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<TITLE>PPL Corporation Form 10-Q June 30, 2002</TITLE>
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<p align="center"><b><font size="5">UNITED STATES</font></B><font size="5"><BR>
  <B>SECURITIES AND EXCHANGE COMMISSION</B><BR>
  <B>Washington, DC 20549</b></font></p>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><font size="5">Form 10-Q</font></P>
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  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="6%" VALIGN="TOP" HEIGHT=34> [X]</TD>
      <TD WIDTH="94%" VALIGN="TOP" HEIGHT=34> QUARTERLY REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the period ended
        <U>June 30, 2002</U></TD>
    </TR>
  </TABLE>
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<p></P>
<P ALIGN="CENTER">OR</P>
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  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="6%" VALIGN="TOP" HEIGHT=34> [ &nbsp;]</TD>
      <TD WIDTH="94%" VALIGN="TOP" HEIGHT=34> TRANSITION REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition
        period from _________ to ___________</TD>
    </TR>
  </TABLE>
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<p></P>
<P ALIGN="CENTER"></P>
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  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=34> Commission File<BR>
        <U>Number</U></TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=34> Registrant; State of Incorporation;
        <BR>
        <U>Address and Telephone Number</U></TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=34> IRS Employer<BR>
        <U>Identification No.</U></TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=14></TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=14></TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=14></TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=34> 1-11459</TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=34> <B>PPL Corporation</B><BR>
        (Exact name of Registrant as specified in its charter)<BR>
        (Pennsylvania)<BR>
        Two North Ninth Street<BR>
        Allentown, PA 18101-1179<BR>
        (610) 774-5151</TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=34> 23-2758192</TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=9></TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=9> 333-74794</TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=9> <B>PPL Energy Supply, LLC</B><BR>
        (Exact name of Registrant as specified in its charter)<BR>
        (Delaware)<BR>
        Two North Ninth Street<BR>
        Allentown, PA 18101-1179<BR>
        (610) 774-5151</TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=9> 23-3074920</TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=9></TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=34> 1-905</TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=34> <B>PPL Electric Utilities Corporation</B><BR>
        (Exact name of Registrant as specified in its charter)<BR>
        (Pennsylvania)<BR>
        Two North Ninth Street<BR>
        Allentown, PA 18101-1179<BR>
        (610) 774-5151</TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=34> 23-0959590</TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=9></TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=9></TD>
    </TR>
    <TR>
      <TD WIDTH="21%" VALIGN="TOP" HEIGHT=34> 333-50350</TD>
      <TD WIDTH="55%" VALIGN="TOP" HEIGHT=34> <B>PPL Montana, LLC</B><BR>
        (Exact name of Registrant as specified in its charter)<BR>
        (Delaware)<BR>
        303 North Broadway - Suite 400<BR>
        Billings, MT 59101<BR>
        (406) 237-6900</TD>
      <TD WIDTH="24%" VALIGN="TOP" HEIGHT=34> 54-1928759</TD>
    </TR>
  </TABLE>
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<p></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject
  to such filing requirements for the past 90 days.</P>
<P ALIGN="CENTER">
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  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Corporation</TD>
      <TD WIDTH="23%" VALIGN="TOP"> Yes<U> X </U></TD>
      <TD WIDTH="25%" VALIGN="TOP"> No<U> &nbsp;</U></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Energy Supply, LLC</TD>
      <TD WIDTH="23%" VALIGN="TOP"> Yes<U> X </U></TD>
      <TD WIDTH="25%" VALIGN="TOP"> No<U> &nbsp;</U></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Electric Utilities Corporation</TD>
      <TD WIDTH="23%" VALIGN="TOP"> Yes<U> X </U></TD>
      <TD WIDTH="25%" VALIGN="TOP"> No<U> &nbsp;</U></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Montana, LLC</TD>
      <TD WIDTH="23%" VALIGN="TOP"> Yes<U> X </U></TD>
      <TD WIDTH="25%" VALIGN="TOP"> No<U> &nbsp;</U></TD>
    </TR>
  </TABLE>
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<p></P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P ALIGN="JUSTIFY">Indicate the number of shares outstanding of each of the issuer's
  classes of common stock, as of the latest practicable date:</P>
<P ALIGN="JUSTIFY"></P>
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  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Corporation</TD>
      <TD WIDTH="48%" VALIGN="TOP"> Common stock, $.01 par value, 147,468,950
        <BR>
        shares outstanding at July 31, 2002, excluding<BR>
        30,993,637 shares held as treasury stock</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="48%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Energy Supply, LLC</TD>
      <TD WIDTH="48%" VALIGN="TOP"> PPL Corporation indirectly holds all of the
        <BR>
        member interests in PPL Energy Supply, LLC.</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="48%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Electric Utilities Corporation</TD>
      <TD WIDTH="48%" VALIGN="TOP"> Common stock, no par value, 78,029,863 <BR>
        shares outstanding and all held by PPL <BR>
        Corporation at July 31, 2002, excluding<BR>
        79,270,519 shares held as treasury stock</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="48%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> PPL Montana, LLC</TD>
      <TD WIDTH="48%" VALIGN="TOP"> PPL Corporation indirectly holds all of the
        <BR>
        member interests in PPL Montana, LLC.</TD>
    </TR>
  </TABLE>
</CENTER>
<p></P>
<p align="justify"><b>PPL Energy Supply, LLC and PPL Montana, LLC meet the conditions
  set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and are therefore
  filing this form with the reduced disclosure format.</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>This document is available at the Investor Center on PPL's
  website at www.pplweb.com. However, information on this website does not constitute
  a part of this Form 10-Q.</b></p>
<P ALIGN="JUSTIFY"></P>
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<P ALIGN="center">(THIS PAGE LEFT BLANK INTENTIONALLY.)</P>
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<P ALIGN="JUSTIFY"></P>
<P ALIGN="CENTER">&nbsp;</P>
<p align="center"><b>PPL CORPORATION</B><BR>
  <B>PPL ENERGY SUPPLY, LLC</B><BR>
  <B>PPL ELECTRIC UTILITIES CORPORATION</B><BR>
  <B>PPL MONTANA, LLC</B><BR>
</P>
<P ALIGN="CENTER">FORM 10-Q<BR>
  FOR THE QUARTER ENDED JUNE 30, 2002<BR>
  <BR>
  <U>Table of Contents</u></p>
<P ALIGN="CENTER">
  <table border=0 cellspacing=0 cellpadding=0 width=100%>
    <tr>
      <td valign="TOP" colspan=4 height=26></td>
      <td valign="TOP" colspan=2 height=26>
        <div align="right"><u>Page</u></div>
      </td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> <A HREF="#GLOSSARY">GLOSSARY OF TERMS AND ABBREVIATIONS</A></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> <A HREF="#FORWARD">FORWARD-LOOKING INFORMATION</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">1</div>
      </td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> PART I. FINANCIAL INFORMATION</td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> Item 1. Financial Statements</td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26> <b>PPL Corporation and Subsidiaries</b></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#CORPINCOMESTATEMENT">Condensed Consolidated Statement of
        Income</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">2</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#CORPCASHFLOWS">Condensed Consolidated Statement of
        Cash Flows</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">3</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#CORPBALANCESHEET">Condensed Consolidated Balance Sheet</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">4</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#CORPSHAREOWNERS">Condensed Consolidated Statement of
        Shareowners' Common Equity</A> <br>
        &nbsp;&nbsp;and&nbsp;Comprehensive Income</td>
      <td width="5%" valign="BOTTOM" height=26>
        <div align="right">6</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26> <b>PPL Energy Supply, LLC and Subsidiaries</b></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ESINCOMESTATEMENT">Condensed Consolidated Statement of
        Income</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">8</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ESCASHFLOWS">Condensed Consolidated Statement of
        Cash Flows</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">9</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ESBALANCESHEET">Condensed Consolidated Balance Sheet</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">10</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ESMEMBERS">Condensed Consolidated Statement of
        Member's Equity</A> <br>
        &nbsp;&nbsp;&nbsp; and Comprehensive Income</td>
      <td width="5%" valign="BOTTOM" height=26>
        <div align="right">12</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26> <b>PPL Electric Utilities Corporation
        and Subsidiaries</b></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#EUINCOMESTATEMENT">Condensed Consolidated Statement of
        Income</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">14</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#EUCASHFLOWS">Condensed Consolidated Statement of
        Cash Flows</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">15</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#EUBALANCESHEET">Condensed Consolidated Balance Sheet</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">16</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#EUSHAREOWNERS">Condensed Consolidated Statement of
        Shareowner's Common Equity <br>
        &nbsp;&nbsp;&nbsp;and Comprehensive Income</A></td>
      <td width="5%" valign="BOTTOM" height=26>
        <div align="right">18</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26> <b>PPL Montana, LLC and Subsidiaries</b></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#MONTANAINCOMESTATEMENT">Condensed Consolidated Statement of
        Income</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">19</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#MONTANACASHFLOWS">Condensed Consolidated Statement of
        Cash Flows</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">20</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#MONTANABALANCESHEET">Condensed Consolidated Balance Sheet</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">21</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#MONTANAMEMBERS">Condensed Consolidated Statement of
        Member's Equity</A><br>
        &nbsp;&nbsp; &nbsp;and Comprehensive Income</td>
      <td width="5%" valign="BOTTOM" height=26>
        <div align="right">22</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26> <A HREF="#NOTES">Combined Notes to Condensed Consolidated
        Financial Statements</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">23</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> Item 2. Management's Discussion and
        Analysis of Financial Condition and <br>
        &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Results of Operations</td>
      <td width="5%" valign="BOTTOM" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM2CORP">PPL Corporation and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">43</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM2ES">PPL Energy Supply, LLC and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">50</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM2EU">PPL Electric Utilities Corporation
        and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">56</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM2MONTANA">PPL Montana, LLC and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">59</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> Item 3. Quantitative and Qualitative
        Disclosures About Market Risk </td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM3CORP">PPL Corporation and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">60</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM3ES">PPL Energy Supply, LLC and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">62</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM3EU">PPL Electric Utilities Corporation
        and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">64</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> <A HREF="#ITEM3MONTANA">PPL Montana, LLC and Subsidiaries</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">64</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> PART II. OTHER INFORMATION</td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> <A HREF="#ITEM1">Item 1. Legal Proceedings</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">65</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> <A HREF="#ITEM4">Item 4. Submission of Matters to a
        Vote of Security Holders</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">66</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=4 height=26> <A HREF="#ITEM6">Item 6. Exhibits and Reports on Form
        8-K</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">67</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> <A HREF="#SIGNATURES">SIGNATURES</A></td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">68</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=3 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td valign="TOP" colspan=5 height=26> <A HREF="#EX12">COMPUTATION OF RATIO OF EARNINGS TO
        FIXED CHARGES</A></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Corporation and Subsidiaries</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">69</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Energy Supply, LLC and Subsidiaries</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">70</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Electric Utilities Corporation
        and Subsidiaries</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">71</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Montana, LLC and Subsidiaries</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">72</div>
      </td>
    </tr>
 <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> </td>
      <td width="5%" valign="TOP" height=26>
        <div align="right"></div>
      </td>
</tr>

    <tr>
      <td valign="TOP" colspan=5 height=26><A HREF="#EX99">CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER
         AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
         ACT OF 2002</A></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26></td>
      <td width="5%" valign="TOP" height=26></td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Corporation</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">73</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Energy Supply, LLC</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">75</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Electric Utilities Corporation
        </td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">77</div>
      </td>
    </tr>
    <tr>
      <td width="7%" valign="TOP" height=26></td>
      <td width="8%" valign="TOP" height=26></td>
      <td width="9%" valign="TOP" height=26></td>
      <td valign="TOP" colspan=2 height=26> PPL Montana, LLC</td>
      <td width="5%" valign="TOP" height=26>
        <div align="right">79</div>
      </td>


    </tr>
  </table>
<br><hr noshade><br>
<p align="center"><b><A NAME="GLOSSARY"></A>GLOSSARY OF TERMS AND ABBREVIATIONS</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>1945 First Mortgage Bond Indenture</I> </B>- PPL Electric's
  Mortgage and Deed of Trust, dated as of October 1, 1945, to Bankers Trust Company,
  as trustee, as supplemented.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>APA</i></b> - Asset Purchase Agreement.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>APB</i></b> - Accounting Principles Board.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>BG&amp;E</i></b> - Baltimore Gas &amp; Electric Company.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>CEMAR</i></b> - Companhia Energ&eacute;tica do Maranh&atilde;o,
  a Brazilian electric distribution company in which PPL Global has a majority
  ownership interest.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Clean Air Act</i></b> - federal legislation enacted to
  address certain environmental issues related to air emissions including acid
  rain, ozone and toxic air emissions.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>CO<SUB>2</sub></i></b> - carbon dioxide.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>CTC</i></b> - competitive transition charge on customer
  bills to recover allowable transition costs under the Customer Choice Act.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Customer Choice Act </i></b>(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.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>DEP</i></b> - Department of Environmental Protection,
  a state government agency.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Derivative</i></b> - a financial instrument or other
  contract with all three of the following characteristics:</P>
<OL TYPE="a">
  <li>
    <p align="justify">It has (1) one or more underlyings and (2) one or more
      notional amounts or payment provisions or both. Those terms determine the
      amount of the settlement or settlements, and, in some cases, whether or
      not a settlement is required.</P>
  <li>
    <p align="justify">If it is an option-based contract, it has an initial net
      investment equal to the fair value of the option component. If it is not
      an option-based contract, it requires an initial net investment that is
      less than five percent of the fully prepaid amount.</P>
  <li>
    <p align="justify">Its terms require or permit net settlement, it can readily
      be settled net by a means outside the contract, or it provides for delivery
      of an asset that puts the recipient in a position not substantially different
      from net settlement.</P>
</OL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>DIG</i></b> - Derivatives Implementation Group.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>DRIP</i></b> - Dividend Reinvestment Plan.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>EITF</i></b> <I>(</I>Emerging Issues Task Force) - an
  organization that assists the FASB in improving financial reporting through
  the identification, discussion and resolution of financial issues within the
  framework of existing authoritative literature.</P>
<p align="justify"><b><i>EPA</i></b> - Environmental Protection Agency, a U.S.
  government agency.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>EPS</i></b> - earnings (loss) per share.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>ESOP</i></b> - Employee Stock Ownership Plan.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>FASB</i></b> (Financial Accounting Standards Board) -
  a rulemaking organization that establishes financial accounting and reporting
  standards.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>FERC</i></b> (Federal Energy Regulatory Commission) -
  federal agency that regulates interstate transmission and wholesale sales of
  electricity and related matters.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Griffith Energy</i></b> - Griffith Energy LLC, a 600
  MW gas-fired station in Kingman, Arizona, which is jointly owned by subsidiaries
  of PPL Generation and Duke Energy Corporation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Hyder</i></b> - Hyder Limited, a subsidiary of WPDL and
  previous owner of South Wales Electricity plc. In March 2001, South Wales Electricity
  plc was acquired by WPDH Limited and renamed WPD (South Wales). </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>ICP</i></b> - Incentive Compensation Plan.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>ICPKE</i></b> - Incentive Compensation Plan for Key Employees.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>IRS</i></b> - Internal Revenue Service, in the U.S. Department
  of Treasury.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>ISO</i></b> - Independent System Operator.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>ITC</i></b> - intangible transition charge on customer
  bills to recover intangible transition costs associated with securitizing stranded
  costs under the Customer Choice Act.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>kWh</i></b> - kilowatthour, basic unit of electrical
  energy.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>LIBOR</i></b> - London Interbank Offered Rate.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Mirant</i></b> - Mirant Corporation, formerly Southern
  Energy Inc., a diversified energy company based in Atlanta. PPL Global and Mirant
  jointly own WPDH Limited.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Montana Power</i></b> - 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
  Energy.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>MPSC</i></b> - Montana Public Service Commission.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>MW</i></b> - megawatt.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>MWh</i></b> - megawatthour.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NorthWestern Energy</i></b> - NorthWestern Energy, L.L.C.,
  a Montana limited liability company that acquired Montana Power's electricity
  delivery business in the first quarter of 2002, including Montana Power's rights
  and obligations under existing contracts with PPL Montana.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NO<SUB>x</sub></i></b> - nitrogen oxide.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NPDES</i></b> - National Pollutant Discharge Elimination
  System.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NRC</i></b> (Nuclear Regulatory Commission) - federal
  agency that regulates operation of nuclear power facilities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NUGs</i></B> (Non-Utility Generators) - generating plants
  not owned by public utilities, whose electrical output must be purchased by
  utilities under the PURPA if the plant meets certain criteria.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PCB</i></b> (Polychlorinated Biphenyl) - additive to
  oil used in certain electrical equipment up to the late-1970s. Now classified
  as a hazardous chemical.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PEPS Units</i></b> (Premium Equity Participating Security
  Units) - securities issued by PPL Capital Funding Trust I, consisting of a Preferred
  Security and a forward contract to purchase PPL common stock.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PJM</i></b> (PJM Interconnection, LLC) - operator of
  the electric transmission network and electric energy market in the mid-Atlantic
  region of the U.S.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PLR</i></b> (Provider of Last Resort) - PPL Electric
  providing electricity to retail customers within its delivery territory who
  have chosen not to shop for electricity under the Customer Choice Act.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL</i></b> - PPL Corporation, the parent holding company
  of PPL Electric, PPL Energy Funding and other subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Capital Funding</i></b> - PPL Capital Funding, Inc.,
  a PPL financing subsidiary.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Capital Funding Trust I</i></b> - a Delaware statutory
  business trust created to issue PEPS Units, whose common securities are held
  by PPL.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Capital Trust</i></b> - a Delaware statutory<B> </B>business
  trust created to issue Preferred Securities, whose common securities are held
  by PPL Electric.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Capital Trust II</i></b> - a Delaware statutory business
  trust created to issue Preferred Securities, whose common securities are held
  by PPL Electric.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Electric</i></b> - PPL Electric Utilities Corporation,
  a regulated utility subsidiary of PPL that transmits and distributes electricity
  in its service territory, and provides electric supply to retail customers in
  this territory as a PLR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Energy Funding</i></b> - PPL Energy Funding Corporation,
  which is a subsidiary of PPL and the parent company of PPL Energy Supply.</P>
<p align="justify"><b><i>PPL EnergyPlus</i></b> - PPL EnergyPlus, LLC, a subsidiary
  of PPL Energy Supply, which markets wholesale and retail electricity, and supplies
  energy and energy services in newly deregulated markets.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Energy Supply</i></b> - PPL Energy Supply, LLC, the
  parent company of PPL Generation, PPL EnergyPlus, PPL Global and other subsidiaries.
  Formed in November 2000, PPL Energy Supply is a subsidiary of PPL Energy Funding.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Gas Utilities</i></b> - PPL Gas Utilities Corporation,
  a regulated utility subsidiary of PPL specializing in natural gas distribution,
  transmission and storage services, and the sale of propane.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Generation</i></b> - PPL Generation, LLC, a subsidiary
  of PPL Energy Supply which owns and operates U.S. generating facilities through
  various subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Global</i></b> - PPL Global, LLC, a subsidiary of
  PPL Energy Supply, which acquires and develops domestic generation projects,
  and holds international energy projects that are primarily focused on the distribution
  of electricity.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Holtwood</i></b> - PPL Holtwood, LLC, a subsidiary
  of PPL Generation which owns PPL's hydroelectric generating operations in Pennsylvania.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Martins Creek</i></b> - PPL Martins Creek, LLC, a
  fossil generating subsidiary of PPL Generation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Montana</i></b> - PPL Montana, LLC, an indirect subsidiary
  of PPL Generation which generates electricity for wholesale sales in Montana
  and the Pacific Northwest.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Services</i></b> - PPL Services Corporation, a subsidiary
  of PPL which provides shared services for PPL and its subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Susquehanna</i></b> - PPL Susquehanna, LLC, the nuclear
  generating subsidiary of PPL Generation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Transition Bond Company</i></b> - PPL Transition
  Bond Company, LLC, a wholly-owned subsidiary of PPL Electric, formed to issue
  transition bonds under the Customer Choice Act.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PPL Wallingford</i></b> -<I> </I>PPL Wallingford LLC,
  a 225 MW gas-fired station in Wallingford, Connecticut, and a subsidiary of
  PPL Generation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Preferred Securities</i></b> - Company-obligated mandatorily
  redeemable preferred securities issued by PPL Capital Trust, PPL Capital Trust
  II and PPL Capital Funding Trust I, holding solely debentures of PPL Electric
  in the case of PPL Capital Trust and PPL Capital Trust II, and solely debentures
  of PPL Capital Funding in the case of PPL Capital Funding Trust I.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PUC</i></b> (Pennsylvania Public Utility Commission)
  - state agency that regulates certain ratemaking, services, accounting, and
  operations of Pennsylvania utilities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PURPA</i></b> (Public Utility Regulatory Policies Act
  of 1978) - legislation passed by the U.S. Congress to encourage energy conservation,
  efficient use of resources, and equitable rates.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>PURTA</i></b> - Public Utility Realty Tax Act.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>RMC</i></b> - Risk Management Committee.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>SCR</i></b> - selective catalytic reduction, a pollution
  control process.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>SEC</i></b> - Securities and Exchange Commission.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>SFAS</i></b> (Statement of Financial Accounting Standards)
  - accounting and financial reporting rules issued by the FASB.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>SO<SUB>2</sub></i></b> - sulfur dioxide.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Superfund</i></b> - federal environmental legislation
  that addresses remediation of contaminated sites; states also have similar statutes.</P>
<p align="justify"></P>

