 342 
 
 
 246 
 
Price risk management assets
 
 
 1,087 
 
 
 942 
 
Regulatory assets
 
 
 32 
 
 
 33 
 
Other current assets
 
 
 45 
 
 
 37 
 
Total Current Assets
 
 
 6,094 
 
 
 5,153 
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
Nuclear plant decommissioning trust funds
 
 
 879 
 
 
 864 
 
Other investments
 
 
 39 
 
 
 43 
 
Total Investments
 
 
 918 
 
 
 907 
 
 
 
 
 
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
 
 
Regulated utility plant
 
 
 28,616 
 
 
 27,755 
 
Less:  accumulated depreciation - regulated utility plant
 
 
 5,108 
 
 
 4,873 
 
 
Regulated utility plant, net
 
 
 23,508 
 
 
 22,882 
 
Non-regulated property, plant and equipment
 
 
 
 
 
 
 
 
Generation
 
 
 11,818 
 
 
 11,881 
 
 
Nuclear fuel
 
 
 712 
 
 
 591 
 
 
Other
 
 
 854 
 
 
 834 
 
Less:  accumulated depreciation - non-regulated property, plant and equipment
 
 
 6,283 
 
 
 6,172 
 
 
Non-regulated property, plant and equipment, net
 
 
 7,101 
 
 
 7,134 
 
Construction work in progress
 
 
 3,165 
 
 
 3,071 
 
Property, Plant and Equipment, net
 
 
 33,774 
 
 
 33,087 
 
 
 
 
 
 
 
 
 
 
Other Noncurrent Assets
 
 
 
 
 
 
 
Regulatory assets
 
 
 1,245 
 
 
 1,246 
 
Goodwill
 
 
 4,298 
 
 
 4,225 
 
Other intangibles
 
 
 943 
 
 
 947 
 
Price risk management assets
 
 
 344 
 
 
 337 
 
Other noncurrent assets
 
 
 357 
 
 
 357 
 
Total Other Noncurrent Assets
 
 
 7,187 
 
 
 7,112 
 
 
 
 
 
 
 
Total Assets
 
$
 47,973 
 
$
 46,259 

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

 
6
 


CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, shares in thousands)
 
 
 
 
 
March 31,
 
December 31,
 
 
 
 
 
2014 
 
2013 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
Short-term debt
 
$
 1,579 
 
$
 701 
 
Long-term debt due within one year
 
 
 304 
 
 
 315 
 
Accounts payable
 
 
 1,345 
 
 
 1,308 
 
Taxes
 
 
 240 
 
 
 114 
 
Interest
 
 
 358 
 
 
 325 
 
Dividends
 
 
 236 
 
 
 232 
 
Price risk management liabilities
 
 
 1,302 
 
 
 829 
 
Regulatory liabilities
 
 
 80 
 
 
 90 
 
Other current liabilities
 
 
 932 
 
 
 998 
 
Total Current Liabilities
 
 
 6,376 
 
 
 4,912 
 
 
 
 
 
 
 
 
 
 
Long-term Debt
 
 
 20,514 
 
 
 20,592 
 
 
 
 
 
 
 
 
 
 
Deferred Credits and Other Noncurrent Liabilities
 
 
 
 
 
 
 
Deferred income taxes
 
 
 4,096 
 
 
 3,928 
 
Investment tax credits
 
 
 281 
 
 
 342 
 
Price risk management liabilities
 
 
 450 
 
 
 415 
 
Accrued pension obligations
 
 
 1,159 
 
 
 1,286 
 
Asset retirement obligations
 
 
 701 
 
 
 687 
 
Regulatory liabilities
 
 
 1,037 
 
 
 1,048 
 
Other deferred credits and noncurrent liabilities
 
 
 642 
 
 
 583 
 
Total Deferred Credits and Other Noncurrent Liabilities
 
 
 8,366 
 
 
 8,289 
 
 
 
 
 
 
 
 
 
 
Commitments and Contingent Liabilities (Notes 6 and 10)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
Common stock - $0.01 par value (a)
 
 
 6 
 
 
 6 
 
 
Additional paid-in capital
 
 
 8,352 
 
 
 8,316 
 
 
Earnings reinvested
 
 
 5,788 
 
 
 5,709 
 
 
Accumulated other comprehensive loss
 
 
 (1,429)
 
 
 (1,565)
 
 
Total Equity
 
 
 12,717 
 
 
 12,466 
 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
 
$
 47,973 
 
$
 46,259 

(a)
780,000 shares authorized; 631,417 and 630,321 shares issued and outstanding at March 31, 2014 and December 31, 2013.