<P ALIGN="JUSTIFY"> <b><i>Synfuel projects</i></b> - production facilities that
  manufacture synthetic fuel from coal or coal byproducts. Favorable federal tax
  credits are available on qualified synfuel products.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>Tolling agreement</i></b> - agreement whereby PPL, as
  owner of an electric generating facility, agrees to use that facility to convert
  (&quot;toll&quot;) fuel provided by a third party into electric energy for delivery
  back to the third party.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>WPD (South Wales)</i></b> - Western Power Distribution
  (South Wales) plc, a Welsh regional electric utility company.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>WPD (South West)</i></b> - Western Power Distribution
  (South West) plc, a British regional electric utility company.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>WPDH Limited</i></b> - Western Power Distribution Holdings
  Limited, formerly WPD 1953 Limited, a jointly-owned subsidiary of PPL Global
  and Mirant. WPDH Limited owns WPD Holdings U.K., which owns WPD (South West)
  and WPD (South Wales).</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>WPDL</i></b> - Western Power Distribution Limited, a
  wholly-owned subsidiary of WPD Investment Holdings Limited, which is a jointly-owned
  subsidiary of PPL Global and Mirant. WPDL owns 100% of the common shares of
  Hyder.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="FORWARD"></A>Forward-looking Information</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Certain statements contained in this Form 10-Q concerning expectations,
  beliefs, plans, objectives, goals, strategies, future events or performance
  and underlying assumptions and other statements which are other than statements
  of historical facts are &quot;forward-looking statements&quot; within the meaning
  of the federal securities laws. Although PPL, PPL Energy Supply, PPL Electric
  and PPL Montana believe that the expectations and assumptions reflected in these
  statements are reasonable, there can be no assurance that these expectations
  will prove to be correct. These forward-looking statements involve a number
  of risks and uncertainties, and actual results may differ materially from the
  results discussed in the forward-looking statements. In addition to the specific
  factors discussed in the Management's Discussion and Analysis of the Financial
  Condition and Results of Operations sections herein, the following are among
  the important factors that could cause actual results to differ materially from
  the forward-looking statements: </P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">market demand and prices for energy, capacity and fuel;</P>
  <li>
    <p align="justify">weather variations affecting customer energy usage; </P>
  <li>
    <p align="justify">competition in retail and wholesale power markets; </P>
  <li>
    <p align="justify">the effect of any business or industry restructuring; </P>
  <li>
    <p align="justify">the profitability and liquidity of PPL and its subsidiaries;
    </P>
  <li>
    <p align="justify">new accounting requirements or new interpretations or applications
      of existing requirements; </P>
  <li>
    <p align="justify">operation of existing facilities and operating costs; </P>
  <li>
    <p align="justify">environmental conditions and requirements; </P>
  <li>
    <p align="justify">system conditions and operating costs; </P>
  <li>
    <p align="justify">development of new projects, markets and technologies;
    </P>
  <li>
    <p align="justify">performance of new ventures; </P>
  <li>
    <p align="justify">political, regulatory or economic conditions in states,
      regions or countries where PPL or its subsidiaries conduct business; </P>
  <li>
    <p align="justify">receipt and renewals of necessary governmental approvals;
    </P>
  <li>
    <p align="justify">impact of state or federal investigations applicable to
      PPL and its subsidiaries and the energy industry;</P>
  <li>
    <p align="justify">capital market conditions and decisions regarding capital
      structure; </P>
  <li>
    <p align="justify">stock price performance; </P>
  <li>
    <p align="justify">securities and credit ratings; </P>
  <li>
    <p align="justify">foreign exchange rates; </P>
  <li>
    <p align="justify">new state or federal legislation; </P>
  <li>
    <p align="justify">national or regional economic conditions, including any
      potential effects arising from the September 11, 2001 terrorist attacks
      in the U.S. and any consequential hostilities; and </P>
  <li>
    <p align="justify">the commitments and liabilities of PPL and its subsidiaries.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Any such forward-looking statements should be considered in
  light of such important factors and in conjunction with other documents of PPL,
  PPL Energy Supply, PPL Electric and PPL Montana on file with the SEC.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">New factors that could cause actual results to differ materially
  from those described in forward-looking statements emerge from time to time,
  and it is not possible for PPL, PPL Energy Supply, PPL Electric or PPL Montana
  to predict all of such factors, or the extent to which any such factor or combination
  of factors may cause actual results to differ from those contained in any forward-looking
  statement. Any forward-looking statement speaks only as of the date on which
  such statement is made, and PPL, PPL Energy Supply, PPL Electric and PPL Montana
  undertake no obligations to update the information contained in such statement
  to reflect subsequent developments or information.</P>
<P ALIGN="JUSTIFY"></P>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U><A NAME="CORPINCOMESTATEMENT"></A>PPL
      CORPORATION AND SUBSIDIARIES</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Part I. FINANCIAL INFORMATION</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Item 1. Financial Statements</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=14></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> In the opinion of PPL, the unaudited financial
      statements that follow reflect all adjustments necessary to present fairly
      the Condensed Consolidated Balance Sheet as of June 30, 2002 and December
      31, 2001, and the Condensed Consolidated Statement of Income, the Condensed
      Consolidated Statement of Cash Flows and the Condensed Consolidated Statement
      of Shareowners' Common Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=14></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>CONDENSED CONSOLIDATED STATEMENT OF INCOME</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>PPL Corporation and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <I>(Millions of Dollars, except per share
      data)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Three Months Ended</b></font><BR>
        <font size="2"><B>June 30,</B></font><hr noshade></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b></font><BR>
        <font size="2"><B>June 30,</B></font><hr noshade></div>
    </TD>
    <TD  VALIGN="BOTTOM"></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3 HEIGHT=20></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD  VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Operating Revenues</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Utility</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>742</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">695</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1,547</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">1,522</div>
    </TD>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Unregulated retail electric and gas</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>42</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>91</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">243</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Wholesale energy marketing and trading</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>352</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">431</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>620</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">889</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>165</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">181</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>318</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">323</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1,301</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp; </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">1,411</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>2,576</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">2,977</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Operating Expenses</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Operation</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Fuel</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>128</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">127</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>274</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">314</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Energy purchases</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>343</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">427</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>602</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">823</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>186</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">192</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>377</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">376</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Amortization of recoverable transition costs</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>50</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>103</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">126</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Maintenance</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>82</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">94</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>144</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">148</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Depreciation</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>64</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">67</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>126</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">133</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Taxes, other than income</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>47</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">39</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>98</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">80</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>146</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">162</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>272</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">275</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Other charges</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Write-down of international energy projects</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>94</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>100</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Workforce reduction</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>74</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>74</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1,214</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">1,163</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>2,170</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">2,275</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Operating Income</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>87</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">248</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>406</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">702</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Other Income - net</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>6</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>11</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">12</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Interest Expense</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>100</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">88</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>197</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">192</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Income (Loss) Before Income Taxes and <BR>
      &nbsp;&nbsp;&nbsp;Minority Interest</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(7</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">166</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>220</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">522</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Income Taxes</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">35</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>66</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">161</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Minority Interest</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Income (Loss) Before Cumulative Effect of
      </B><BR>
      <B>&nbsp;&nbsp;a Change in Accounting Principle</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(12</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">130</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>152</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">358</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Cumulative Effect of a Change in<BR>
     &nbsp;&nbsp;Accounting Principle</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(150</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
 <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Income (Loss) Before Dividends and </B><BR>
      <B>&nbsp;&nbsp;Distributions on Preferred Securities</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(12</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">130</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">358</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> Dividends and Distributions - Preferred Securities</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>15</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>32</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">19</div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade>
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Net Income (Loss)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(27</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">117 </div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(30</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">339 </div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=3 height=20></td>
    <td width="0%" valign="BOTTOM" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20> </td>
    <td valign="top" colspan=2 height=20>
      <hr noshade size="5">
    </td>
    <td width="0%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="top" height=20></td>
    <td width="0%" valign="top" height=20></td>
    <td valign="top" colspan=2 height=20>
      <hr noshade size="5">
    </td>
    <td  valign="BOTTOM" height=20></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Earnings (Loss) Per Share of Common Stock</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Basic</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(0.18</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">0.80 </div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(0.20</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">2.33 </div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2> Diluted</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(0.18</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">0.80 </div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>(0.20</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">2.31 </div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="7%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD  VALIGN="BOTTOM" HEIGHT=14></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3> <B>Dividends Declared per Share of Common Stock</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>0.36</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right">0.265</div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>0.72</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">
      <div align="right">0.53 </div>
    </TD>
    <TD  VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3 HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD WIDTH="7%" VALIGN="BOTTOM" HEIGHT=14></TD>
    <TD  VALIGN="BOTTOM" HEIGHT=14></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>

<TABLE BORDER=0 CELLSPACING=1 cellpadding=0 WIDTH=100%>
  <TR>
    <TD WIDTH="99%" VALIGN="TOP" COLSPAN=10> <B><A NAME="CORPCASHFLOWS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS</B></TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> <B>PPL Corporation and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="26%" VALIGN="bottom" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b></font><BR>
        <font size="2"><B>June 30,</B></font><hr noshade></div>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="66%" VALIGN="bottom">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="bottom" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="bottom">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="bottom" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> <B>Net Cash Provided by Operating Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> <B>$</B></TD>
    <TD >
      <div align="right"><B>19</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> $</TD>
    <TD >
      <div align="right">197</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="66%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> <B>Cash Flows From Investing Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Expenditures for property, plant and equipment</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(248</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(207</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Investment in generating assets and electric energy
      projects</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(256</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(190</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Decrease in notes receivable from affiliates</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">210</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Other investing activities - net</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(19</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="66%"> Net cash used in investing activities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(523</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(190</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> <B>Cash Flows From Financing Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Issuance of company-obligated mandatorily redeemable
      preferred securities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">575</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Retirement of company-obligated mandatorily redeemable
      preferred<BR>
      &nbsp;&nbsp;securities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(100</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Issuance of common stock</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>20</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">42</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Retirement of long-term debt</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(191</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(355</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Payment of common and preferred dividends</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(127</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(90</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Net increase (decrease) in short-term debt</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>163</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(473</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="68%" COLSPAN=2> Other financing activities - net</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(1</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="66%"> Net cash used in financing activities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(236</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(325</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> <B>Net Decrease In Cash and Cash Equivalents</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>(740</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">(318</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> Cash and Cash Equivalents at Beginning of Period</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right"><B>933</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD >
      <div align="right">480</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="71%" COLSPAN=3> Cash and Cash Equivalents at End of Period</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> <B>$</B></TD>
    <TD >
      <div align="right"><B>193</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> $</TD>
    <TD >
      <div align="right">162</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td width="2%" valign="TOP">&nbsp;</td>
    <td width="66%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="12%" valign="TOP" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="11%" valign="TOP" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=14 ><B><A NAME="CORPBALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=14 > <B>PPL Corporation and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=14 > (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=14 > <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 >
      <div align="center"><font size="2"><B>June 30,</b></font><BR>
        <font size="2"><B>2002</B></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 >
      <div align="center"><font size="2"><B>December 31,</b></font><BR>
        <font size="2"><B>2001</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 > <B>Assets</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3 ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 ></TD>
    <TD WIDTH="34%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 > <B>Current Assets</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Cash and
      cash equivalents</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" > <B>$</B></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>193</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" > $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">933</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Accounts
      receivable (less reserve: 2002, $124; 2001, $121)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>635</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">539</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Unbilled
      revenues</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>218</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">248</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Fuel, materials
      and supplies - at average cost</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>237</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">251</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Prepayments</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>114</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">43</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Deferred
      income taxes</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>91</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">77</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Price risk
      management assets</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>111</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">123</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Other</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>102</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">116</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=3 ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=2 ></TD>
    <TD WIDTH="34%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>1,701</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">2,330</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 > <B>Investments</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Investment
      in unconsolidated affiliates - at equity</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>646</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">586</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Investment
      in unconsolidated affiliates - at cost</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>120</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">114</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Nuclear
      plant decommissioning trust fund</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>281</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">276</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Other</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>18</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">23</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD WIDTH="7%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=4 >&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>1,065</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">999</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 > <B>Property, Plant and Equipment
      - net</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Electric
      plant in service</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transmission
      and distribution</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>2,677</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">2,566</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generation</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>2,521</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">2,464</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>311</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">310</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD WIDTH="7%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=5 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>5,509</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">5,340</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Construction
      work in progress</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>315</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">181</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Nuclear
      fuel</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>116</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">127</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electric
      plant</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>5,940</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">5,648</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Gas and
      oil plant</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>199</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">196</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Other property</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>109</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">103</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
<tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD WIDTH="7%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=5 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>6,248</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">5,947</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=6 > <B>Regulatory and Other Noncurrent
      Assets</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Recoverable
      transition costs</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>2,069</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">2,172</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <TR>
    <TD colspan="6" VALIGN="BOTTOM" > &nbsp;&nbsp;&nbsp;&nbsp;Other</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>1,111</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">1,118</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD WIDTH="7%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=5 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>3,180</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">3,290</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD WIDTH="7%" VALIGN="BOTTOM" ></TD>
    <TD VALIGN="BOTTOM" COLSPAN=5 ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" > <B>$</B></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM" >
      <div align="right"><B>12,194</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" ></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" > $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" >
      <div align="right">12,566</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" ></TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=6 ></td>
    <td width="1%" valign="BOTTOM" ></td>
    <td valign="top" colspan=2 >
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top" ></td>
    <td width="1%" valign="top" ></td>
    <td valign="top" colspan=2 >
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM" > </td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=14 >
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>

  <br><hr noshade><br>

<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
 <TD VALIGN="BOTTOM" COLSPAN=12> <B>CONDENSED CONSOLIDATED BALANCE SHEET</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B>PPL Corporation and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>June 30,</b></font><BR>
        <font size="2"><B>2002</B></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>December 31,</b></font><BR>
        <font size="2"><B>2001</B></font></div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Liabilities and Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Current Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Short-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>281</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">118</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>566</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">498</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>76</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">87</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Accounts payable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>376</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">558</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>42</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">138</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Interest</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>59</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">61</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Dividends</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>62</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Price risk management liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>112</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">106</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>206</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">213</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>1,780</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">1,830</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Long-term Debt</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>4,882</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">5,081</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Deferred Credits and Other Noncurrent Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Deferred income taxes and investment tax credits</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>1,500</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">1,449</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>390</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>927</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">911</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>2,817</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">2,853</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Commitments and Contingent Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Minority Interest</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>38</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">38</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Company-obligated Mandatorily Redeemable
      </B><BR>
      <B>&nbsp;&nbsp;Preferred Securities of Subsidiary Trusts Holding Solely</b><BR>
         <b>&nbsp;&nbsp;Company Debentures</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>725</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">825</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Preferred Stock</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> With sinking fund requirements</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>31</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">31</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Without sinking fund requirements</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>82</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">82</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=4> <B>Shareowners' Common Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Common stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Capital in excess of par value</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>1,976</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">1,956</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Treasury stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>(836</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(836</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Earnings reinvested</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>887</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">1,023</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Accumulated other comprehensive loss</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>(120</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(251</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=3> Capital stock expense and other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>(39</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(37</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>1,870</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">1,857</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right"><B>12,194</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">12,566</div>
    </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="34%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="2%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="4%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>

<br><hr noshade><br>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr>
    <td valign="BOTTOM" colspan=22> <b><a name="CORPSHAREOWNERS"></a>CONDENSED
      CONSOLIDATED STATEMENT OF SHAREOWNERS' COMMON EQUITY</b><br>
      <b>AND COMPREHENSIVE INCOME</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=22> <b>PPL Corporation and Subsidiaries</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=22> (Unaudited)</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=22> <i>(Millions of Dollars)</i></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=22>&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="23%" valign="BOTTOM" colspan=6>
      <div align="center"><font size="2"><b>Three Months Ended</b></font><br>
        <font size="2"><b>June 30,</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="19%" valign="BOTTOM" colspan=6>
      <div align="center"><font size="2"><b>Six Months Ended</b></font><br>
        <font size="2"><b>June 30,</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="53%" colspan=6>
      <div align="center"></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="11%" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="10%" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="9%" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
    <td width="7%" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="1%">
      <div align="center"></div>
    </td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Common stock at beginning of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"><b>$</b></td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">$</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"><b>$</b></td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">$</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Common stock at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Capital in excess of par value
      at beginning of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1,975</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">1,919</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>1,956</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">1,895</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Common stock issued (a)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">18</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>20</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">42</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Capital in excess of par value
      at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1,976</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">1,937</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>1,976</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">1,937</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Treasury stock at beginning of
      period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(836</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(836</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(836</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(836</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Treasury stock at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(836</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(836</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(836</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(836</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Earnings reinvested at beginning
      of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>967</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">1,182</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>1,023</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">999</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Net income (loss) (b)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(27</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">117</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(30</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">339</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Cash dividends declared on common
      stock</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(53</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(39</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(106</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(78</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Earnings reinvested at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>887</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">1,260</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>887</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">1,260</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Accumulated other comprehensive
      loss at beginning of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(255</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(253</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(251</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(36</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Foreign currency translation adjustments
      (b) (c)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>136</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(46</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>144</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(71</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Unrealized loss on available-for-sale
      securities (b)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(1</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(1</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(2</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(3</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>

  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Unrealized gain (loss) on qualifying
      derivatives (b) (d)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">225</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(11</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">35</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
 <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Accumulated other comprehensive
      loss at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(120</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(75</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(120</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(75</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Capital stock expense and other
      at beginning of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(39</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(12</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(37</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(12</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="5%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Issuance costs and other charges
      to issue PEPS Units</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(24</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(24</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="5%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Other</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(2</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Capital stock expense and other
      at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(39</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(36</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(39</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(36</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Total Shareowners' Common Equity</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1,870</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">2,252</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>1,870</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">2,252</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Common stock shares at beginning
      of period (a)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>147,122</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">145,623</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>146,580</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">145,041</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="47%" valign="BOTTOM" colspan=3> Common stock issued through the
      ESOP, DRIP, <br>
      &nbsp;&nbsp; ICP, ICPKE and structured equity program</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>43</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">410</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>585</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">992</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6> Common stock shares at end of period</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>147,165</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">146,033</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>147,165</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">146,033</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2"> (a)</td>
    <td width="48%" valign="BOTTOM" colspan=4> In thousands. $.01 par value, 390
      million shares authorized. Each share entitles the holder to one vote on
      any question presented to any shareowners' meeting. </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2"> (b)</td>
    <td width="48%" valign="BOTTOM" colspan=4> Statement of Comprehensive Income:</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="48%" valign="BOTTOM" colspan=4> Net income (loss)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(27</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">117</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(30</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">339</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="48%" valign="BOTTOM" colspan=4> Other comprehensive income (loss):</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="46%" valign="BOTTOM" colspan=2> Foreign currency translation adjustments,
      net of tax (benefit) of $(4), $(3), $(10), $(13)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>136</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(46</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>144</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(71</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="46%" valign="BOTTOM" colspan=2> Unrealized loss on available-for-sale
      securities, net of tax (benefit) of $(1), $0, $(1), $(2)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>(1</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">(1</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(2</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(3</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="46%" valign="BOTTOM" colspan=2> Unrealized gain (loss) on qualifying
      derivatives, net of tax (benefit) of $149, $(7), $17</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">225</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>(11</b></div>
    </td>
    <td width="1%" valign="BOTTOM"> <b>)</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">35</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
<tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="46%" valign="BOTTOM" colspan=2> Total other comprehensive income
      (loss)</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>135</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">178</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>131</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">(39</div>
    </td>
    <td width="1%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2">&nbsp;</td>
    <td width="48%" valign="BOTTOM" colspan=4> Comprehensive Income</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>108</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="8%" valign="BOTTOM">
      <div align="right">295</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="8%" valign="BOTTOM">
      <div align="right"><b>101</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="6%" valign="BOTTOM">
      <div align="right">300</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" valign="BOTTOM" colspan=6>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="10%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="9%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="7%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2"> (c)</td>
    <td width="96%" valign="BOTTOM" colspan=20> Includes a $94 million credit
      for the write-off of the CEMAR cumulative translation adjustment in June
      2002. See Note 14 for additional information.</td>
  </tr>
  <tr>
    <td width="4%" valign="TOP" colspan="2"> (d)</td>
    <td width="96%" valign="BOTTOM" colspan=20> Includes a $(182) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001.</td>
  </tr>
  <tr>
    <td valign="TOP" colspan=22>&nbsp;</td>
  </tr>
  <tr>
    <td valign="TOP" colspan=22>
      <div align="center"><i><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </td>
  </tr>
</table>
<br>
  <hr noshade>
  <br>
  <P ALIGN="CENTER">(THIS PAGE LEFT BLANK INTENTIONALLY.)</P>
<br>
  <hr noshade>
  <br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19><B><U><A NAME="ESINCOMESTATEMENT"></A>PPL
      ENERGY SUPPLY, LLC AND SUBSIDIARIES</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Part I. FINANCIAL INFORMATION</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Item 1. Financial Statements</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=22></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> In the opinion of PPL Energy Supply, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Member's Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>CONDENSED CONSOLIDATED STATEMENT OF INCOME</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="11%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="11%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="11%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="top" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="top" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="top" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="top" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Revenues</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Wholesale energy marketing and
      trading</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>352</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">433</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>620</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">889</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Wholesale energy marketing to affiliates</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>339</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">305</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>708</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">639</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Utility</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>109</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">101</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>212</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">212</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Unregulated retail electric and
      gas</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>42</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">103</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>91</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">243</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>164</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">170</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>315</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">306</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1,006</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,112</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1,946</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">2,289</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Expenses</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Operation</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Fuel</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>109</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">106</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>221</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">245</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Energy purchases</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>286</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">370</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>484</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">700</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Energy purchases from affiliates</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>40</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">53</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>86</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">98</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Other operation and maintenance</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>197</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">215</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>387</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">388</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Transmission</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>6</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">15</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">34</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Depreciation</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>39</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">42</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>76</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">85</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Taxes, other than income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>10</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">12</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>19</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">24</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>136</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">146</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>251</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">240</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Other charges</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Write-down of international energy projects</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>94</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>100</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Workforce reduction</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>40</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>40</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>957</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">959</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1,677</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">1,814</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Income</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>49</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">153</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>269</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">475</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Other Income - net</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">18</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>21</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">32</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Interest Expense</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>19</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>36</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Interest Expense with Affiliate</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">26</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Income Before Income Taxes and
      Minority<br>
      &nbsp;&nbsp;&nbsp; Interest</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>42</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">166</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>253</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">479</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Income Taxes</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>32</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">41</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>97</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">151</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Minority Interest</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Income Before Cumulative Effect
      of a Change</B><B> in Accounting Principle</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>9</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>154</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Cumulative Effect of a Change in
      Accounting<br>
      &nbsp;&nbsp;&nbsp; Principle</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(150</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Net Income</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>9</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="43%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="1%" valign="top">&nbsp;</td>
    <td width="11%" valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>