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

 
7
 

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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 630,321 
 
$
 6 
 
$
 8,316 
 
$
 5,709 
 
$
 (1,565)
 
 
   
 
$
 12,466 
Common stock issued (b)
 
 1,096 
 
 
   
 
 
 30 
 
 
   
 
 
   
 
 
   
 
 
 30 
Stock-based compensation (c)
 
   
 
 
   
 
 
 6 
 
 
   
 
 
   
 
 
   
 
 
 6 
Net income
 
   
 
 
   
 
 
   
 
 
 316 
 
 
   
 
 
   
 
 
 316 
Dividends and dividend
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
equivalents (d)
 
   
 
 
   
 
 
   
 
 
 (237)
 
 
   
 
 
   
 
 
 (237)
Other comprehensive
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
income (loss)
 
   
 
 
   
 
 
   
 
 
   
 
 
 136 
 
 
   
 
 
 136 
March 31, 2014
 
 631,417 
 
$
 6 
 
$
 8,352 
 
$
 5,788 
 
$
 (1,429)
 
 
   
 
$
 12,717 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 581,944 
 
$
 6 
 
$
 6,936 
 
$
 5,478 
 
$
 (1,940)
 
$
 18 
 
$
 10,498 
Common stock issued (b)
 
 1,270 
 
 
   
 
 
 37 
 
 
   
 
 
   
 
 
   
 
 
 37 
Stock-based compensation (c)
 
   
 
 
   
 
 
 15 
 
 
   
 
 
   
 
 
   
 
 
 15 
Net income
 
   
 
 
   
 
 
   
 
 
 413 
 
 
   
 
 
   
 
 
 413 
Dividends, dividend equivalents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and distributions (d)
 
   
 
 
   
 
 
   
 
 
 (215)
 
 
   
 
 
   
 
 
 (215)
Other comprehensive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
income (loss)
 
   
 
 
   
 
 
   
 
 
   
 
 
 (206)
 
 
   
 
 
 (206)
March 31, 2013
 
 583,214 
 
$
 6 
 
$
 6,988 
 
$
 5,676 
 
$
 (2,146)
 
$
 18 
 
$
 10,542 

(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.
(c)
The three months ended March 31, 2014 and 2013 include $27 million and $28 million of stock-based compensation expense related to new and existing unvested equity awards.  These periods also include $(21) million and $(13) 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)
"Earnings reinvested" includes dividends and dividend equivalents on PPL common stock and restricted stock units.

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

 
8
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
 
 
 
 
 
 
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
 
 
 
 
2014 
 
2013 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
Unregulated wholesale energy
 
$
 (1,429)
 
$
 143 
 
Unregulated wholesale energy to affiliate
 
 
 27 
 
 
 14 
 
Unregulated retail energy
 
 
 351 
 
 
 238 
 
Energy-related businesses
 
 
 125 
 
 
 113 
 
Total Operating Revenues
 
 
 (926)
 
 
 508 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Operation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel
 
 
 482 
 
 
 298 
 
 
Energy purchases
 
 
 (1,804)
 
 
 (199)
 
 
Other operation and maintenance
 
 
 258 
 
 
 235 
 
Depreciation
 
 
 80 
 
 
 78 
 
Taxes, other than income
 
 
 21 
 
 
 17 
 
Energy-related businesses
 
 
 124 
 
 
 110 
 
Total Operating Expenses
 
 
 (839)
 
 
 539 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
 
 (87)
 
 
 (31)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income (Expense) - net
 
 
 6 
 
 
 4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
 
 
 34 
 
 
 46 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (Loss) Before Income Taxes
 
 
 (115)
 
 
 (73)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Taxes
 
 
 (49)
 
 
 (35)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to PPL Energy Supply Member
 
$
 (66)
 
$
 (38)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying Notes to Condensed Financial Statements are an integral part of the financial statements.

 
9
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
 
 
 
 
 
 
2014 
 
2013 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
 (66)
 
$
 (38)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
 
Amounts arising during the period - gains (losses), net of tax (expense) benefit:
 
 
 
 
 
 
 
 
Available-for-sale securities, net of tax of ($6), ($25)
 
 
 5 
 
 
 23 
Reclassifications from AOCI - (gains) losses, net of tax expense (benefit):