<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> <B><A NAME="ESCASHFLOWS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF CASH FLOWS</B></TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="30%" VALIGN="bottom" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="bottom" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="bottom"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="bottom"><font size="2"></font></TD>
    <TD WIDTH="13%" VALIGN="bottom" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="68%" VALIGN="TOP" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD colspan="2" VALIGN="TOP">
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD colspan="2" VALIGN="TOP">
      <hr noshade>
    </TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> <B>Net Cash Provided by (Used in) Operating Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> <B>$</B></TD>
    <TD WIDTH="12%">
      <div align="right"><B>(36</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> $</TD>
    <TD WIDTH="12%">
      <div align="right">72</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> <B>Cash Flows From Investing Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Expenditures for property, plant and equipment</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(157</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(131</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Investment in generating assets and electric energy
      projects</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(256</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(190</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Net decrease in notes receivable from affiliates</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>152</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">262</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Other investing activities - net</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(17</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">8</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%"> Net cash used in investing activities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(278</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(51</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> <B>Cash Flows From Financing Activities</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Retirement of long-term debt</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(10</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(21</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Contributions from Member</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">1,567</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Distributions to Member</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(552</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(324</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Net increase (decrease) in short-term debt</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>165</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(78</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Net decrease in short-term debt payable to affiliates</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(1,191</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Other financing activities - net</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(3</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%"> Net cash used in financing activities</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(395</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(47</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> <B>Net Decrease In Cash and Cash Equivalents</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>(709</b></div>
    </TD>
    <TD WIDTH="1%"> <B>)</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">(26</div>
    </TD>
    <TD WIDTH="1%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> Cash and Cash Equivalents at Beginning of Period</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right"><B>815</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">
      <div align="right">130</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> Cash and Cash Equivalents at End of Period</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> <B>$</B></TD>
    <TD WIDTH="12%">
      <div align="right"><B>106</b></div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> $</TD>
    <TD WIDTH="12%">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="68%" valign="TOP" colspan=3>&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade size="5">
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade size="5">
    </td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="64%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="68%" COLSPAN=3> <B>Non-cash contributions from Member:</B></TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="66%" COLSPAN=2> Intercompany notes and accounts receivable</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="12%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%"> $</TD>
    <TD WIDTH="12%">
      <div align="right">920</div>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=11>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr>
    <td valign="BOTTOM" colspan=12> <b><a name="ESBALANCESHEET"></a>CONDENSED
      CONSOLIDATED BALANCE SHEET</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <b>PPL Energy Supply, LLC and Subsidiaries</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> (Unaudited)</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <i>(Millions of Dollars)</i></td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="18%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>June 30,</b><br>
        <b>2002</b> </font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="19%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>December 31,</b><br>
        <b>2001</b> </font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4> <b>Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="49%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4> <b>Current Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Cash and cash equivalents</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>106</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">815</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Accounts receivable (less reserve:
      2002, $102; 2001,<br>
      &nbsp;&nbsp;&nbsp; $100)</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>393</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">343</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Unbilled revenues</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>118</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">114</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Accounts receivable from affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>184</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">113</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Notes receivable from affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>153</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">305</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Fuel, materials and supplies -
      at average cost</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>203</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">209</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Price risk management assets</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>107</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">123</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>125</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">100</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="49%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>1,389</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">2,122</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4> <b>Investments</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Investment in unconsolidated affiliates
      - at equity</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>646</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">586</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Investment in unconsolidated affiliates
      - at cost</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>120</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">114</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Note receivable from affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>90</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">90</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Nuclear plant decommissioning trust
      fund</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>281</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">276</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>4</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">7</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>1,141</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">1,073</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4> <b>Property, Plant and Equipment
      - net</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Electric plant in service</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM" colspan=2> Transmission and distribution</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>535</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">465</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM" colspan=2> Generation</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,521</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">2,464</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM" colspan=2> General</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>119</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">122</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="49%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>3,175</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">3,051</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Construction work in progress</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>279</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">146</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Nuclear fuel</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>116</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">127</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM" colspan=2> Electric plant</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>3,570</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">3,324</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Gas and oil plant</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>24</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">23</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="53%" valign="BOTTOM" colspan=3> Other property</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>74</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">71</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="49%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>3,668</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">3,418</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="55%" valign="BOTTOM" colspan=4> <b>Other Noncurrent Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>541</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">548</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="49%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>6,739</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="17%" valign="BOTTOM">
      <div align="right">7,161</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="55%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="18%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="19%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12>
      <div align="center"><i><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </td>
  </tr>
</table>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9> <B>CONDENSED CONSOLIDATED BALANCE SHEET</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>June 30,</b><BR>
        <B>2002</B></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>December 31,</b><BR>
        <B>2001</B></div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Liabilities and Equity</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Current Liabilities</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Short-term debt</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>281</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">118</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Long-term debt</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>37</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">24</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Accounts payable</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>313</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Accounts payable to affiliates</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>24</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">47</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Above market NUG contracts</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>76</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">87</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Taxes</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>49</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">94</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Collateral on PLR energy supply to
      affiliate</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>68</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Deferred revenue on PLR energy supply
      to affiliate</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">11</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Price risk management liabilities</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>108</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">97</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Other</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>140</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">165</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1,108</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">1,136</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Long-term Debt</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>745</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">737</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Deferred Credits and Other Noncurrent Liabilities</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Deferred income taxes and investment
      tax credits</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>160</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Above market NUG contracts</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>390</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Nuclear plant decommissioning</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>290</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">294</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Deferred revenue on PLR energy supply
      to affiliate</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>75</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">79</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> &nbsp; &nbsp; &nbsp;Other</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>374</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">357</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>1,289</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">1,278</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Commitments and Contingent Liabilities</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
<tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Minority Interest</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>38</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">38</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM"> <B>Member's Equity</B></TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>3,559</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">3,972</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade>
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM">
      <div align="right"><B>6,739</b></div>
    </TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="0%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="6%" VALIGN="BOTTOM">
      <div align="right">7,161</div>
    </TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td valign="BOTTOM">&nbsp;</td>
    <td width="0%" valign="BOTTOM">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="0%" valign="top">&nbsp;</td>
    <td width="0%" valign="top">&nbsp;</td>
    <td valign="top" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="7%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=9>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>

<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20> <B><A NAME="ESMEMBERS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF MEMBER'S EQUITY AND</B><BR>
      <B>COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=20>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="47%" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="11%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="11%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="11%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="10%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at beginning of
      period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>3,742</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">3,255</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,972</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">2,577</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Member contributions</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,567</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">2,486</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Net income (a)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>9</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive income (loss),
      net of tax:</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM" COLSPAN=2> Foreign currency translation adjustments
      (a)<br>
      &nbsp;&nbsp;&nbsp; (b)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>136</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(46</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>144</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(71</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM" COLSPAN=2> Unrealized gain (loss) on qualifying<br>
      &nbsp;&nbsp;&nbsp; derivatives (a) (c)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">218</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(14</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">33</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Distributions to Member</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(331</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(552</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(232</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>3,559</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">5,118</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,559</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">5,118</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM"> (a)</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Statement of Comprehensive Income:</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Net income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>9</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive income (loss):</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM"> Foreign currency translation adjustments,<br>
      &nbsp;&nbsp;&nbsp;net of tax (benefit) of $(4), <BR>
      &nbsp;&nbsp;&nbsp;$(3), $(10), $(13)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>136</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(46</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>144</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(71</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM"> Unrealized loss on qualifying derivatives,<br>
      &nbsp;&nbsp;&nbsp;net of tax (benefit) of $(1), <BR>
      &nbsp;&nbsp;&nbsp;$147, $(10), $23</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">218</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(14</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">33</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Total other comprehensive income
      (loss)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>135</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">172</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>130</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(38</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=3> Comprehensive Income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>144</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">296</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>134</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">287</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=4>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP"> (b)</TD>
    <TD WIDTH="97%" VALIGN="BOTTOM" COLSPAN=19> Includes a $94 million credit
      for the write-off of the CEMAR cumulative translation adjustment in June
      2002. See Note 14 for additional information.</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP"> (c)</TD>
    <TD WIDTH="97%" VALIGN="BOTTOM" COLSPAN=19> Includes a $(182) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001.</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=20>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=20>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<P ALIGN="CENTER">(THIS PAGE LEFT BLANK INTENTIONALLY.)</P>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U><A NAME="EUINCOMESTATEMENT"></A>PPL
      ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Part I. FINANCIAL INFORMATION</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B><U>Item 1. Financial Statements</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> In the opinion of PPL Electric, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Shareowner's Common Equity and Comprehensive Income for the
      periods ended June 30, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>CONDENSED CONSOLIDATED STATEMENT OF INCOME</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <B>PPL Electric Utilities Corporation and
      Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=20></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=20></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B>June 30,</B></font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B></font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Revenues</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Retail electric</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>595</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">558</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,236</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,192</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Retail electric to affiliate</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>8</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">11</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Wholesale electric</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>6</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">17</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Wholesale electric to affiliate</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>40</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">43</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>82</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">88</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">11</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">17</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>651</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">625</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,348</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,325</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Expenses</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Operation</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Energy purchases</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">44</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>105</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">89</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Energy purchases from affiliate</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>339</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">300</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>708</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">634</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>61</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">62</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>116</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">121</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM"> Amortization of recoverable transition costs</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>50</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>103</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">126</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Maintenance</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>16</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>27</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">26</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Depreciation</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>23</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">22</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>46</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">45</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Taxes, other than income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>38</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">27</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>79</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">10</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">16</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Workforce reduction</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>33</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>33</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>612</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">533</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,220</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,112</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Income</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>39</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">92</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>128</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">213</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Other Income - net</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>7</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">5</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Interest Expense</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>53</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">52</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>109</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">114</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Income (Loss) Before Income
      Taxes</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">41</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>26</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Income Taxes (Benefit)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(9</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">36</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Income (Loss) Before Dividends
      on Preferred<br>
      &nbsp;&nbsp;&nbsp;Securities</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(3</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">28</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>23</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">68</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="41%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Dividends - Preferred Securities</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>11</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Net Income (Loss)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right"><B>(8</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">21</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="46%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=20></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=19 HEIGHT=20>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B><A NAME="EUCASHFLOWS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF CASH FLOWS</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B>PPL Electric Utilities Corporation and
      Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="30%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B> </font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="67%" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Cash Provided by Operating
      Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>82</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">155</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="60%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> <B>Cash Flows From Investing Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Expenditures for property, plant
      and equipment</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(86</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(65</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Net decrease in notes receivable
      from parent and affiliates</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>270</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">70</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Other investing activities - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>3</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(10</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="62%" VALIGN="BOTTOM" COLSPAN=2> Net cash provided by (used in)
      investing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>187</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> <B>Cash Flows From Financing Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Retirement of long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(171</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(329</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Retirement of company-obligated
      mandatorily redeemable preferred securities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(100</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Deposit of funds for the retirement
      of long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Payment of common and preferred
      dividends</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(42</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(37</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Redemption of preferred stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" COLSPAN=3> Net decrease in short-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(40</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="62%" VALIGN="BOTTOM" COLSPAN=2> Net cash used in financing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(313</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(412</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Decrease in Cash and Cash
      Equivalents</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>(44</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(262</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> Cash and Cash Equivalents at Beginning
      of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>79</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">267</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=4> Cash and Cash Equivalents at End
      of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right"><B>35</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="67%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr>
    <td valign="BOTTOM" colspan=12> <b><a name="EUBALANCESHEET"></a>CONDENSED
      CONSOLIDATED BALANCE SHEET</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <b>PPL Electric Utilities Corporation and
      Subsidiaries</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> (Unaudited)</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <i>(Millions of Dollars)</i></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12>&nbsp;</td>
  </tr>
  <tr>
    <td width="59%" valign="BOTTOM" colspan=4>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="18%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>June 30,</b><br>
        <b>2002</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="15%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>December 31,</b><br>
        <b>2001</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="59%" valign="BOTTOM" colspan=4> <b>Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="59%" valign="BOTTOM" colspan=4> <b>Current Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Cash and cash equivalents</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>35</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">79</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Accounts receivable (less reserve:
      2002, $21; 2001, $19)</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>206</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">179</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Unbilled revenues</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>99</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">131</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Accounts receivable from affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>23</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">18</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Notes receivable from affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>80</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">350</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Income tax receivable</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>35</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">35</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Prepayments</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>55</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">4</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Prepayment on PLR energy supply
      from affiliate</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>12</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">11</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Deferred income taxes</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>43</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">41</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Collateral on PLR energy supply
      from affiliate</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>68</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>35</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">35</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>691</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">883</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="59%" valign="BOTTOM" colspan=4> <b>Property, Plant and Equipment
      - net</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Electric plant in service</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="54%" valign="BOTTOM" colspan=2> Transmission and distribution</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,142</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,101</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="54%" valign="BOTTOM" colspan=2> General</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>184</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">183</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,326</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,284</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Construction work in progress</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>37</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">32</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="54%" valign="BOTTOM" colspan=2> Electric plant</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,363</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,316</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Other property</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>3</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">3</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,366</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,319</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="59%" valign="BOTTOM" colspan=4> <b>Regulatory and Other Noncurrent
      Assets</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Recoverable transition costs</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,069</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,172</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Prepayment on PLR energy supply
      from affiliate</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>75</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">79</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="57%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>450</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">468</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>2,594</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">2,719</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="52%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="16%" valign="BOTTOM">
      <div align="right"><b>5,651</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="13%" valign="BOTTOM">
      <div align="right">5,921</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="57%" colspan=3>&nbsp; </td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12>
      <div align="center"><i><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </td>
  </tr>
</table>
<br>
<hr noshade><br>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr>
    <td valign="BOTTOM" colspan=12> <b>CONDENSED CONSOLIDATED BALANCE SHEET</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <b>PPL Electric Utilities Corporation and
      Subsidiaries</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> (Unaudited)</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12> <i>(Millions of Dollars)</i></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12>&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="17%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>June 30,</b><br>
        <b>2002</b></font></div>
    </td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="2%" valign="BOTTOM"><font size="2"></font></td>
    <td width="17%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>December 31,</b><br>
        <b>2001</b></font></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Liabilities and Equity</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Current Liabilities</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Long-term debt</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>269</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">274</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Accounts payable</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>32</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">34</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Accounts payable to affiliates</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>159</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">122</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Taxes</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>48</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">74</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Interest</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>35</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">34</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>52</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">46</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>595</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">584</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Long-term Debt</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>3,019</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">3,185</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Deferred Credits and Other Noncurrent
      Liabilities</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Deferred income taxes and investment
      tax credits</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>750</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">757</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>141</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">132</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>891</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">889</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Commitments and Contingent Liabilities</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="4" valign="BOTTOM"> <b>Company-obligated Mandatorily Redeemable
      Preferred<br>
      &nbsp;&nbsp;&nbsp;Securities of Subsidiary Trusts Holding Solely<br>
      &nbsp;&nbsp;&nbsp;Company Debentures</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>150</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">250</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Preferred Stock</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> With sinking fund requirements</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>31</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">31</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Without sinking fund requirements</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>51</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">51</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>82</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">82</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="57%" valign="BOTTOM" colspan=4> <b>Shareowner's Common Equity</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Common stock</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>1,476</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">1,476</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Additional paid-in capital</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>51</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">51</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Treasury stock</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>(912</b></div>
    </td>
    <td width="2%" valign="BOTTOM"> <b>)</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">(912</div>
    </td>
    <td width="2%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Earnings reinvested</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>315</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">332</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="55%" valign="BOTTOM" colspan=3> Capital stock expense and other</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>(16</b></div>
    </td>
    <td width="2%" valign="BOTTOM"> <b>)</b></td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">(16</div>
    </td>
    <td width="2%" valign="BOTTOM"> )</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>914</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">931</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="51%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> <b>$</b></td>
    <td width="15%" valign="BOTTOM">
      <div align="right"><b>5,651</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM"> $</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">5,921</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="57%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="17%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=12>
      <div align="center"><i><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </td>
  </tr>
</table>
<br>
<hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <tr>
    <td valign="BOTTOM" colspan=32><b><a name="EUSHAREOWNERS"></a>CONDENSED CONSOLIDATED
      STATEMENT OF SHAREOWNER'S COMMON EQUITY</b><br>

      <b>AND COMPREHENSIVE INCOME</b> </td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=32><b>PPL Electric Utilities Corporation and Subsidiaries</b>
    </td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=32>(Unaudited) </td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=32><i>(Millions of Dollars)</i> </td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=32>&nbsp; </td>
  </tr>
  <tr>
    <td width="51%" valign="BOTTOM" colspan=4>
      <div align="center"></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"></div>
    </td>
    <td valign="BOTTOM" colspan=10>
      <div align="center"><font size="2"><b>Three Months Ended</b><br>
        <b>June 30,</b> </font>
        <hr noshade>
      </div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"></font></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"></font></div>
    </td>
    <td valign="BOTTOM" colspan=10>
      <div align="center"><font size="2"><b>Six Months Ended</b><br>
        <b>June 30,</b> </font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM" colspan=2>&nbsp;</td>
  </tr>
  <tr>
    <td width="51%" valign="BOTTOM" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td valign="BOTTOM" colspan=3>
      <div align="center"><b>2002</b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td valign="BOTTOM" colspan=3>
      <div align="center"><b>2001</b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td valign="BOTTOM" colspan=3>
      <div align="center"><b>2002</b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td width="1%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td valign="BOTTOM" colspan=3>
      <div align="center"><b>2001</b></div>
    </td>
    <td width="2%" valign="BOTTOM" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Common stock at beginning of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,476</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,476</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Common stock at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,476</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,476</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Additional paid-in capital at beginning
      of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Additional paid-in capital at end
      of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>51</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Treasury stock at beginning of
      period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(912</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(912</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Treasury stock at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(912</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(912</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Earnings reinvested at beginning
      of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>333</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">304</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>332</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">277</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss) (b)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(8</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">21</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Cash dividends declared on common
      stock</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(10</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(29</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Earnings reinvested at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>315</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">301</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>315</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">301</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Accumulated other comprehensive
      income (loss) at<br>
      &nbsp;&nbsp;&nbsp; beginning of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Unrealized loss on qualifying derivatives
      (b)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Accumulated other comprehensive
      loss at end of<br>
      &nbsp;&nbsp;&nbsp; period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Capital stock expense and other
      at beginning of<br>
      &nbsp;&nbsp;&nbsp; period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(16</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(16</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Capital stock expense and other
      at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(16</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(16</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Total Shareowner's Common Equity</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>914</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,183</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>914</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1,183</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Common stock shares at beginning
      of period (a)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> Common stock shares at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR valign="top">
    <TD WIDTH="2%"> (a)</TD>
    <TD WIDTH="98%" COLSPAN=31> In thousands. No par value. 170 million shares
      authorized. All common shares of PPL Electric stock are owned by PPL.</TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="2%"> (b)</TD>
    <TD WIDTH="48%" COLSPAN=3> Statement of Comprehensive Income:</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%">&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%">&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%">&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%">&nbsp;</TD>
    <TD WIDTH="2%" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(8</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">21</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive loss:</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $0, $(1)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Total other comprehensive loss</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade>
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Comprehensive Income (Loss)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(8</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">20</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>12</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">54</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="51%" colspan=4>
      <div align="center"><b></b> </div>
    </td>
    <td width="1%" colspan=2>
      <div align="center"><b></b></div>
    </td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td width="1%" colspan=2>&nbsp;</td>
    <td colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" colspan=2>
      <div align="center"><b></b></div>
    </td>
  </tr>
  <TR>
    <TD VALIGN="TOP" COLSPAN=32>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<table border=0 cellspacing=0 cellpadding=0 width=100%>
  <tr>
    <td valign="BOTTOM" colspan=19> <b><u><a name="MONTANAINCOMESTATEMENT"></a>PPL
      MONTANA, LLC AND SUBSIDIARIES</u></b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> <b><u>Part I. FINANCIAL INFORMATION</u></b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> <b><u>Item 1. Financial Statements</u></b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19>&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> In the opinion of PPL Montana, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Member's Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19>&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> <b>CONDENSED CONSOLIDATED STATEMENT OF INCOME</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> <b>PPL Montana, LLC and Subsidiaries</b></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> (Unaudited)</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19> <i>(Millions of Dollars)</i></td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19>&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19>&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="40%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="26%" valign="BOTTOM" colspan=6>
      <div align="center"><font size="2"><b>Three Months Ended</b><br>
        <b>June 30,</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="24%" valign="BOTTOM" colspan=6>
      <div align="center"><font size="2"><b>Six Months Ended</b><br>
        <b>June 30,</b></font>
        <hr noshade>
      </div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="12%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="11%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2002</b></font></div>
    </td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="1%" valign="BOTTOM"><font size="2"></font></td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center"><font size="2"><b>2001</b></font></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> <b>Operating Revenues</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="12%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Wholesale energy marketing and
      trading</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>56</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">76</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> <b>$</b></td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>105</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">226</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Wholesale energy marketing to affiliate</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>13</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">23</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>30</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">55</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Other</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">1</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Total</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>69</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">99</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>136</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">282</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> <b>Operating Expenses</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Operation</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="40%" valign="BOTTOM"> Fuel</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>6</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">5</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>14</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">14</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="40%" valign="BOTTOM"> Energy purchases</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>17</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">17</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>22</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">34</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="40%" valign="BOTTOM"> Other operation and maintenance</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>31</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">29</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>54</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">49</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="40%" valign="BOTTOM"> Transmission</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>1</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>3</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">5</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Depreciation</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>5</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">5</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Taxes, other than income</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>4</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">5</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>8</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">8</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="42%" valign="BOTTOM" colspan=2> Total</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>61</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">60</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>106</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">115</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> <b>Operating Income</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>8</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">39</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>30</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">167</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> Other Income - net</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>1</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">1</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>1</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> Interest Expense</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>2</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>3</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">4</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> <b>Income Before Income Taxes</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>7</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">38</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>28</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">165</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> Income Taxes</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>3</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">15</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>11</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">65</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="45%" valign="BOTTOM" colspan=3> <b>Net Income</b></td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="10%" valign="BOTTOM">
      <div align="right"><b>4</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="10%" valign="BOTTOM">
      <div align="right">23</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="9%" valign="BOTTOM">
      <div align="right"><b>17</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM"> $</td>
    <td width="9%" valign="BOTTOM">
      <div align="right">100</div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="45%" colspan=3>&nbsp;</td>
    <td width="1%"><font size="2"></font></td>
    <td width="12%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td valign="BOTTOM" colspan=19>
      <div align="center"><i><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </td>
  </tr>
</table>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B><A NAME="MONTANACASHFLOWS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B>PPL Montana, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30, </B></font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="63%" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Cash Provided by Operating
      Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>20</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">123</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> <B>Cash Flows From Investing Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> Proceeds from sale of property,
      plant and equipment</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> Expenditures for property, plant
      and equipment</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="58%" VALIGN="BOTTOM" COLSPAN=2> Net cash used in investing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(11</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> <B>Cash Flows From Financing Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> Repayments on revolving line of
      credit</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>(14</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> Borrowings on revolving line of
      credit</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>10</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> Distribution to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(167</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="58%" VALIGN="BOTTOM" COLSPAN=2> Net cash used in financing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>(4</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(167</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Increase (Decrease) in Cash
      and Cash Equivalents</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>3</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> Cash and Cash Equivalents at Beginning
      of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>24</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">79</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> Cash and Cash Equivalents at End
      of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right"><B>27</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10> <B><A NAME="MONTANABALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10> <B>PPL Montana, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>June 30,</b><BR>
        <B>2002</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Current Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Cash and cash equivalents</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>27</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accounts receivable (less reserve: 2002,
      $47; 2001, $47)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>25</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">22</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accounts receivable from joint owners</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>7</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accounts receivable from affiliates</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Fuel, materials and supplies - at average
      cost</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>6</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Price risk management assets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">14</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>8</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Prepayments and other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>93</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">84</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Noncurrent Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Property, plant and equipment - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>433</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">425</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>18</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">20</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>122</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">122</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>573</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">567</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>666</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">651</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Liabilities and Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Current Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accounts payable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>55</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">36</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accounts payable to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>14</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">11</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Revolving line of credit</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>40</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">44</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Accrued expenses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>22</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">14</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Price risk management liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>138</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">122</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Noncurrent Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Employee benefit obligations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>17</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>63</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">65</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>23</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">27</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>103</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">108</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Commitments and Contingent Liabilities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> <B>Member's Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>425</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">421</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right"><B>666</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">651</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="65%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21> <B><A NAME="MONTANAMEMBERS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF MEMBER'S EQUITY AND</B><BR>
      <B>COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21> <B>PPL Montana, LLC and Subsidiaries</B></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21> (Unaudited)</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21> <I>(Millions of Dollars)</I></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=21>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B>June 30,</B></font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>Six Months Ended</b><BR>
        <B>June 30,</B></font>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=20></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2002</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=20>
      <div align="center"><font size="2"><B>2001</b></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=20></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="49%" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="11%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="10%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="10%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD WIDTH="9%" COLSPAN=2>
      <hr noshade>
    </TD>
    <TD WIDTH="1%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Member's Equity at beginning of
      period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>420</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">248</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>421</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">453</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Net income (a)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">23</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>17</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">100</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Other comprehensive income (loss),
      net of tax</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=3> Unrealized gain (loss) on qualifying
      derivatives<br>
      &nbsp;&nbsp;&nbsp;(a) (b)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">183</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Distribution to Member</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(67</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">(167</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Member's Equity at end of period</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>425</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">387</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>425</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">387</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM"> (a)</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Statement of Comprehensive Income:</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Net income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">23</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>17</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">100</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Other comprehensive income (loss):</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Unrealized gain (loss) on qualifying
      derivatives, net of tax (benefit) of $0, $117, $(9), $0</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">183</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Total other comprehensive income
      (loss)</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">183</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=4> Comprehensive Income</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">206</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">101</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <TR valign="top">
    <TD WIDTH="4%"> (b)</TD>
    <TD WIDTH="96%" COLSPAN=20> Includes a $(156) million cumulative effect of
      a change in accounting principle from adoption of SFAS 133 on January 1,
      2001.</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=21>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="TOP" COLSPAN=21>
      <div align="center"><I><font size="1">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>

<br><hr noshade><br>
<p align="center"><b><u><A NAME="NOTES"></A>Combined Notes to Condensed Consolidated
  Financial Statements</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Terms and abbreviations appearing in Combined Notes to Condensed
  Consolidated Financial Statements are explained in the glossary.</P>
<OL>
  <li><b>Interim Financial Statements </B>
    <P><i>(PPL, PPL Energy Supply, PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Certain information in footnote disclosures, normally included
      in financial statements prepared in accordance with accounting principles
      generally accepted in the U.S., has been condensed or omitted in this Form
      10-Q under the rules and regulations of the SEC. These financial statements
      should be read in conjunction with the financial statements and notes included
      in each company's Annual Report to the SEC on Form 10-K for the year ended
      December 31, 2001.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Certain amounts in the June 30, 2001 and December 31, 2001
      financial statements have been reclassified to conform to the presentation
      in the June 30, 2002 financial statements.</P>
  <li><b>Summary of Significant Accounting Policies </B>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The following accounting policy disclosures represent updates
      to the &quot;Summary of Significant Accounting Policies&quot; footnote in
      each company's Annual Report to the SEC on Form 10-K for the year ended
      December 31, 2001. </P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Utility Revenue</b></p>
    <p align="justify"></P>
    <P ALIGN="JUSTIFY"><i>(PPL and PPL Energy Supply)</i></P>

    <P ALIGN="JUSTIFY">The Statement of Income &quot;Operating Revenues - Utility&quot;
      line item contains operating revenues from domestic and international rate
      regulated delivery operations. This revenue was previously reported as &quot;Retail
      electric and gas&quot; and &quot;Wholesale energy marketing and trading&quot;
      by PPL and as &quot;Retail electric and gas&quot; by PPL Energy Supply.</P>
    <p align="justify"></P>
    <p align="justify"><b>Independent System Operator</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Certain PPL subsidiaries participate in the PJM in several
      roles. Certain PPL subsidiaries also participate in the New England Power
      Pool (NEPOOL) and the New York ISO (NYISO) in a less significant way. In
      PJM, PPL EnergyPlus is a marketer, a load-serving entity to its customer-choice
      customers, and a buyer for PPL's Pennsylvania generation subsidiaries. PPL
      Electric is a transmission owner and provider of last resort load in PJM.
      In NEPOOL, PPL EnergyPlus is a marketer and a buyer for PPL's New England
      generating assets. In the NYISO, PPL EnergyPlus acts as a marketer. PPL
      Electric does not participate in NEPOOL or NYISO.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">A function of interchange accounting is to &quot;match&quot;
      participants' MWh entitlements (generation plus scheduled bilateral purchases)
      against their MWh obligations (load plus scheduled bilateral sales) during
      every hour of every day. If the net result during any given hour is an entitlement,
      the participant is credited with a spot market sale to the ISO at the respective
      market price for that hour; if the net result is an obligation, the participant
      is charged with a spot market purchase from the ISO at the respective market
      price for that hour. ISO purchases and sales are not allocated to individual
      customers.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL records the hourly net sales and purchases in its financial
      statements as sales to and purchases from the respective ISOs, in accordance
      with FERC and industry accounting.</P>
  <li><b>Segment and Related Information </B>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL's reportable segments are Supply, Delivery and International.
      The Supply segment primarily consists of the domestic energy marketing,
      domestic generation and domestic development operations of PPL Energy Supply.
      The Delivery segment includes the regulated electric and gas delivery operations
      of PPL Electric and PPL Gas Utilities. The International segment includes
      PPL Global's responsibility for the acquisition, development, ownership
      and operation of international energy projects. The majority of PPL Global's
      international investments are located in the U.K., Chile and El Salvador.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Energy Supply's reportable segments are Supply and
      International. The International segment at the PPL Energy Supply level
      is consistent with the International segment at the PPL level. The Supply
      segment information reported at the PPL Energy Supply level will not agree
      with the Supply segment information reported at the PPL level. Additional
      Supply segment functions, including telecommunications, exist at PPL that
      are outside of PPL Energy Supply. Furthermore, certain income items, including
      PLR revenue and certain interest income, exist at the PPL Energy Supply
      level, but are eliminated in consolidation at the PPL level. Finally, certain
      expense items are fully allocated to the segments at the PPL level only.
    </P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Segments include direct charges, as well as an allocation
      of indirect corporate costs, for services provided by PPL Services. These
      service costs include functions such as financial, legal, human resources
      and information services.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">See Note 9 for a discussion of the PLR contracts between
      PPL Electric and PPL EnergyPlus. PPL EnergyPlus' sales to PPL Electric,
      to meet PPL Electric's PLR load, are included in the Supply segment of PPL
      Energy Supply. PPL Electric's sales of this electricity to its PLR customers
      are included in the Delivery segment of PPL. There are no intersegment revenues
      for PPL or PPL Energy Supply.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Previously reported information has been reclassified to
      conform to the current presentation. Changes from previous reports include
      the allocation of interest expense to segments, and the reporting of PLR
      revenues at PPL in the Delivery segment rather than in the Supply segment.
      Financial data for the segments are as follows (millions of dollars):</P>
    <p align="justify"></P>
    <P ALIGN="JUSTIFY"><i>(PPL)</i></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="37%" COLSPAN=2>&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp; </TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp; </TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Statement Data</B></TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=9> Revenues from external customers</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">514</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">607</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">943</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,239</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> International</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">153</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">140</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">294</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">303</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Delivery</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">634</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">664</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,339</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,435</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp; </td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp; </td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">1,301</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,411</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2,576</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2,977</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">58</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">78</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">174</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">239</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> International (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(77</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(222</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">38</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Delivery</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">21</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">62</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp; </td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp; </td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(27</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">117</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(30</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">339</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>June 30,</b><BR>
            <B>2002</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>December 31,</b><BR>
            <B>2001</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> <B>Balance Sheet Data</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Total assets</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=2> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">4,687</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">4,720</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=2> International</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">1,736</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">1,749</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=2> Delivery </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">5,771</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">6,097</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="46%" colspan=3></td>
        <td width="2%">&nbsp;</td>
        <td width="23%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="23%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">12,194</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">12,566</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="46%" colspan=3></td>
        <td width="2%">&nbsp;</td>
        <td width="23%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="23%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="5%" VALIGN="TOP"> (a)</TD>
        <TD WIDTH="95%" VALIGN="TOP"> The International segment includes the &quot;Cumulative
          Effect of a Change in Accounting Principle&quot; recorded in March 2002.
          See Note 12 for additional information. The international segment also
          includes the write-downs of the CEMAR investment described in Note 14.</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Energy Supply)</i></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Statement Data</B></TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=9> Revenues from external customers</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">853</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">972</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,652</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,986</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> International</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">153</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">140</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">294</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">303</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">1,006</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,112</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1,946</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2,289</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net Income </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">86</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">106</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">226</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">287</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> International (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(77</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(222</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">38</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">124</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">325</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>

    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>June 30,</b><BR>
            <B>2002</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>December 31,</b><BR>
            <B>2001</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> <B>Balance Sheet Data</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Total assets</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">5,003</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">5,412</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="43%" VALIGN="BOTTOM" COLSPAN=2> International</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">1,736</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">1,749</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="24%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="3%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="23%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">6,739</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM">
          <div align="right">7,161</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="45%" valign="BOTTOM" colspan=3>&nbsp;</td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="24%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="23%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="5%" VALIGN="TOP"> (a)</TD>
        <TD WIDTH="95%" VALIGN="TOP"> The International segment includes the &quot;Cumulative
          Effect of a Change in Accounting Principle&quot; recorded in March 2002.
          See Note 12 for additional information. The international segment also
          includes the write-downs of the CEMAR investment described in Note 14.
        </TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>Investment in Unconsolidated Affiliates - at Equity</b></P>


<P ALIGN="JUSTIFY"></P>
<P><i>(PPL and PPL Energy Supply)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Investments in unconsolidated affiliates accounted for under
  the equity method by both PPL and PPL Energy Supply were $646 million and $586
  million at June 30, 2002 and December 31, 2001. The most significant investment
  was PPL Global's investment in WPDH Limited, which was $406 million at June
  30, 2002 and $328 million at December 31, 2001. At June 30, 2002, PPL Global
  had a 51% equity ownership interest in WPDH Limited, but shared joint control
  with Mirant. The respective Shareholders' Agreements provide for PPL Global
  and Mirant each to elect four directors to the Board, with majority Board approval
  generally required for significant operating and financial decisions, including
  but not limited to:</P>
<P ALIGN="JUSTIFY"></P>
</ol>
<UL>
  <li>
    <p align="justify">issuance, purchase, redemption, reorganization or reduction
      of share capital or any equity security;</P>
  <li>
    <p align="justify">alteration of any of the provisions of the articles of
      association;</P>
  <li>
    <p align="justify">petition for the appointment of an administrator or liquidator
      or invite any person to appoint an administrative receiver;</P>
  <li>
    <p align="justify">fundamentally change the nature of the business;</P>
  <li>
    <p align="justify">make any election in respect of UK Corporation Tax which
      would have a material adverse effect on one shareholder but not on the other;</P>
  <li>
    <p align="justify">declare dividends; and </P>
  <li>
    <p align="justify">incur additional indebtedness if to do so would result
      in a reduction of the company's credit rating to below that of investment
      grade.</P>

<P ALIGN="JUSTIFY"></P>

<P ALIGN="JUSTIFY">Accordingly, PPL Global accounts for its investment in WPDH
  Limited (and other investments where it has majority ownership but lacks voting
  control) under the equity method of accounting.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Summarized below is information from the financial statements
  of unconsolidated affiliates accounted for under the equity method, underlying
  the amounts included in PPL's and PPL Energy Supply's consolidated financial
  statements (millions of dollars):

</ul>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Statement Data</B></TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">172</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">156</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">350</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">332</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Operating Income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">114</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">80</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">211</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">167</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net Income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">52</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">65</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">81</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">144</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="35%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>June 30,</b><BR>
        <B>2002</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>December 31,</b><BR>
        <B>2001</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> <B>Balance Sheet Data</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Current Assets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1,235</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">612</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Noncurrent Assets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">4,792</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">5,517</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Current Liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">423</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">502</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Noncurrent Liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3,974</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3,955</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<ol start=5>
  <li>
    <p align="justify"><b>Earnings Per Share</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL)</i></P>

    <P ALIGN="JUSTIFY">Basic EPS is calculated by dividing &quot;Net Income (Loss)&quot;
      on the Statement of Income by the weighted average number of common shares
      outstanding during the period. In the calculation of diluted EPS, weighted
      average shares outstanding are increased for additional shares that would
      be outstanding if potentially dilutive securities were converted to common
      stock. Potentially dilutive securities consist of stock options granted
      under the incentive compensation plans, stock units representing common
      stock granted&nbsp; under&nbsp; directors&nbsp; compensation&nbsp; programs
      and PEPS Units.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Preferred dividends are included in net income in the computation
      of basic and diluted EPS.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The basic and diluted EPS calculations, and the reconciliation
      of the shares used in the calculations, are shown below:</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=3>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=9 HEIGHT=32> (Millions of Dollars
          or Thousands of Shares)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> <B>Income (Numerator)</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> Net Income (Loss) - before<BR>
          &nbsp;&nbsp;cumulative effect of a<BR>
          &nbsp;&nbsp;change in accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(27</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">117</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">120</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">339</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Cumulative effect of<BR>
          &nbsp;&nbsp;a change in <BR>
          &nbsp;&nbsp;accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(150</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=3>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> Net Income (Loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(27</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">117</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(30</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">339</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> <B>Shares (Denominator)</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> Shares for Basic EPS</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">147,149</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">145,901</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">146,927</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">145,608</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> Add: Incremental shares:</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="7%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM"> Stock options</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">730</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">275</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">794</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="7%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM"> Stock units</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">69</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">73</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">69</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=3>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3> Shares for Diluted EPS</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">147,149</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">146,700</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">147,275</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">146,471</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">&nbsp;</P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=2>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=8 HEIGHT=32> (Millions of Dollars
          or Thousands of Shares)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" HEIGHT=32></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=32></TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> <B>Basic EPS</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss) - before<BR>
          &nbsp;&nbsp;cumulative effect of a<BR>
          &nbsp;&nbsp;change in accounting<BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.82</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Cumulative effect<BR>
          &nbsp;&nbsp;of a change in <BR>
          &nbsp;&nbsp;accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(1.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=2>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> <B>Diluted EPS</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss) - before<BR>
          &nbsp;&nbsp;cumulative effect of a<BR>
          &nbsp;&nbsp;change in accounting<BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">.82</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Cumulative effect<BR>
          &nbsp;&nbsp;of a change in <BR>
          &nbsp;&nbsp;accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(1.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="32%" colspan=2>&nbsp;</td>
        <td width="16%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="32%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In May 2001, PPL issued 23 million PEPS Units that contain
      a purchase contract component for PPL's common stock. The PEPS Units will
      only be dilutive if the average price of PPL's common stock exceeds $65.03
      for any period. Therefore, they were excluded from the diluted EPS calculations
      for the three and six months ended June 30, 2002 and June 30, 2001.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Stock options to purchase 3,058,000 PPL common shares and
      67,000 directors stock units for the three months ended June 30, 2002 were
      not included in that period's computation of diluted EPS. Since PPL had
      a loss before the cumulative effect of a change in accounting principle,
      the effect would have been antidilutive.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Stock options to purchase 879,000 PPL common shares for
      the six months ended June 30, 2002 were not included in that period's computation
      of diluted EPS because the exercise price of the options was greater than
      the average market price of the common shares. Therefore, the effect would
      have been antidilutive.</P>
    <P ALIGN="JUSTIFY"></P>

  <li>
    <p align="justify"><b>Credit Arrangements, Financing Activities and Leases</b></P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Credit Arrangements</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In order to enhance liquidity, and as a credit back-stop
      to their respective commercial paper programs, PPL Electric maintains a
      $400 million 364-day credit facility maturing in June 2003 (replacing a
      similar facility that had expired in June 2002) and PPL Energy Supply maintains
      three credit facilities: a $300 million 364-day credit facility maturing
      in June 2003, a $500 million three-year credit facility maturing in June
      2004, and a $300 million three-year credit facility maturing in June 2005
      (the two $300 million credit facilities replace a $600 million 364-day credit
      facility which expired in June 2002). At June 30, 2002, no borrowings were
      outstanding under any of these facilities. Both PPL Electric and PPL Energy
      Supply have the ability to cause lenders to issue letters of credit under
      their respective facilities. At June 30, 2002, PPL Electric had no letters
      of credit outstanding under its facility and PPL Energy Supply had $17 million
      of letters of credit outstanding under its $500 million facility.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Montana maintains a $100 million three-year credit
      facility maturing in November 2002 to meet its liquidity needs and to provide
      for the issuance of up to $75 million in letters of credit. At June 30,
      2002, PPL Montana had outstanding borrowings of $40 million and had outstanding
      letters of credit of $35 million under this facility. Additionally, PPL
      Montana had maintained a $150 million credit facility which matured in April
      2002, designed for the sole purpose of issuing letters of credit. This facility
      was not renewed.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply, PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The subsidiaries of PPL are separate legal entities. PPL's
      subsidiaries are not liable for the debts of PPL. Accordingly, creditors
      of PPL may not satisfy their debts from the assets of the subsidiaries absent
      a specific contractual undertaking by a subsidiary to pay PPL's creditors
      or as required by applicable law or regulation. Similarly, absent a specific
      contractual undertaking or as required by applicable law or regulation,
      PPL is not liable for the debts of its subsidiaries. Accordingly, creditors
      of PPL's subsidiaries may not satisfy their debts from the assets of PPL
      absent a specific contractual undertaking by PPL to pay the creditors of
      its subsidiaries or as required by applicable law or regulation.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Similarly, the subsidiaries of PPL Energy Supply, PPL Electric
      and PPL Montana are separate legal entities. These subsidiaries are not
      liable for the debts of PPL Energy Supply, PPL Electric and PPL Montana.
      Accordingly, creditors of PPL Energy Supply, PPL Electric and PPL Montana
      may not satisfy their debts from the assets of their subsidiaries absent
      a specific contractual undertaking by a subsidiary to pay the creditors
      or as required by applicable law or regulation. In addition, absent a specific
      contractual undertaking or as required by applicable law or regulation,
      PPL Energy Supply, PPL Electric and PPL Montana are not liable for the debts
      of their subsidiaries. Accordingly, creditors of these subsidiaries may
      not satisfy their debts from the assets of PPL Energy Supply, PPL Electric
      or PPL Montana absent a specific contractual undertaking by that parent
      to pay the creditors of its subsidiaries or as required by applicable law
      or regulation.</P>
    <p align="justify"><b>Financing Activities</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In February 2002, PPL Capital Funding repurchased $10 million,
      par value, of its medium-term notes, 7.75% Series due 2005, at a market
      value of $11 million.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">During the first quarter of 2002, PPL issued $13 million
      of common stock in small amounts on a periodic basis under its Structured
      Equity Shelf Program.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At June 30, 2002, PPL Energy Supply had $155 million of
      commercial paper outstanding. As of June 30, 2002, some foreign subsidiaries
      of PPL Energy Supply had short-term borrowings from banks of $86 million
      that are non-recourse to PPL Energy Supply.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In May 2002, PPL Electric:</P>
    <P ALIGN="JUSTIFY"></P>
</ol>
<UL>
  <li>
    <p align="justify">retired $11 million of its outstanding First Mortgage Bonds,
      8-1/2% Series due 2022, at par value, through the maintenance and replacement
      fund provisions of the 1945 First Mortgage Bond Indenture;</P>
  <li>
    <p align="justify">retired $28 million of its outstanding First Mortgage Bonds,
      7-3/4% Series due May 2002, at par value; and</P>
  <li>
    <p align="justify">instructed the property trustee of PPL Capital Trust to
      redeem, at par value, all of the $100 million of outstanding 8.20% Preferred
      Securities due 2027 that were previously issued by PPL Capital Trust.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<ol start=7>
<P ALIGN="JUSTIFY">During the first six months of 2002, PPL Transition Bond Company
  made principal payments on bonds totaling $132 million.</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY">At June&nbsp;30,&nbsp;2002, there was no commercial paper or
  bank borrowings outstanding for PPL Electric.</P>

<P ALIGN="JUSTIFY"></P>

<p align="justify"><i>(PPL Energy Supply)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the six months ended June 2002, PPL Energy Supply distributed
  $552 million to its parent company, PPL Energy Funding.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Leases</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL, PPL Energy Supply and PPL Montana) </i></P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Colstrip Generating Plant</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In July 2000, PPL Montana sold its interest in the Colstrip
  generating plant to owner lessors who are leasing the assets back to PPL Montana
  under four 36-year operating leases. PPL Montana leases a 50% interest in Colstrip
  Units 1 and 2 and a 30% interest in Unit 3, through four non-cancelable operating
  leases. These leases provide two renewal options based on the economic useful
  life of the generation assets. The amount outstanding under these leases at
  June 30, 2002 was $334 million. There is no residual value guarantee in these
  Montana leases. However, upon an event of default or an event of loss, the lessee
  could be required to pay a termination value of amounts sufficient to allow
  the lessor to repay amounts owing on the lessor notes and make the lessor whole
  for its equity investment and anticipated return on investment. The events of
  default include payment defaults, breaches of representations of covenants,
  acceleration of other indebtedness of PPL Montana, change in control of PPL
  Montana and certain bankruptcy events.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL and PPL Energy Supply) </i></P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Cancellation of Lease for Turbine Generator Units and Related
  Equipment</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In November 2000, a PPL Global subsidiary entered into a $555
  million operating lease arrangement for turbine generator units and related
  equipment (SCRs, transformers and spare engines). In June 2002, this operating
  lease was cancelled in connection with the decision in December 2001 to cancel
  several development projects. Prior to terminating the lease, certain equipment
  under this lease was either purchased by a PPL Global subsidiary or sold to
  another lessor.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>University Park and Sundance</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In May 2001, a PPL Global subsidiary entered into a $1.06 billion
  operating lease arrangement, as lessee, for the development, construction and
  operation of several commercial power generation facilities. In February 2002,
  in connection with the December 2001 decision to cancel several development
  projects, the available commitment under this lease was reduced to approximately
  $700 million to cover only two projects located in University Park, Illinois,
  and Sundance, Arizona. In July 2002, these facilities were substantially completed
  and the initial lease term commenced. The lease terminates in June 2008. At
  the end of the lease term, the lessee has the option to extend the lease or
  purchase the facilities. If the lessee does not choose either of these options,
  then it will guarantee a residual value of up to $545 million based on an estimated
  total lessors' investment of $657 million for both projects combined. If the
  financing is terminated early as a result of significant environmental damage,
  or an event of default, the lessee could be obligated to pay up to 100% of the
  lessors' investment in the facilities. These events of default include, subject
  to certain exceptions, payment or judgment defaults, breach of representations
  or covenants, defaults in other indebtedness, termination of the financing documents
  or loss of a required approval. The obligations of the lessee under this lease,
  including payment obligations, have been guaranteed by PPL Energy Supply.</P>
<p align="justify"><u>Lower Mt. Bethel</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In December 2001, a PPL Global subsidiary entered into an operating
  lease arrangement, as lessee, for $455 million for the development, construction
  and operation of a 600 MW gas-fired combined-cycle generation facility located
  in Lower Mt. Bethel Township, Northampton County, Pennsylvania. The initial
  lease term is approximately 10 years beginning on the date of commercial operation
  which is expected to occur in early 2004. At the end of the lease term, the
  lessee has the option to extend the lease or purchase the facility. If the lessee
  does not choose either of these options, then it will guarantee a residual value
  estimated to be up to $321 million. The lessee could be obligated to pay up
  to 100% of the lessors' investment and other obligations in the facilities if
  the financing is terminated early as a result of a loss, destruction or condemnation
  of the project, or in an event of default. These events of default during the
  construction period include a violation of environmental law, material environmental
  damage, revocation or failure to obtain environmental approval, defaults arising
  out of any fraudulent act, illegal act, misapplication of funds or willful misconduct,
  or if a bankruptcy event occurs. These events of default during the lease term
  include, subject to certain exceptions, payment or judgment defaults, breach
  of representations or covenants, defaults in other indebtedness, termination
  of the financing documents, or violations of environmental law, material environmental
  damage or loss of a required environmental approval. The total exposure as a
  result of any of these events of default occurring is estimated to be up to
  $330 million as of June 30, 2002. The maximum exposure is estimated to be up
  to $565 million as of the commencement of the lease based on current market
  conditions. The obligations of the lessee under this lease, including payment
  obligations, have been guaranteed by PPL Energy Supply.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Under the terms of this lease financing, PPL Martins Creek,
  which operates the adjacent Martins Creek facility, will provide water services
  for the Lower Mt. Bethel facility. PPL Martins Creek and the owner/lessor have
  entered into a water services agreement, which is still subject to the approval
  of the trustee for the debtholders of the lease financing and a majority of
  the debtholders. PPL Martins Creek is currently in discussions with the trustee
  and the debtholders regarding the water services agreement. In addition, the
  Air Quality Plan Approval issued by the Pennsylvania DEP for construction of
  the Lower Mt. Bethel facility has been appealed by the New Jersey DEP to the
  Pennsylvania DEP Environmental Hearing Board. The PPL Global subsidiary involved
  in this lease financing has joined with the Pennsylvania DEP in opposing this
  appeal. Finally, in August 2002, the Northampton County Court of Common Pleas
  issued a decision concerning the permissible noise levels from the Lower Mt.
  Bethel facility when it becomes operational. Specifically, the court's decision
  addressed the noise measurement criteria and the point at which the noise levels
  are to be measured. PPL is currently evaluating the court's decision. The Lower
  Mt. Bethel facility is expected to be operational in 2004. PPL cannot predict
  the outcome of these various matters or their ultimate impact on the development
  of the Lower Mt. Bethel facility, on PPL or on PPL Energy Supply, but such impact
  may be material.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Dividend Restrictions</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL, PPL Energy Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The PPL Montana Colstrip lease places certain restrictions
  on PPL Montana's ability to declare dividends. At this time, PPL believes that
  these covenants will not limit PPL Montana's ability to operate as desired and
  will not affect PPL's ability to meet any of its cash obligations. Certain of
  PPL Global's international subsidiaries also have financing arrangements which
  limit their ability to pay dividends. However, PPL does not, at this time, expect
  that any of such limitations would significantly impact its ability to meet
  its cash obligations.</P>
<P ALIGN="JUSTIFY"></P>

  <li>
    <p align="justify"><b>Acquisitions, Development and Divestitures</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Domestic Generation Projects</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Global is currently completing the negotiation of a
      Project Coordination Agreement with the Village of Freeport, New York, which
      allows for the development and construction of a single LM-6000 simple-cycle
      facility at a site adjacent to the Village of Freeport's existing Power
      Plant No. 2. The facility is projected to begin commercial operation in
      the summer of 2003. The cost of PPL's unit is estimated to be approximately
      $50 - $55 million. Negotiations are also proceeding with respect to a Site
      Lease, a Project Interconnection Agreement and a Shared Facilities Agreement.
      In addition, negotiations for the sale of power from the facility to the
      Long Island Power Authority under a ten-year Power Purchase Agreement are
      proceeding. These agreements are subject to approval of the respective governing
      boards, various regulatory approvals, and agreement on satisfactory definitive
      documentation.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In addition, in December 2001, PPL Global made a decision
      to cancel approximately 2,100 MW of previously planned generation development
      in Pennsylvania and Washington state. These projects were in the early stage
      of development and would have had an estimated capital cost of approximately
      $1.3 billion. The charge for cancellation of these generation projects,
      which was primarily due to cancellation fees under turbine purchase contracts,
      was approximately $150 million, and was reported on the 2001 Statement of
      Income as &quot;Cancellation of generation projects,&quot; a component of
      &quot;Other Charges.&quot; At June 30, 2002, PPL Global had completed payment
      of the cancellation fees.</P>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>Commitments and Contingent Liabilities</b></P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply, PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL and its subsidiaries are involved in numerous legal
      proceedings, claims and litigation in the ordinary course of business. PPL
      and its subsidiaries cannot predict the ultimate outcome of such matters,
      or whether such matters may result in material liabilities.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Wholesale Energy Commitments </B><I>(PPL, PPL Energy
      Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">As part of the purchase of generation assets from Montana
      Power, PPL Montana agreed to supply electricity under two wholesale transition
      service agreements with Montana Power to serve its retail load not served
      by other providers or provided by Montana Power's remaining generation.
      The first agreement expired in December 2001, and the second agreement expired
      in June 2002. In addition, as part of its purchase of the generation assets
      from Montana Power, PPL Montana assumed a power purchase agreement and another
      power sales agreement. In accordance with purchase accounting guidelines,
      &nbsp;PPL &nbsp;Montana recorded a liability of &nbsp;$118 &nbsp;million
      as &nbsp;the estimated fair value of these agreements at the acquisition
      date. The liability is being amortized over the terms of the agreements
      as adjustments to &quot;Wholesale energy marketing and trading&quot; revenues
      and &quot;Energy purchases&quot; on the Statement of Income. The unamortized
      balance of the liability at June 30, 2002 was $65 million and is included
      on the Balance Sheet in &quot;Deferred Credits and Other Noncurrent Liabilities
      - Other&quot; for PPL, in &quot;Current Liabilities - Other&quot; and &quot;Deferred
      Credits and Other Noncurrent Liabilities - Other&quot; for PPL Energy Supply
      and in &quot;Wholesale energy commitments&quot; for PPL Montana.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">On July 1, 2002, PPL EnergyPlus began to sell to NorthWestern
      Energy an aggregate of 450 MW of energy to be supplied by PPL Montana. Under
      this five-year agreement, PPL EnergyPlus will supply 300 MW of around-the-clock
      electricity and 150 MW of on-peak electricity.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Liability for Above Market NUG Contracts </B><I>(PPL,
      PPL Energy Supply and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In 1998, PPL Electric recorded a loss accrual for above
      market contracts with NUGs of $854 million, due to its generation business
      being deregulated. Effective January 1999, PPL Electric began reducing this
      liability as an offset to &quot;Energy purchases&quot; on the Statement
      of Income. This reduction is based on the estimated timing of the purchases
      from the NUGs and projected market prices for this generation. The final
      existing NUG contract expires in 2014. In connection with the corporate
      realignment, effective July 1, 2000, the remaining balance of this liability
      was transferred to PPL EnergyPlus. At June 30, 2002, the remaining liability
      associated with the above market NUG contracts was $466 million.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In the first quarter of 2002, PPL Energy Supply paid $50
      million to terminate the liability outstanding under an energy contract
      with one of the NUGs. The liability associated with this NUG contract was
      $75 million. The excess of the liability over the payment resulted in a
      $25 million credit to &quot;Energy purchases&quot; on the Statement of Income.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Commitments - Acquisitions and Development Activities
      </B><I>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Global and its subsidiaries have outstanding purchase
      commitments with respect to domestic construction projects. At June 30,
      2002, PPL Global and its subsidiaries had approximately $89 million of such
      commitments.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Commitments - Leases </B><I>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">See &quot;Leases&quot; in Note 6 for additional information
      on residual value guarantees under operating lease arrangements.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Sales to California Independent System Operator and
      to Other Pacific Northwest Purchasers</B><I> (PPL, PPL Energy Supply and
      PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Through its subsidiaries, PPL has made approximately $18
      million of sales to the California ISO, of which $17 million has not been
      paid to PPL subsidiaries. Given the myriad of electricity supply problems
      presently faced by the California electric utilities and the California
      ISO, PPL cannot predict whether or when it will receive payment. As of June
      30, 2002, PPL has fully reserved for possible underrecoveries of payments
      for these sales. </P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Litigation arising out of the California electricity supply
      situation has been filed at the FERC and in California courts against sellers
      of energy to the California ISO. The plaintiffs and intervenors in these
      proceedings allege abuses of market power, manipulation of market prices,
      unfair trade practices and violations of state antitrust laws, among other
      things, and seek price caps on wholesale sales in California and other western
      power markets, refunds of excess profits allegedly earned on these sales
      of energy, and other relief, including treble damages and attorneys' fees.
      Certain of PPL's subsidiaries have intervened in the FERC proceedings in
      order to protect their interests, but have not been named by any plaintiffs
      in any of the court actions alleging abuses of market power, manipulation
      of market prices, unfair trade practices and violations of state antitrust
      laws. However, in April 2002, PPL Montana was named by a defendant in a
      consolidated court proceeding, which combined into one master proceeding
      several of the lawsuits alleging antitrust violations and unfair trade practices.
      Specifically, one of the original generators being sued by the various plaintiffs
      in the consolidated court proceeding filed a cross-complaint against 30
      other generators and power marketers, including PPL Montana. This generator
      denies that any unlawful, unfair or fraudulent conduct occurred or caused
      any harm to the plaintiffs, and explains that the plaintiffs' claims are
      completely barred by federal law. Nonetheless, this generator alleges that
      it filed its complaint against the other generators and power marketers
      in order to assist the court in resolving the proceeding and asserts that
      if it is found liable, the other generators and power marketers, including
      PPL Montana, caused, contributed to and/or participated in the plaintiffs'
      alleged losses. This litigation, originally brought in state court in California,
      has been removed to federal court in California.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In addition, PPL Montana has been named as a defendant
      in a declaratory judgment action initiated by the State of California to
      prevent certain members of the California Power Exchange from seeking compensation
      for the state's seizure of certain energy contracts. PPL Montana is a member
      of the California Power Exchange, but it has no energy contracts with or
      through the California Power Exchange and has not sought compensation in
      connection with the state's seizure.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Attorneys general in several western states, including
      California, have begun investigations related to the electricity supply
      situation in California and other western states. The FERC has determined
      that all sellers of energy into markets operated by the California ISO and
      the California Power Exchange, including PPL Montana, should be subject
      to refund liability for the period beginning October 2, 2000 through June
      20, 2001 and has initiated an evidentiary hearing concerning refund amounts.
      The FERC also is considering whether to order refunds for spot market bilateral
      sales made in the Pacific Northwest, including sales made by PPL Montana
      during the period December 2000 through June 2001. The FERC Administrative
      Law Judge assigned to the Pacific Northwest proceeding has recommended that
      no refunds be ordered for such sales into the Pacific Northwest. The FERC
      presently is considering this recommendation. The FERC has been conducting
      an additional investigation of alleged price manipulation in power markets
      in California and the western U.S. In connection with this investigation,
      the FERC has served several sets of data requests on sellers of energy in
      those markets, including PPL Montana. PPL Montana sold only a small amount
      of electricity into the California market during 2000 and 2001 and currently
      is not selling into that market. In its response to a FERC data request
      concerning PPL Montana's California trading strategies, PPL Montana explained
      that it did not engage in the type of California trading strategies that
      have been attributed to Enron. In responses to FERC data requests concerning
      whether PPL Montana and PPL EnergyPlus engaged in so-called &quot;wash trades&quot;
      in the western U.S., PPL Montana and PPL EnergyPlus explained that they
      have not, and do not, engage in such trades.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">While PPL believes that it has not engaged in any improper
      trading practices, PPL cannot predict whether, or the extent to which, any
      of its subsidiaries will be the target of any additional governmental investigations
      or named in other lawsuits or refund proceedings, the outcome of any such
      lawsuits or proceedings or whether the ultimate impact on PPL of the electricity
      supply situation in California and other western states will be material.
    </P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>MPSC Order </B><I>(PPL, PPL Energy Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In June 2001, the MPSC issued an order (MPSC Order) in
      which it found that Montana Power must continue to provide electric service
      to its customers at tariffed rates until its transition plan under the Montana
      Electricity Utility Industry Restructuring and Customer Choice Act is finally
      approved, and that purchasers of generating assets from Montana Power must
      provide electricity to meet Montana Power's full load requirements at prices
      to Montana Power that reflect costs calculated as if the generating assets
      had not been sold. PPL Montana purchased Montana Power's interests in two
      coal-fired plants and 11 hydroelectric units in 1999, and NorthWestern Energy
      purchased Montana Power's electricity delivery business in the first quarter
      of 2002.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In July 2001, PPL Montana filed a complaint against the
      MPSC with the U.S. District Court in Helena, Montana, challenging the MPSC
      Order. In its complaint, PPL Montana asserted, among other things, that
      the Federal Power Act preempts states from exercising regulatory authority
      over the sale of electricity in wholesale markets, and requested the court
      to declare the MPSC action preempted, unconstitutional and void. In addition,
      the complaint requested that the MPSC be enjoined from seeking to exercise
      any authority, control or regulation of wholesale sales from PPL Montana's
      generating assets. In March 2002, the District Court dismissed PPL Montana's
      lawsuit on procedural grounds, ruling that the Eleventh Amendment to the
      U.S. Constitution prevented PPL Montana from bringing the action in federal
      court. The District Court noted that the action could be filed in a state
      court in Montana. PPL Montana has appealed the District Court's ruling to
      the United States Court of Appeals for the Ninth Circuit. In July 2002,
      the MPSC filed an unopposed motion for summary disposition of the appeal,
      requesting the Ninth Circuit to reverse the District Court's ruling and
      send the case back to the District Court in light of a recent Eleventh Amendment
      decision by the U.S. Supreme Court. The Ninth Circuit has not yet acted
      on the MPSC's unopposed motion.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At this time, PPL Montana cannot predict the outcome of
      the proceedings related to the MPSC Order, what actions the MPSC, the Montana
      Legislature or any other governmental authority may take on these or related
      matters, or the ultimate impact on PPL, PPL Energy Supply and PPL Montana
      of any of these matters.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Montana Power Shareholders' Litigation </B><I>(PPL,
      PPL Energy Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In August 2001, a purported class-action lawsuit was filed by a group
      of shareholders of Montana Power against Montana Power, the directors of
      Montana Power, certain unnamed advisors and consultants of Montana Power
      and PPL Montana. The plaintiffs allege, among other things, that Montana
      Power was required to, and did not, obtain shareholder approval of the sale
      of Montana Power's generation assets to PPL Montana in 1999. Although most
      of the claims in the complaint are against Montana Power, its board of directors,
      and its consultants and advisors, two claims are asserted against PPL Montana.
      In the first claim, plaintiffs seek a declaration that because Montana Power
      shareholders did not vote on the 1999 sale of generating assets to PPL Montana,
      that sale &quot;was null and void ab initio.&quot; The second claim alleges
      that PPL Montana was privy to and participated in a strategy whereby Montana
      Power would sell its generation assets to PPL Montana without first obtaining
      Montana Power shareholder approval, and that PPL Montana has made net profits
      in excess of $100 million as the result of this alleged illegal sale. In
      the second claim, plaintiffs request that the court impose a &quot;resulting
      and/or constructive trust&quot; on both the generation assets themselves
      and all profits, plus interest on the amounts subject to the trust. In November 2001,
      PPL Montana and the other defendants filed a motion to dismiss the plaintiffs'
      complaint on the basis that it fails to state a claim upon which relief may be
      granted, and the plaintiffs filed a motion for the lawsuit to be certified
      by the court as a class-action.  In August 2002, the court denied this motion
      to dismiss, except as to certain matters not relating to PPL Montana, and
      granted the plaintiffs' motion for certification of the lawsuit as a class-action.
      PPL Montana cannot predict the outcome of this matter.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Employee Litigation </B><I>(PPL Energy Supply and PPL
      Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In April 2000, three employees at PPL Montana's Colstrip
      facility were burned when an equipment fault in Colstrip Unit 1 caused electrical
      arcing. In May 2000, the injured employees and their spouses filed litigation
      for their injuries in Montana district court against Montana Power. PPL
      Montana was subsequently named as a party defendant to the litigation. In
      April 2002, PPL Montana filed a pleading, naming Montana Power, seeking
      indemnification for any damages assessed against PPL Montana. In June 2002,
      PPL Montana settled this litigation and its indemnification claims against
      Montana Power pursuant to a settlement agreement with the plaintiffs and
      Montana Power.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>PJM Market Monitor Report </B><I>(PPL, PPL Energy Supply
      and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In November 2001, the PJM Market Monitor publicly released
      a report prepared for the PUC entitled &quot;Capacity Market Questions&quot;
      relating to the pricing of installed capacity in the PJM daily market during
      the first quarter of 2001. The report concludes that PPL EnergyPlus (identified
      in the report as &quot;Entity 1&quot;) was able to exercise market power
      to raise the market-clearing price above the competitive level during that
      period. PPL EnergyPlus does not agree with the Market Monitor's conclusions
      that it exercised market power; in addition, the Market Monitor acknowledged
      in his report that PJM's standards and rules did not prohibit PPL EnergyPlus'
      conduct. In November 2001, the PUC issued an Investigation Order directing
      its Law Bureau to conduct an investigation into the PJM capacity market
      and the allegations in the Market Monitor's report. In June 2002, the PUC
      issued an investigation report alleging, among other things, that PPL had
      &quot;unfairly manipulated electricity markets in early 2001,&quot; and
      that &quot;there was an unlawful exercise of market power and market rules
      gaming by PPL&quot; that was damaging to wholesale and retail electricity
      markets in Pennsylvania. The PUC stated that it was not authorized to, and
      was not attempting to, adjudicate the merits of PPL's defenses to these
      charges, but has referred the matter to the U.S. Department of Justice --
      Antitrust Division, or DOJ, the FERC and the Pennsylvania Attorney General.
      PPL had previously responded to certain information requests of the DOJ
      in connection with a civil investigative demand regarding capacity transactions
      in the PJM, and PPL has agreed to provide the Office of the Pennsylvania
      Attorney General with any information that it provided to the DOJ. In addition,
      in July 2002, PPL appealed the PUC order to the Commonwealth Court of Pennsylvania.
      Although PPL believes that the PUC's report is inaccurate, that its conclusions
      are groundless, and that PPL acted ethically and legally, in compliance
      with all applicable laws and regulations, PPL cannot predict the outcome
      or extent of any investigations, litigation or other proceedings related
      to this matter.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>FERC Market-based Rates </B><I>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In December 1998, the FERC issued an order authorizing
      PPL EnergyPlus to make wholesale sales of electric power and related products
      at market-based rates. In that order, the FERC directed PPL EnergyPlus to
      file an updated market analysis within three years of the date of the order,
      and every three years thereafter. PPL EnergyPlus filed its initial updated
      market analysis in December 2001. Several parties thereafter filed interventions
      and protests requesting that, in light of the PJM Market Monitor's report
      described above, PPL EnergyPlus be required to provide additional information
      demonstrating that it has met the FERC's market power tests necessary for
      PPL EnergyPlus to continue its market-based rate authority. PPL EnergyPlus
      has responded that the FERC does not require the economic test suggested
      by the intervenors and that, in any event, it would meet such economic test
      if required by the FERC. PPL EnergyPlus cannot predict the outcome of this
      matter. </P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>FERC Notice of Proposed Rulemaking </B><I>(PPL, PPL
      Energy Supply, PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">On July 31, 2002, the FERC issued a Notice of Proposed
      Rulemaking entitled &quot;Remedying Undue Discrimination through Open Access
      Transmission Service and Standard Electricity Market Design.&quot; The proposed
      rule is currently available for public comment, with a final rule expected
      in late 2002. The FERC plans to begin implementing the final rule by July
      31, 2003. This far-reaching proposed rule purports to establish uniform
      transmission rules and establish a standard market design by, among other
      things:</P>
    <P ALIGN="JUSTIFY"></P>
</ol>
<UL>
  <li>
    <p align="justify">enacting standard transmission tariffs and uniform market
      mechanisms, </P>
  <li>
    <p align="justify">monitoring and mitigating &quot;market power,&quot;</P>
  <li>
    <p align="justify">managing transmission congestion through pricing and tradable
      financial rights,</P>
  <li>
    <p align="justify">requiring independent operational control over transmission
      facilities, </P>
  <li>
    <p align="justify">forming state advisory committees on regional transmission
      organizations and resource adequacy, and</P>
  <li>
    <p align="justify">exercising FERC jurisdiction over all transmission service.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<ol start=9>
<P ALIGN="JUSTIFY">This proposed rule may have a significant impact on PPL and
  its subsidiaries. PPL is evaluating this new proposal, but cannot predict, at
  this time, what impact any final rule will have on PPL.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Supply to Energy West Resources, Inc. </B><I>(PPL
  Energy Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In July 2001, PPL Montana filed an action in state court and
  a responsive pleading in federal court, both related to a breach of contract
  by Energy West Resources, Inc. (Energy West), a Great Falls, Montana-based energy
  aggregator. PPL Montana is seeking a judgment that Energy West violated the
  terms of the contract under which it supplies energy to Energy West and should
  pay damages of at least $7.5 million. All litigation in this matter has been
  consolidated in the U. S. District Court for the District of Montana, Great
  Falls Division, and is proceeding in that forum. PPL Montana cannot predict
  the ultimate outcome of these proceedings.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Montana Hydroelectric Initiative </B><I>(PPL, PPL Energy
  Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In July 2002, the Montana Secretary of State certified, in
  accordance with applicable statutes, that a proposed Montana Hydroelectric Security
  Act initiative had received sufficient signatures to be placed on the November
  2002 statewide ballot. Among the stated purposes of the initiative is to create
  an elected Montana public power commission to determine whether purchasing hydroelectric
  dams in Montana is in the public interest. Such a commission could decide to
  acquire any or all of the hydroelectric dams owned by PPL Montana either pursuant
  to a negotiated purchase or an acquisition at fair market value through the
  power of condemnation. PPL Montana has declared its opposition to, and intends
  to vigorously oppose, the initiative. PPL Montana, in addition to several other
  Montana groups and individuals, has filed a lawsuit in Montana state court alleging
  that the initiative violates the Montana state constitution and should not be
  included on the November 2002 statewide ballot. At this time, PPL, PPL Energy
  Supply and PPL Montana cannot predict whether the legal challenge to the initiative
  will be successful, whether it would pass if on the ballot or what impact, if
  any, the measure might ultimately have upon PPL Montana or its hydroelectric
  operations. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Montana Hydroelectric License Contingencies </B><I>(PPL
  Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana has 11 hydroelectric facilities and one storage
  reservoir licensed by the FERC pursuant to the Federal Power Act under long-term
  licenses which expire on varying dates from 2009 through 2040. Pursuant to Section
  8(e) of the Federal Power Act, the FERC approved the transfer from Montana Power
  of all pertinent licenses, and any amendments thereto, for the ownership and
  operation of these facilities purchased by PPL Montana.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Kerr Dam Project license was jointly issued by the FERC
  to Montana Power and the Confederated Salish and Kootenai Tribes of the Flathead
  Reservation in 1985, and required Montana Power to hold and operate the project
  for 30 years. The license required Montana Power, and subsequently PPL Montana
  as a result of the purchase of the Kerr Dam from Montana Power, to continue
  to implement a plan to mitigate the impact of the Kerr Dam on fish, wildlife
  and the habitat. Such implementation will require payments totaling approximately
  $6 million between 2002 to 2020.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Colstrip Transmission System </B><I>(PPL, PPL Energy Supply
  and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Global was party to separate APAs with Portland General
  Electric Company (PGE) and Puget Sound Energy, Inc. (PSE) to purchase their
  respective interests in the Colstrip Units and certain related transmission
  assets and rights. The interested parties mutually agreed to terminate the APAs.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Montana Power APA, previously assigned to PPL Montana by
  PPL Global, includes a provision concerning the purchase by PPL Montana of a
  portion of NorthWestern Energy's interest in the 500-kilovolt Colstrip Transmission
  System (CTS) for $97 million. PPL Montana is currently in discussions with NorthWestern
  Energy regarding the purchase of the CTS and the claims that PPL Montana believes
  it has against NorthWestern Energy arising from the Montana Power APA and related
  agreements. Notwithstanding these ongoing discussions, on August 5, 2002, NorthWestern
  Energy filed, but has not yet served, a lawsuit against PPL Montana in Montana
  state court seeking specific performance of PPL Montana's purchase of the CTS
  or, alternatively, damages for breach of contract. PPL cannot predict the outcome
  of the ongoing discussions, whether PPL Montana will be served with the lawsuit
  or the outcome of the litigation filed by NorthWestern Energy.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Nuclear Insurance </B><I>(PPL and PPL Energy Supply)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Susquehanna is a member of certain insurance programs which
  provide coverage for property damage to members' nuclear generating stations.
  Facilities at the Susquehanna station are insured against property damage losses
  up to $2.75 billion under these programs. PPL Susquehanna is also a member of
  an insurance program which provides insurance coverage for the cost of replacement
  power during prolonged outages of nuclear units caused by certain specified
  conditions. Under the property and replacement power insurance programs, PPL
  Susquehanna could be assessed retroactive premiums in the event of the insurers'
  adverse loss experience. Effective April 1, 2002, this maximum assessment increased
  from $20 million to $40 million, to increase the insurer's capacity to cover
  catastrophic losses.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Susquehanna's public liability for claims resulting from
  a nuclear incident at the Susquehanna station is limited to about $9.5 billion
  under provisions of The Price Anderson Amendments Act of 1988. PPL Susquehanna
  is protected against this liability by a combination of commercial insurance
  and an industry assessment program. In the event of a nuclear incident at any
  of the reactors covered by The Price Anderson Amendments Act of 1988, PPL Susquehanna
  could be assessed up to $176 million per incident, payable at $20 million per
  year.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Environmental Matters</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Air</U><I> (PPL, PPL Energy Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Clean Air Act deals, in part, with acid rain, attainment
  of federal ambient ozone standards and toxic air emissions in the U.S. PPL's
  subsidiaries are in substantial compliance with the Clean Air Act.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Bush administration and certain members of Congress have
  made proposals regarding possible amendments to the Clean Air Act. These amendments
  could require significant further reductions in NO<SUB>x</SUB>, SO<SUB>2</SUB>
  and mercury and could possibly require measures to limit CO<SUB>2</SUB>.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Pennsylvania DEP has finalized regulations requiring further
  seasonal (May-June) NO<SUB>x</SUB> reductions to 80% from 1990 levels starting
  in 2003. These further reductions are based on the requirements of the Northeast
  Ozone Transport Region Memorandum of Understanding and two EPA ambient ozone
  initiatives: the September 1998 EPA State Implementation Plan (SIP) call (i.e.,
  EPA's requirement for states to revise their SIPs) issued under Section 110
  of the Clean Air Act, requiring reductions from 22 eastern states, including
  Pennsylvania; and the EPA's approval of petitions filed by Northeastern states,
  requiring reductions from sources in 12 Northeastern states and Washington D.C.,
  including PPL sources. The EPA's SIP-call was substantially upheld by the D.C.
  Circuit Court of Appeals on challenge. Although the Court extended the implementation
  deadline to May 2004, the Pennsylvania DEP has not changed its rules accordingly.
  PPL expects to achieve the 2003 NO<SUB>x</SUB> reductions with the recent installation
  of SCR technology on the Montour units, and the planned installation of SCR
  technology on a Brunner Island unit.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The EPA has also developed new standards for ambient levels
  of ozone and fine particulates in the U.S. These standards have been upheld
  following court challenges. The new particulates standard may require further
  reductions in SO<SUB>2</SUB> and year-round NO<SUB>x</SUB> reductions commencing
  in 2010-2012 at SIP-call levels in Pennsylvania for certain PPL subsidiaries,
  and at slightly less stringent levels in Montana. The revised ozone standard
  is not expected to have a material effect on facilities of PPL subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Under the Clean Air Act, the EPA has been studying the health
  effects of hazardous air emissions from power plants and other sources in order
  to determine what emissions should be regulated, and has determined that mercury
  emissions must be regulated. The EPA may determine that other hazardous air
  emissions from power plants should be regulated. In this regard, the EPA is
  expected to develop mercury regulations by 2004.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In 1999, the EPA initiated enforcement actions against several
  utilities, asserting that older, coal-fired power plants operated by those utilities
  have, over the years, been modified in ways that subject them to more stringent
  &quot;New Source&quot; requirements under the Clean Air Act. The EPA has since
  issued notices of violation and commenced enforcement activities against other
  utilities. Although the EPA has threatened to continue expanding its enforcement
  actions, the future direction of the &quot;New Source&quot; requirements is
  presently unclear. Therefore, at this time, PPL is unable to predict whether
  such EPA enforcement actions will be brought with respect to any of its affiliates'
  plants. However, the EPA regional offices that regulate plants in Pennsylvania
  (Region III) and Montana (Region VIII) have indicated an intention to issue
  information requests to all utilities in their jurisdiction. The Region VIII
  office issued such a request to PPL Montana's Corette plant in 2000 and the
  Region III office issued such a request to PPL Generation's Martins Creek plant
  in 2002. PPL and its subsidiaries have responded to the Corette information
  request and are in the process of responding to the Martins Creek information
  request. PPL cannot presently predict what, if any, action the EPA might take
  in this regard. Should the EPA or any state initiate one or more enforcement
  actions against PPL or its subsidiaries, compliance with any such enforcement
  actions could result in additional capital and operating expenses in amounts
  which are not now determinable, but which could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The EPA is also proposing to revise its regulations in a way
  that will require power plants to meet &quot;New Source&quot; performance standards
  and/or undergo &quot;New Source&quot; review for many maintenance and repair
  activities that are currently exempt.</P>

<P ALIGN="JUSTIFY">The New Jersey DEP and some New Jersey residents have raised
  environmental concerns with respect to the Martins Creek plant, particularly
  with respect to SO<SUB>2</SUB> emissions. PPL Martins Creek is discussing these
  concerns with the New Jersey DEP. The cost of addressing New Jersey's SO<SUB>2
  </SUB>concerns and opacity issues is not now determinable but could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Air Quality Plan Approval issued by the Pennsylvania DEP
  for construction of the Lower Mt. Bethel facility has been appealed by the New
  Jersey DEP to the Pennsylvania DEP Environmental Hearing Board. The PPL Global
  subsidiary involved in the Lower Mt. Bethel lease financing has joined with
  the Pennsylvania DEP in opposing this appeal. In addition, in August 2002, the
  Northampton County Court of Common Pleas issued a decision concerning the permissible
  noise levels from the Lower Mt. Bethel facility when it becomes operational.
  Specifically, the court's decision addressed the noise measurement criteria
  and the point at which the noise levels are to be measured. PPL is currently
  evaluating the court's decision. The Lower Mt. Bethel facility is expected to
  be operational in 2004. PPL cannot predict the outcome of these matters or their
  ultimate impact on the Lower Mt. Bethel facility, on PPL or on PPL Energy Supply,
  but such impact may be material.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Water/Waste</U><I> (PPL, PPL Energy Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The final NPDES permit for the Montour plant contains stringent
  limits for iron discharges. The results of a toxic reduction study show that
  additional water treatment facilities or operational changes are needed at this
  station. A plan for these changes was submitted and has been approved by the
  Pennsylvania DEP. PPL Energy Supply estimates that the cost of the treatment
  facilities will be under $3 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">A final NPDES permit has been issued to the Brunner Island
  generating plant. The permit contains a provision requiring further studies
  on the thermal impact of the cooling water discharge from the plant. Depending
  on the outcome of these studies, the plant could be subject to capital and operating
  costs that are not now determinable, but which could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The EPA has significantly tightened the water quality standard
  for arsenic. The revised standard may require several PPL subsidiaries to further
  treat wastewater and/or take abatement action at their power plants, the cost
  of which is not now determinable, but which could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The EPA recently finalized requirements for new or modified
  water intake structures. These requirements will affect where generating facilities
  are built, will establish intake design standards, and could lead to requirements
  for cooling towers at new and modified power plants. Another new rule, expected
  to be finalized in 2003, will address existing structures. Each of these rules
  could impose significant operating costs on PPL subsidiaries, which are not
  now determinable, but which could be significant.</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY"><u>Superfund and Other Remediation</u></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL and PPL Electric)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In 1995, PPL Electric entered into a consent order with the
  Pennsylvania DEP to address a number of sites where it may be liable for remediation.
  This may include potential PCB contamination at certain PPL Electric substations
  and pole sites; potential contamination at a number of coal gas manufacturing
  facilities formerly owned or operated by PPL Electric; and oil or other contamination
  which may exist at some of PPL Electric's former generating facilities. As of
  June 30, 2002, work has been completed on over 80% of the sites included in
  the consent order.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In 1996, PPL Gas Utilities entered into a similar consent order
  with the Pennsylvania DEP to address a number of sites where subsidiaries of
  PPL Gas Utilities may be liable for remediation. The sites primarily include
  former coal gas manufacturing facilities. Subsidiaries of PPL Gas Utilities
  are also investigating the potential for any mercury contamination from gas
  meters and regulators. Accordingly, PPL Gas Utilities and Pennsylvania DEP have
  agreed to add 72 meter/regulation sites to the consent order and had addressed
  five of these sites by June 30, 2002.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Electric and PPL Gas Utilities had accrued
  approximately $5 million and $10 million, representing the estimated amounts
  they will have to spend for site remediation, including those sites covered
  by each company's consent orders mentioned above.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL, PPL Energy Supply and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In conjunction with its 1999 sale of generating assets to PPL
  Montana, Montana Power prepared a Phase I and Phase II Environmental Site Assessment.
  The assessment identifies approximately $7 million of future capital expenditures
  through the year 2020 related to various groundwater remediation issues. Additional
  capital expenditures could be required in amounts which are not now determinable,
  but which could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In 1999, the Montana Supreme Court held in favor of several
  citizens' groups that the right to a clean and healthful environment is a fundamental
  right guaranteed by the Montana Constitution. The court's ruling could result
  in significantly more stringent environmental laws and regulations, as well
  as an increase in citizens' suits under Montana's environmental laws. The effect
  on PPL Montana of any such changes in laws or regulations or any such increase
  in legal actions is not currently determinable, but it could be significant.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Under the Montana Power APA, PPL Montana is indemnified by
  Montana Power for any pre-acquisition environmental liabilities. However, this
  indemnification is conditioned on certain circumstances and subject to certain
  limitations set forth in the Montana Power APA, including circumstances under
  which PPL Montana and Montana Power would share in certain costs. As a result
  of the acquisition by NorthWestern Energy of Montana Power's electricity delivery
  business, PPL Montana may need to pursue any such indemnification claims against
  NorthWestern Energy.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Future cleanup or remediation work at sites currently under
  review, or at sites not currently identified, may result in material additional
  operating costs for PPL subsidiaries that cannot be estimated at this time.
</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY"> <u>General</u> </P>

<p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Certain of PPL's affiliates have electric distribution operations
  in the U.K. and Latin America. PPL believes that these operations are in compliance
  in all material respects with all applicable laws and government regulations
  to protect the environment. PPL is not aware of any material administrative
  proceeding against these companies with respect to any environmental matter.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">There have been increasing litigation claims throughout the
  U.S. based on exposure to asbestos against companies that manufacture or distribute
  asbestos products or that have these products on their premises. Certain of
  PPL's energy services subsidiaries, such as those that have supplied or installed
  asbestos material in connection with the repair or installation of heating,
  ventilating and air conditioning systems, have been named as defendants in asbestos-related
  lawsuits. PPL cannot predict the outcome of these lawsuits or whether additional
  claims may be asserted against its subsidiaries in the future. PPL does not
  expect that the ultimate resolution of the current lawsuits will have a material
  adverse effect on its financial condition.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL, PPL Energy Supply, PPL Electric and PPL Montana)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Due to the environmental issues discussed above or other environmental
  matters, PPL subsidiaries may be required to modify, replace or cease operating
  certain facilities to comply with statutes, regulations and actions by regulatory
  bodies or courts. In this regard, PPL subsidiaries also may incur capital expenditures,
  operating expenses and other costs in amounts which are not now determinable,
  but which could be significant.</P>
<P ALIGN="JUSTIFY"></P>

<P ALIGN="JUSTIFY"><b>Credit Support</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL and PPL Energy Supply provide certain guarantees for their
  subsidiaries. PPL has guaranteed fully and unconditionally all of the debt of
  its wholly-owned subsidiary, PPL Capital Funding, which at June 30, 2002, consisted
  of $1.3 billion of medium-term notes. At June 30, 2002, PPL has guaranteed certain
  obligations under power purchase and sales agreements of PPL EnergyPlus for
  $43 million and certain obligations of other subsidiaries, totaling $37 million.
  As of June 30, 2002, PPL Energy Supply had guaranteed certain obligations of
  its subsidiaries totaling $754 million.</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY"><i>(PPL Electric)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Electric provided a guarantee in the
  amount of $7 million in support of Safe Harbor Water Power Corporation, in which
  PPL Electric had an ownership interest prior to the corporate realignment. PPL
  Holtwood now has this ownership interest.</P>
<P ALIGN="JUSTIFY"></P>

  <li>
    <p align="justify"><b>Related Party Transactions</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>PLR Contracts </B><I> (PPL Energy Supply and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Electric has power sales agreements with PPL EnergyPlus,
      effective January 1, 2002, to supply all of PPL Electric's PLR load through
      2009. Under these contracts, PPL EnergyPlus will provide electricity at
      the pre-determined capped prices that PPL Electric is authorized to charge
      its PLR customers. For the three and six months ended June 30, 2002, these
      sales totaled $339 million and $708 million, including nuclear decommissioning
      recovery and amortization of an up-front contract payment. For the three
      and six months ended June 30, 2001, these sales totaled $300 million and
      $634 million, including nuclear decommissioning recovery, under the previous
      PLR contract. These sales are included in the Statement of Income as &quot;Energy
      purchases from affiliate&quot; by PPL Electric and as &quot;Wholesale energy
      marketing to affiliates&quot; revenues by PPL Energy Supply.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Under the current PLR contracts, PPL Electric is required
      to make performance assurance deposits with PPL EnergyPlus when the market
      price of electricity is less than the contract price by more than its contract
      collateral threshold. Conversely, PPL EnergyPlus is required to make performance
      assurance deposits with PPL Electric when the market price of electricity
      is greater than the contract price by more than its contract collateral
      threshold. PPL Electric's deposit with PPL EnergyPlus was $68 million at
      June 30, 2002. This deposit is shown on the Balance Sheets as &quot;Collateral
      on PLR energy supply to/from affiliate,&quot; a current asset of PPL Electric
      and a current liability of PPL Energy Supply. PPL Energy Supply pays interest
      equal to the three-month LIBOR plus 3% on this deposit, which is included
      in the Statement of Income as &quot;Interest Expense with Affiliate.&quot;</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>NUG Purchases </B><I>(PPL Energy Supply and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Electric has a reciprocal contract with PPL EnergyPlus
      to sell electricity purchased under contracts with NUGs. PPL Electric purchases
      electricity from the NUGs at contractual rates and then sells the electricity
      at the same price to PPL EnergyPlus. For the three months ended June 30,
      2002 and 2001, these NUG purchases totaled $40 million and $43 million and
      for the six months ended June 30, 2002 and 2001 were $82 million and $88
      million. These amounts are included in the Statement of Income as &quot;Wholesale
      electric to affiliate&quot; revenues by PPL Electric, and as &quot;Energy
      purchases from affiliates&quot; by PPL Energy Supply.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Montana Retail Supply </B><I>(PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Montana has a memorandum of understanding (MOU) with
      PPL EnergyPlus regarding the supply of energy to satisfy PPL EnergyPlus'
      obligations under its retail contracts, which expires on December 31, 2002.
      Under the MOU, energy sales to PPL EnergyPlus for the three months ended
      June 30, 2002 and 2001 were $13 million and $23 million and for the six
      months ended June 30, 2002 and 2001 were $30 million and $55 million. These
      amounts are included in &quot;Wholesale energy marketing to affiliate&quot;
      revenues on the Statement of Income.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Brokering and Contract Management Agreement </B><I>(PPL
      Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Under a wholesale sales brokering and contract management
      agreement between PPL Montana and PPL EnergyPlus, PPL Montana paid PPL EnergyPlus
      $2 million and $1 million for the three months ended June 30, 2002 and 2001.
      For the six months ended June 30, 2002 and 2001, the payments were $4 million
      and $2 million. PPL Montana records this expense as &quot;Other operation
      and maintenance&quot; on the Statement of Income.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Allocations of Corporate Service Costs </B><I>(PPL Energy
      Supply, PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Corporate functions such as financial, legal, human resources
      and information services were transferred to PPL Services in the corporate
      realignment. PPL Services bills the respective PPL subsidiaries for the
      cost of such services when they can be specifically identified. The cost
      of these services that is not directly charged to PPL subsidiaries is allocated
      to certain of the subsidiaries based on the relative capital invested by
      PPL in these subsidiaries. PPL Services allocated the following charges
      to PPL Energy Supply, PPL Electric and PPL Montana (in millions): </P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="37%" colspan=2>&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Direct expenses</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Energy Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">23</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">43</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">36</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Electric</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">28</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Montana</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Overhead costs</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Energy Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">13</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Electric</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">13</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM"> PPL Montana</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Intercompany Borrowings </b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL, through PPL Capital Funding and other subsidiaries,
      provides certain funding and credit support for PPL Energy Supply and its
      subsidiaries. Such funding includes loans that are due on demand with interest
      charged at a rate based on PPL Capital Funding's short-term borrowing rate.
      PPL Energy Supply had no notes payable to affiliates at June 30, 2002 or
      December 31, 2001 and consequently had no intercompany interest expense
      in 2002 related to intercompany borrowings.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Energy Supply, through its financing subsidiary PPL
      Investment Corporation, had notes receivable from affiliates of PPL totaling
      $243 million and $395 million at June 30, 2002 and December 31, 2001. Interest
      earned on loans to affiliates was $6 million and $11 million for the three
      months ended June 30, 2002 and 2001, and was $11 million and $19 million
      for the six months ended June 30, 2002 and 2001.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In December 2001, PPL Electric made two loans from excess
      cash to PPL Energy Funding in the aggregate principal amount of $350 million.
      One loan was a demand promissory note in the original principal amount of
      $150 million requiring interest to be paid monthly at an annual interest
      rate of 4.0%. The other loan was a one-year term promissory note in the
      original principal amount of $200 million requiring interest to be paid
      monthly at an annual interest rate of 6.5%. The outstanding balance of these
      loans at June 30, 2002 was $80 million. Intercompany interest income was
      $1 million for the three months ended June 30, 2002 and 2001, and was $5
      million for the six months ended June 30, 2002 and 2001.</P>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>Derivative Instruments and Hedging Activities</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Fair Value Hedges</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Energy Supply and PPL Montana enter into financial
      or physical contracts to hedge a portion of the fair value of firm commitments
      of forward electricity sales. These contracts range in maturity through
      2007. Additionally, PPL and PPL Energy Supply enter into financial contracts
      to hedge fluctuations in the market value of existing debt issuances. For
      the three and six months ended June 30, 2002, PPL and PPL Energy Supply
      recognized an immaterial amount from the ineffective portion of fair value
      hedges and did not recognize any gains or losses from firm commitments that
      no longer qualified as fair value hedges. For these same periods PPL Montana
      did not recognize any gains or losses from the ineffective portion of fair
      value hedges or from firm commitments that no longer qualified as fair value
      hedges. For the three and six months ended June 30, 2001, PPL, PPL Energy
      Supply and PPL Montana did not recognize any gains or losses from the ineffective
      portion of fair value hedges or from firm commitments that no longer qualified
      as fair value hedges.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Cash Flow Hedges</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Energy Supply and PPL Montana enter into financial
      and physical contracts, including forwards, futures and swaps, to hedge
      the price risk associated with electric, gas and oil commodities. Additionally,
      PPL enters into financial interest rate swap contracts to hedge interest
      expense associated with both existing and anticipated debt issuances. These
      contracts and swaps, excluding those forecasted transactions related to
      the payment of variable interest on existing financial instruments, range
      in maturity through 2022. PPL also enters into foreign currency forward
      contracts to hedge exchange rates associated with firm commitments denominated
      in foreign currencies and to hedge the net investment of foreign operations.
      These forward contracts range in maturity through 2003.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The after-tax impact on the financial statements of PPL
      and PPL Energy Supply resulting from cash flow hedge ineffectiveness was
      insignificant for the three and six months ended June 30, 2002, and was
      an after-tax gain of $3 million for the three and six months ended June
      30, 2001.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Cash flow hedges may be discontinued because it is probable
      that the original forecasted transaction will not occur by the end of the
      originally specified time period. Reclassifications for the three and six
      months ended June 30, 2002 were insignificant. As a result of an unplanned
      outage in 2001 and changes in economic conditions, PPL Energy Supply and
      PPL Montana discontinued certain cash flow hedges, resulting in the following
      gain/(loss) reclassifications (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B><BR>
            <B>2001</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B><BR>
            <B>2001</B>
            <hr noshade>
          </div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM"> PPL </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM"> PPL Energy Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM"> PPL Montana</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">As of June 30, 2002, the deferred net gain, after-tax,
      on derivative instruments in accumulated other comprehensive income expected
      to be reclassified into earnings during the next twelve months (excluding
      derivative activities of equity investments) was $5 million, $7 million,
      and $6 million for PPL, PPL Energy Supply and PPL Montana, respectively.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The following table shows the change in accumulated unrealized
      gains or losses on derivatives in other comprehensive income for the following
      periods (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B><BR>
            <B>2002</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="24%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B><BR>
            <B>2002</B>
            <hr noshade>
          </div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=3> <B><U>PPL</u></b></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Beginning accumulated <BR>
          &nbsp;&nbsp;derivative gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">23</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change associated with <BR>
          &nbsp;&nbsp;current period hedging <BR>
          &nbsp;&nbsp;activities and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change associated with C15<BR>
          &nbsp;&nbsp;accounting change (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change from reclassification<BR>
          &nbsp;&nbsp;into earnings</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="49%" colspan=3>&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="24%" colspan=3>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Ending accumulated derivative<BR>
          &nbsp;&nbsp;gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="49%" colspan=3>&nbsp;</td>
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
        <td width="24%" colspan=3>
          <hr noshade size="5">
        </td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=2> <B><U>PPL Energy Supply</u></b></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Beginning accumulated <BR>
          &nbsp;&nbsp;derivative gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">34</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">47</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change associated with <BR>
          &nbsp;&nbsp;current period hedging <BR>
          &nbsp;&nbsp;activities and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">(2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(11</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change associated with C15<BR>
          &nbsp;&nbsp;accounting change (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Net change from reclassification<BR>
          &nbsp;&nbsp;into earnings</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="3%">&nbsp;</td>
        <td width="46%">&nbsp; </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM"> Ending accumulated derivative<BR>
          &nbsp;&nbsp;gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="3%">&nbsp;</td>
        <td width="46%">&nbsp; </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=3> <B><U>PPL Montana</u></b></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Beginning accumulated <BR>
          &nbsp;&nbsp;derivative gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">19</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Net change associated with
          <BR>
          &nbsp;&nbsp;current period hedging <BR>
          &nbsp;&nbsp;activities and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">(2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">(13</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Net change from reclassification<BR>
          &nbsp;&nbsp;into earnings</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="3%" valign="BOTTOM">&nbsp;</td>
        <td width="46%" valign="BOTTOM" colspan=2>&nbsp;</td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td colspan="2" valign="BOTTOM">
          <hr noshade>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td colspan="2" valign="BOTTOM">
          <hr noshade>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=2> Ending accumulated derivative<BR>
          &nbsp;&nbsp;gain</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="20%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="3%" valign="BOTTOM">&nbsp;</td>
        <td width="46%" valign="BOTTOM" colspan=2>&nbsp;</td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td colspan="2" valign="BOTTOM">
          <hr noshade size="5">
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td colspan="2" valign="BOTTOM">
          <hr noshade size="5">
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
    </table>
         <p>&nbsp;</p>
          <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
               <TR>
        <TD WIDTH="7%" VALIGN="TOP" COLSPAN=1> (a)</TD>
        <TD WIDTH="93%" VALIGN="TOP" COLSPAN=10> On June 27, 2001, the FASB cleared
          DIG Issue C15, "Scope Exceptions: Normal Purchases and Normal Sales
          Exception for Option-Type Contracts and Forward Contracts in Electricity,"
          which extends the normal purchases and normal sales exception to electricity
          purchase and sale agreements meeting certain criteria. The mark-to-market
          value recorded in accumulated other comprehensive income as of June
          30, 2001 is being amortized through the original delivery term of the
          contracts.</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Implementation Issues</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In December 2001, the FASB revised guidance on DIG Issue
      C16, &quot;Scope Exceptions: Applying the Normal Purchases and Normal Sales
      Exception to Contracts that Combine a Forward Contract and a Purchased Option
      Contract.&quot; Issue C16 provides additional guidance on the classification
      and application of SFAS 133 relating to purchases and sales of electricity
      utilizing forward contracts and options, as well as the eligibility of fuel
      contracts for the normal purchases and normal sales exception. The revised
      guidance was effective April 1, 2002. PPL had no financial statement impact
      from the revised guidance on fuel contracts classified as normal.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>EITF 02-3, Accounting for Contracts Involved in Trading
      and Risk Management Activities</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In June 2002, the FASB's EITF adopted the position that
      revenues from energy trading contracts must be reported &quot;net&quot;
      in financial statements for periods ending after June 30, 2002. The EITF
      requires that all comparative financial statements for interim periods or
      years should be restated (reclassified) to conform to this consensus. Although
      this new accounting guidance will require changes to certain line items
      in the financial statements, it will not impact PPL's overall financial
      position or earnings. Rather, the portion of PPL's revenues from wholesale
      energy marketing and trading will be netted against expenses from energy
      purchases that represent energy trading activities. PPL has not yet quantified
      the financial statement impact from this revised guidance.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Credit Concentration</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL, PPL Energy Supply and PPL Montana enter into contracts
      with many entities for the purchase and sale of energy. Most of these contracts
      are considered a normal part of doing business and, as such, the mark-to-market
      value of these contracts is not reflected in the financial statements. However,
      the mark-to-market value of these contracts is considered when committing
      to a new business from a credit perspective.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL, PPL Energy Supply and PPL Montana have credit exposures
      to energy trading partners. The majority of these exposures were the mark-to-market
      value of multi-year contracts for energy sales. Therefore, if these counterparties
      fail to perform their obligations under such contracts, the companies would
      not experience an immediate financial loss, but would experience lower revenues
      in future years to the extent that replacement sales could not be made at
      the same prices as sales under the defaulted contracts.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At June 30, 2002, PPL had a credit exposure of $332 million
      to energy trading partners. Four counterparties accounted for 63% of this
      exposure. No other individual counterparty accounted for more than 2% of
      the exposure. Each of the four primary counterparties has an investment
      grade credit rating from Standard &amp; Poor's. </P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At June 30, 2002, PPL Energy Supply had a credit exposure
      of $550 million to energy trading partners. Five counterparties accounted
      for 78% of this exposure. No other individual counterparty accounted for
      more than 1% of the exposure. The largest exposure, $218 million, was to
      PPL Electric, under the long-term contract to provide PPL Electric's PLR
      load. PPL Electric has posted collateral in an amount of $68 million related
      to this exposure in accordance with its contract with PPL Energy Supply.
      The other four counterparties have an investment grade credit rating from
      Standard &amp; Poor's.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At June 30, 2002, PPL Montana had a credit exposure of
      $164 million to energy trading partners. Three counterparties accounted
      for 95% of this exposure. No other individual counterparty accounted for
      more than 2% of the exposure. Each of the three primary counterparties has
      an investment grade credit rating from Standard &amp; Poor's.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">With the exception of one counterparty, a government agency,
      PPL, PPL Energy Supply and PPL Montana have the right to request collateral
      from each of these counterparties in the event their credit rating falls
      below investment grade. It is also the policy of PPL, PPL Energy Supply
      and PPL Montana to enter into netting agreements with all of its counterparties
      to minimize credit exposure.</P>
    <P ALIGN="JUSTIFY"></P>
<li>
    <p align="justify"><b>Other Income - Net</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The breakdown of PPL's Other Income was as follows (millions
      of dollars):</P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="38%" COLSPAN=2>&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> <B>Other Income</B></TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Interest income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Equity earnings</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">)</div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Total</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">22</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=9> <B>Other Deductions</B></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other deductions</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2> <B>Other Income - net</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
    </TABLE>
    <p align="justify"></P>
    <P ALIGN="JUSTIFY"><i>(PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The breakdown of PPL Energy Supply's Other Income was as
      follows (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="38%" COLSPAN=2>&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> <B>Other Income</B></TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Affiliated interest income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">19</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Interest income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Equity earnings </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Total</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">24</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">38</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=9> <B>Other Deductions</B></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other deductions</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2> <B>Other Income - net</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">21</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">32</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
    </TABLE>
      <P ALIGN="JUSTIFY"><i>(PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The breakdown of PPL Electric's Other Income was as follows
      (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="38%" COLSPAN=2>&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="1%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=4> <B>Other Income</B></TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Affiliated interest income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Interest income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other income</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <tr valign="top">
        <td width="38%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Total</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"></TD>
      </TR>
      <TR>
        <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=9> <B>Other Deductions</B></TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM"> Misc. other deductions</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=2> <B>Other Income - net</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
     <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD colspan="2" VALIGN="BOTTOM">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>Goodwill and Other Intangible Assets </b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In June 2001, the FASB issued SFAS 142, &quot;Goodwill
      and Other Intangible Assets,&quot; which eliminates the amortization of
      goodwill and other acquired intangible assets with indefinite economic useful
      lives. SFAS 142 requires an annual impairment test of goodwill at the reporting
      unit level. A reporting unit is a segment or one level below a segment (referred
      to as a component). Intangible assets other than goodwill that are not subject
      to amortization are also required to undergo an annual impairment test.
      PPL and its subsidiaries adopted SFAS 142 on January 1, 2002. Previously
      reported information has been restated to conform to the current presentation.
      The following information is disclosed in accordance with SFAS 142.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Acquired Intangible Assets </b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL) </i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>June 30, 2002</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>December 31, 2001</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B>Amount</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying</b><BR>
            <B>Amount</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B>
            <hr noshade>
          </div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Emission allowances</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">50</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">36</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Land and<BR>
          &nbsp;&nbsp;transmission rights</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">241</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">88</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">247</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">86</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Licenses and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">32</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">323</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">92</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">314</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">90</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade size="5">
        </td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Current intangible assets are included in &quot;Current
      Assets - Other,&quot; and long-term intangible assets are included in &quot;Regulatory
      and Other Noncurrent Assets - Other&quot; on the Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Amortization expense was approximately $1 million and $2
      million for the three and six months ended June 30, 2002. Estimated amortization
      expense for the years 2003 through 2007 is $5 million per year.</P>
    <p align="justify"></P>
    <P ALIGN="JUSTIFY"><i>(PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>June 30, 2002</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>December 31, 2001</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying</b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Emission allowances</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">50</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">36</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Land and<BR>
          &nbsp;&nbsp;transmission rights</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">49</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">49</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">13</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Licenses and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">32</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">131</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">116</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade size="5">
        </td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Current intangible assets are included in &quot;Current
      Assets - Other,&quot; and long-term intangible assets are included in &quot;Other
      Noncurrent Assets&quot; on the Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Amortization expense was approximately $1 million for the
      three and six months ended June 30, 2002. Estimated amortization expense
      for the years 2003 through 2007 is $2 million per year.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>June 30, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying</b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Land and<BR>
          &nbsp;&nbsp;transmission rights</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">191</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">73</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">197</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">72</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Intangible assets are included in &quot;Regulatory and
      Other Noncurrent Assets - Other&quot; on the Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Amortization expense was approximately $1 million for the
      three and six months ended June 30, 2002. Estimated amortization expense
      for the years 2003 through 2007 is $2 million per year.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):</P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=80%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>June 30, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying</b><BR>
            <B>Amount</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B>Amortization</B></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Emission allowances</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">19</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">19</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>

      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM"> Licenses and other</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">15</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">15</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">34</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">34</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="17%" colspan=3>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="18%" colspan=4>
          <hr noshade size="5">
        </td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Current intangible assets are included in &quot;Prepayments
      and other,&quot; and long-term intangible assets are included in &quot;Noncurrent
      Assets - Other&quot; on the Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Amortization expense was immaterial for the three and six
      months ended June 30, 2002. Estimated amortization expense is immaterial
      for each of the years 2003 through 2007. </P>
    <p align="justify"><b>Goodwill</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The changes in the carrying amounts of goodwill by segment
      were as follows (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="44%" VALIGN="BOTTOM" COLSPAN=10>
          <div align="center"><B>PPL Energy Supply</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>PPL</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Supply</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>International</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Total</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Delivery(a)</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Total</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="22%" colspan=2>&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2> Balance as of <BR>
          &nbsp;&nbsp;January 1, 2002</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">72</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">257</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">329</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">55</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">384</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2> Goodwill acquired</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2> Effect of foreign <BR>
          &nbsp;&nbsp;exchange rates</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2> Impairment losses</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(150</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">(150</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">(150</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <tr valign="top">
        <td width="22%" colspan=2>&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2> Balance as of <BR>
          &nbsp;&nbsp;June 30, 2002</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">84</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">119</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">203</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">55</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">258</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="22%" colspan=2>&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="12%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="5%" VALIGN="BOTTOM"> (a)</TD>
        <TD WIDTH="95%" VALIGN="BOTTOM" COLSPAN=21> The Delivery segment is not
          part of PPL Energy Supply.</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Goodwill is included in other noncurrent assets on the
      Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The reporting units of the Supply, Delivery and International
      segments completed the transition impairment test in the first quarter of
      2002. A transition goodwill impairment loss of $150 million was recognized
      in the Latin American reporting unit within the International segment, and
      is reported as a &quot;Cumulative Effect of a Change in Accounting Principle&quot;
      on the Statement of Income. The fair value of the reporting unit was estimated
      using the expected present value of future cash flows.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The following table reconciles reported earnings from prior
      periods to earnings adjusted to exclude the amortization expense related
      to goodwill and equity method goodwill that will no longer be recorded in
      accordance with SFAS 142.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL)</i></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD VALIGN="BOTTOM" COLSPAN=5> (Millions of Dollars, except per share
          data)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Reported net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(27</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">117</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(30</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">339</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Add back: Goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Add back: Equity method <BR>
          &nbsp;&nbsp;goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Adjusted net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(27</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">121</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(30</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">348</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> <B>Basic EPS:</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Reported net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2.33</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.05</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Equity method goodwill <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Adjusted net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.83</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2.39</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> <B>Diluted EPS:</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Reported net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.80</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2.31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.05</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Equity method goodwill <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Adjusted net income (loss)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.18</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">0.83</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">(0.20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP"> )</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2.37</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="38%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
    </TABLE>
    <p align="justify"></P>
    <P ALIGN="JUSTIFY"><i>(PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="28%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Six Months</b><BR>
            <B>Ended June 30,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="38%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="51%" VALIGN="BOTTOM" COLSPAN=3> (Millions of Dollars)</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Reported net income </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">124</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">325</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Add back: Goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Add back: Equity method <BR>
          &nbsp;&nbsp;goodwill amortization</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="38%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="38%" VALIGN="BOTTOM"> Adjusted net income </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">128</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">333</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr>
        <td width="38%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Electric and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Electric and PPL Montana had no goodwill at June 30,
      2002 and December 31, 2001. The adoption of SFAS 142 would not have affected
      prior period earnings of PPL Electric and PPL Montana.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Reconciliation of Prior Annual Periods to Exclude Amortization
      </b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">The following table reconciles reported earnings from prior
      annual periods to earnings adjusted to exclude the amortization expense
      related to goodwill and equity method goodwill that will no longer be recorded
      in accordance with SFAS 142. PPL and PPL Energy Supply were not affected
      by changes in amortization periods for other intangible assets.</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>PPL</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>For the Years Ended </b><BR>
            <B>December 31,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2000</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>1999</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income before
          <BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">169</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">487</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">478</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">13</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Equity method goodwill
          <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income before
          <BR>
          &nbsp;&nbsp;extraordinary items and cumulative<BR>
          &nbsp;&nbsp;effect of a change in accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">185</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">501</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">491</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">179</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">498</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">432</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">13</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">11</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Equity method goodwill
          <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">195</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">512</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">445</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>

    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>PPL</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>For the Years Ended </b><BR>
            <B>December 31,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2000</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>1999</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> <B>Basic EPS:</B></TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income before<BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting<BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.16</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.38</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3.14</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.09</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.07</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.06</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Equity method goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.03</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income before<BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.27</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.47</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3.23</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.23</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.45</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.84</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.09</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.07</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.06</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Equity method goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.03</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.34</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.54</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.93</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> <B>Diluted EPS:</B></TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income before<BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting<BR>
          &nbsp;&nbsp;principle </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.15</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.37</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3.14</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.09</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.07</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.06</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Equity method goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.03</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income before<BR>
          &nbsp;&nbsp;extraordinary items and cumulative &nbsp;&nbsp;effect of
          a change in accounting<BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.26</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.46</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3.23</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.22</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.44</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.84</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.09</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.07</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.06</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Equity method goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">0.03</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.33</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3.53</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">2.93</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>PPL Energy Supply</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>For the Years Ended </b><BR>
            <B>December 31,</B>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>2000</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>1999</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income (loss)
          before <BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting <BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">171</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">242</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(35</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Equity method goodwill
          <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income (loss)
          before <BR>
          &nbsp;&nbsp;extraordinary items and cumulative <BR>
          &nbsp;&nbsp;effect of a change in accounting<BR>
          &nbsp;&nbsp;principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">186</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">254</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(23</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Reported net income (loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">174</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">242</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(35</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Goodwill amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">12</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">9</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">7</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Add back: Equity method goodwill
          <BR>
          &nbsp;&nbsp;amortization</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income (loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">189</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">254</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(23</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
      </TR>
      <tr valign="top">
        <td width="45%" colspan=2>&nbsp;</td>
        <td width="18%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="16%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td width="14%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
    </TABLE>
    <p align="justify"></P>

    <P ALIGN="JUSTIFY"><i>(PPL Electric and PPL Montana)</i></P>

    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL Electric and PPL Montana had no goodwill at December
      31, 2001, 2000 and 1999. The adoption of SFAS 142 would not have affected
      prior period earnings of PPL Electric and PPL Montana.</P>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>New Accounting Standards</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply, PPL Electric and PPL Montana<B>)</b></i></P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>SFAS 143</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In June 2001, the FASB issued SFAS 143, &quot;Accounting
      for Asset Retirement Obligations,&quot; on the accounting for obligations
      associated with the retirement of long-lived assets. SFAS 143 requires a
      liability to be recognized in the financial statements for retirement obligations
      meeting specific criteria. Measurement of the initial obligation is to approximate
      fair value, with an equivalent amount recorded as an increase in the value
      of the capitalized asset. The asset will be depreciated in accordance with
      normal depreciation policy and the liability will be increased, with a charge
      to the income statement, until the obligation is settled. SFAS 143 is effective
      for fiscal years beginning after June 15, 2002. PPL and its subsidiaries
      are currently in the process of identifying asset retirement obligations.
      The potential impact of adopting SFAS 143 is not yet determinable, but may
      be material. </P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>SFAS 144 </b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In August 2001, the FASB issued SFAS 144, &quot;Accounting
      for the Impairment or Disposal of Long-Lived Assets,&quot; that replaces
      SFAS 121, &quot;Accounting for the Impairment of Long-Lived Assets and for
      Long-Lived Assets to Be Disposed Of.&quot; For long-lived assets to be held
      and used, SFAS 144 retains the requirements of SFAS 121 to (a) recognize
      an impairment loss only if the carrying amount is not recoverable from undiscounted
      cash flows and (b) measure an impairment loss as the difference between
      the carrying amount and fair value of the asset. For long-lived assets to
      be disposed of, SFAS 144 establishes a single accounting model based on
      the framework established in SFAS 121. The accounting model for long-lived
      assets to be disposed of by sale applies to all long-lived assets, including
      discontinued operations, and replaces the provisions of APB Opinion No.
      30, &quot;Reporting the Results of Operations - Reporting the Effects of
      Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
      Occurring Events and Transactions,&quot; for the disposal of segments of
      a business. SFAS 144 also broadens the reporting of discontinued operations.
      PPL and its subsidiaries adopted SFAS 144 on January 1, 2002, with no material
      impact on the financial statements.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>SFAS 145 </b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In April 2002, the FASB issued SFAS 145, &quot;Rescission
      of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13,
      and Technical Corrections.&quot; The most relevant provision of SFAS 145
      is the rescission of SFAS 4, &quot;Reporting Gains and Losses from Extinguishment
      of Debt - An Amendment of APB Opinion No. 30,&quot; which required all gains
      and losses from extinguishment of debt to be aggregated and, if material,
      classified as an extraordinary item, net of related income tax effect. As
      a result of the rescission, the criteria in APB Opinion No. 30 will now
      be used to classify those gains and losses. The provisions of SFAS 145 related
      to the rescission of SFAS 4 shall be applied in fiscal years beginning after
      May 15, 2002, with early application encouraged. The adoption of SFAS 145
      will not have a material impact on PPL or its subsidiaries.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>SFAS 146</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In June 2002, the FASB issued SFAS 146, &quot;Accounting
      for Costs Associated with Exit or Disposal Activities.&quot; SFAS 146 addresses
      financial accounting and reporting for costs associated with exit or disposal
      activities and replaces EITF 94-3, &quot;Liability Recognition for Certain
      Employee Termination Benefits and Other Costs to Exit an Activity (including
      Certain Costs Incurred in a Restructuring).&quot; SFAS 146 requires the
      recognition of costs associated with exit or disposal activities when they
      are incurred rather than at the date of a commitment to an exit or disposal
      plan. The provisions of SFAS 146 are effective for exit or disposal activities
      initiated after December 31, 2002, with earlier application encouraged.
      The adoption of SFAS 146 will not have a material impact on PPL or its subsidiaries,
      but may impact future disposal or exit activities.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>EITF 02-3</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">See Note 10 for a discussion of EITF 02-3 and the potential
      impact of adoption.</P>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><b>Write-down of International Energy Projects</b></p>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>

    <P ALIGN="JUSTIFY">At December 31, 2001, PPL Global estimated that the long-term
      viability of its CEMAR investment was jeopardized and that there was minimal
      probability of positive future cash flows. See PPL's Note 22 and PPL Energy
      Supply's Note 21 to the Financial Statements included in each company's
      Annual Report to the SEC on Form 10-K for the year ended December 31, 2001
      for additional information. At that time, PPL Global recorded an impairment
      loss in the carrying value of its net assets in CEMAR, an increase in its
      valuation allowance in deferred tax assets, and a credit to &quot;Minority
      Interest&quot; on the Statement of Income. The net result of these transactions
      was a $217 million charge to earnings.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At March 31, 2002, PPL Global recorded a further impairment
      loss in the carrying value of its net assets in CEMAR of approximately $4
      million, after-tax. The pre-tax charge was $6 million, and was recorded
      as a charge to &quot;Write-down of international energy projects&quot; on
      the Statement of Income.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL had been working with governmental authorities in Brazil
      and CEMAR's creditors on a plan to return the company to financial stability.
      That plan included CEMAR's request for a rate-increase review, which Brazilian
      regulators denied in June 2002. PPL viewed the rate-increase review as a
      critical step in restoring CEMAR to financial stability. While CEMAR has
      the capability to appeal the regulator's denial, PPL puts a low probability
      on the chances of any appeal succeeding. Given the regulator's denial of
      the rate-increase review and the current financial condition of CEMAR, PPL
      has made a decision to exit the investment. PPL Global's remaining portion
      of its CEMAR investment, primarily related to its foreign currency translation
      adjustments balance, was written-off as of June 30, 2002. The $94 million
      charge was recorded in &quot;Write-down of international energy projects&quot;
      on the Statement of Income.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In July 2002, PPL announced a proposal to sell all of its
      90% equity interest in CEMAR to Franklin Park Energy, LLC. The sale is subject
      to regulatory approval of Brazil's National Electric Energy Agency and other
      customary conditions. The purchase and sale agreement may be terminated
      by either party if closing on the sale does not occur by August 15, 2002.
      If the sale is not consummated, PPL expects that CEMAR would consider filing
      for bankruptcy under Brazilian law. PPL cannot predict what position the
      Brazilian regulator, CEMAR's creditors or others may take in connection
      with these matters or the ultimate outcome of these matters.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">As a result of its financial difficulties, CEMAR has failed
      to pay certain of its creditors for obligations when due. In addition, CEMAR
      is not in compliance with the financial covenants in its 150 million Brazilian
      reals (approximately $56 million) debenture indenture for the year ended
      December 31, 2001, and for the quarter ended March 31, 2002. CEMAR has reached
      agreement with the required majority of debenture holders on a waiver for
      the failure to meet certain financial covenants through measurement periods
      ending September 30, 2002.</P>
    <P ALIGN="JUSTIFY"></P>

  <li>
    <p align="justify"><b>Workforce Reduction</b></P>

<P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL, PPL Energy Supply and PPL Electric)</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In an effort to improve operational efficiency and reduce costs,
  PPL announced a workforce reduction in June 2002 that eliminated 598 employees,
  or about 7% of PPL's U.S. workforce, at a cost of $74 million. The program was
  broad-based and impacted virtually all employee groups except certain positions
  that are key to providing high-quality service to PPL's electricity delivery
  customers. Linemen, electricians and line foremen, for example, were not affected
  by the reductions.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL recorded the cost of the program as a one-time charge of
  $74 million included in the Statement of Income as &quot;Workforce reduction.&quot;
  This charge reduced net income by $43 million after taxes, or 29 cents per share
  of common stock. Annual savings in operating expenses associated with the workforce
  reduction are estimated to be approximately $50 million. The program provides
  for enhanced early retirement benefits and/or one-time special pension separation
  allowances based on an employee's age and years of service. These features of
  the program will be paid primarily from the PPL Retirement Plan pension trust
  and increased PPL's pension liability by $65 million. The remaining $9 million
  of costs relate primarily to severance payments and outplacement costs which
  will be paid by PPL, and are included on the Balance Sheet in &quot;Current
  Liabilities.&quot;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply eliminated 195 employees and recorded a one-time
  charge of $40 million, which after taxes reduced net income by $23 million.
  Included in the charge was a $10 million allocation of the costs associated
  with the elimination of employees of PPL Services.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric eliminated 260 employees and recorded a one-time
  charge of $33 million, which after taxes reduced net income by $19 million.
  Included in the charge was a $6 million allocation of the costs associated with
  the elimination of employees of PPL Services.</P>
</ol>

<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM2CORP"></A>PPL CORPORATION AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">This discussion should be read in conjunction with the Financial
  Statements and Combined Notes to Condensed Consolidated Financial Statements
  included in Item 1 above, and with the section entitled &quot;Review of the
  Financial Condition and Results of Operations&quot; in PPL's Annual Report to
  the SEC on Form 10-K for the year ended December 31, 2001. Terms and abbreviations
  appearing in Management's Discussion and Analysis of Financial Condition and
  Results of Operations are explained in the glossary.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Earnings</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net income (loss) and the related EPS were as follows:</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM"> Net income (loss)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM"> &nbsp;&nbsp;(millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(27</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">117</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(30</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">339</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM"> EPS - basic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(0.18</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">0.80</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(0.20</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">2.33</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM"> EPS - diluted</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(0.18</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">0.80</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(0.20</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">2.31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net income in 2002 was impacted by three unusual items as shown
  below. Refer to specific notes to the Financial Statements for discussion of
  these items.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> (Millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income (loss) -<BR>
      &nbsp;&nbsp;actual</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(27</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">117</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(30</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">339</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Unusual items (net of<BR>
      &nbsp;&nbsp;tax):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> SFAS 142 goodwill<BR>
      &nbsp;&nbsp;impairment (Note &nbsp;&nbsp;12)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(150</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> Write-down of <BR>
      &nbsp;&nbsp;investment in <BR>
      &nbsp;&nbsp;CEMAR (Note 14)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(94</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(98</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> Workforce reduction<BR>
      &nbsp;&nbsp;(Note 15)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(43</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(43</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income from core<BR>
      &nbsp;&nbsp;operations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">110</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">117</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">261</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">339</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Core earnings declined by $7 million and $78 million for the
  three and six months ended June 30, 2002, compared to the same periods in 2001.
  These decreases were primarily due to (after-tax earnings impacts noted in millions
  of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower wholesale energy margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(26</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower unregulated retail energy
      <BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(11</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(33</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower delivery revenues (net of<BR>
      &nbsp;&nbsp;CTC/ITC amortization)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> PPL Global earnings (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Earnings from synfuel<BR>
      &nbsp;&nbsp;projects (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Higher regulated retail energy<BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">30</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">61</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Other - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(78</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=9>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP"> (a)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=9> The increase for the three months
      ended was due to the discontinuance of goodwill amortization and lower development
      spending. The decrease for the six months ended was due to higher interest
      on Latin American debt and lower operating results at equity affiliates,
      offset by the discontinuance of goodwill amortization and a favorable termination
      settlement on a cancelled domestic development project.</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP"> (b)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=9> The decrease for the three months
      ended was due to $4 million less in tax credits. (The second quarter of
      2001 included additional tax credits which had been deferred pending the
      receipt of a private letter ruling from the IRS.) The increase for the six
      months ended was due to higher sales volumes.</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL expects that the current low level of wholesale energy
  prices will adversely impact margins for the remainder of this year, and could
  continue to do so beyond 2002. Based upon current energy price levels, there
  is a risk that PPL may be unable to recover its investment in new gas-fired
  generation facilities. Under generally accepted accounting principles, PPL does
  not believe that there is an impairment charge to be recorded at this time.
  PPL is unable to predict the ultimate earnings impact of this issue, based upon
  energy price levels, applicable accounting rules and other factors, but such
  impact may be material. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL also expects that it will incur quarterly operating losses
  from CEMAR until such time as it exits its investment in CEMAR. See Note 14
  to the Financial Statements for information on PPL Global's investment in CEMAR.
  See "Financial Condition - Liquidity" for a discussion of a possible charge
  related to PPL Capital Funding's 7.70% Reset Put Securities due 2007.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Domestic Energy Margins</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following tables provide summary data regarding changes
  in domestic gross margins of wholesale and retail energy for the three and six
  months ended June 30, 2002, compared with the same periods in 2001 (millions
  of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=4>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=4>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Utility revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Unregulated retail electric and
      <BR>
      &nbsp;&nbsp;gas revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(62</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(152</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Wholesale energy marketing and<BR>
      &nbsp;&nbsp;trading revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(79</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(269</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Other revenue adjustments (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">50</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Total revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(95</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(346</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(40</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Purchased power</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(84</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(221</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=5> Other cost adjustments (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="46%" VALIGN="BOTTOM" COLSPAN=3> Total cost of sales</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(83</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(245</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM"> Domestic gross energy <BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="right">(101</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="49%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade size="5">
    </td>
    <td width="2%" colspan=3>&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=4>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP" COLSPAN=3> (a)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=16> Adjusted to exclude the impact of
      any revenues and costs not associated with domestic energy margins, in particular,
      revenues and costs related to the international operations of PPL Global
      and the domestic delivery operations of PPL Electric and PPL Gas Utilities.</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Changes in Gross Domestic Energy Margins By Customer:</U>
</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Wholesale - Eastern U.S.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(44</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Wholesale - Western U.S.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(20</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(106</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Unregulated retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(19</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Regulated retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Domestic gross energy margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(101</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Gross margin calculations are dependent on the allocation of
  fuel and purchased power costs to the customer segments. That allocation is
  based on hourly MWh consumption levels compared to hourly MWh supply costs.
  Any costs specific to a customer segment are charged to that customer segment.</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY"><u>Wholesale - Eastern U.S.</u></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">East wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  lower wholesale prices. Average wholesale prices for the three months ended
  June 30, 2002 were $16/MWh lower than those realized in the same period in 2001.
  As a result, wholesale revenues were lower by $17 million, despite a 36% increase
  in wholesale sales. Because of the higher levels of sales, costs were $7 million
  higher. Average wholesale prices for the year-to-date June 30, 2002 were $12/MWh
  lower than those realized for the same period in 2001, thereby providing $106
  million less in revenues. Partially offsetting this decline were higher volumes
  of sales, which added $36 million to revenues and a buyout of a NUG contract,
  which reduced power purchases by $25 million.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale - Western U.S.</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">West wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  significantly lower wholesale prices. Average wholesale prices for the three
  and six months ended June 30, 2002, were $43/MWh and $85/MWh lower than those
  realized for the same periods in 2001. Lower wholesale prices for the three
  and six months ended June 30, 2002 account for $76 million and $248 million
  of margin reductions. These reductions were offset by higher volumes of $56
  million and $142 million, due in part to the commercial operations of Griffith
  Energy.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Unregulated Retail</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Unregulated retail margins were lower for the three and six
  months ended June 30, 2002, compared to the same periods in 2001. These declines
  were primarily due to lower revenues resulting from the expiration of contracts
  which were not renewed in the East and to significantly lower retail prices
  in the West. However, the declines were partially offset by an increase in the
  number of customers. For the three and six months ended June 30, 2002, lower
  prices account for $18 million and $57 million of margin reductions. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Regulated Retail</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Regulated retail margins in the East were higher for the three
  and six months ended June 30, 2002, compared to the same periods in 2001. For
  the three months ended June 30, 2002, increased sales volumes improved margins
  by $11 million. Higher average sales prices, caused by changes in usage among
  customer classes, improved margins by $13 million. Finally, lower supply costs
  in 2002, due to lower purchased power costs, lower fuel costs and increased
  generating unit availability, improved margins by $27 million. For the six months
  ended June 30, 2002, increased sales volumes improved margins by $25 million.
  Higher average prices, caused by changes in usage among customer classes, improved
  margins by $25 million. Finally, lower supply costs in 2002, due to lower purchased
  power costs, lower fuel costs and increased generating unit availability, improved
  margins by $52 million.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Revenues</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Utility</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in utility revenues was attributable
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4> Electric Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> PPL Electric:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM"> Electric delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM"> PLR electric generation supply</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">37</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">73</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> PPL Global:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="43%" VALIGN="BOTTOM"> Electric delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">8</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">41</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4> Gas Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> PPL Gas Utilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="MIDDLE">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="MIDDLE">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="MIDDLE">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="MIDDLE">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="MIDDLE">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="MIDDLE">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase in utility operating revenues in both periods
  was primarily due to PPL Electric's higher revenues from providing electric
  generation supply as a PLR. During the past 12 months, about 80% to 90% of kWh
  in PPL Electric's service territory that had been served by alternate suppliers
  under the Customer Choice Act have returned to PPL Electric as the supplier.
  Because the bulk of the shoppers returned to PPL Electric as their supplier
  in July 2001, there should not be similar levels of increase for the remainder
  of the year.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The $8 million increase in PPL Global's revenue in the three
  months ended June 30, 2002, compared to the same period in 2001 was due to an
  increase in the volume of deliveries in Brazil, Chile and El Salvador.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Both PPL Gas Utilities' revenues and PPL Electric's delivery
  revenues were lower in the six months ended June 30, 2002, compared with the
  same period in 2001. The PPL Electric delivery revenue decrease was primarily
  due to lower sales volume of 3.3%, due to mild winter weather in the first quarter
  of 2002 and adverse economic conditions. The PPL Gas Utilities' decrease was
  primarily due to lower sales volumes of 1.3 million dekatherms, or 17%. This
  was also due to mild winter weather.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Unregulated Retail Electric and Gas</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in revenues from unregulated retail electric and
  gas operations was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> PPL EnergyPlus:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Retail electric</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(60</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(146</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Retail gas</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(62</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(152</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in electric generation supply in both periods
  was primarily due to lower sales volumes, reflecting the expiration of certain
  PPL EnergyPlus contracts with existing customers and an increased emphasis on
  competing in wholesale markets.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale Energy Marketing and Trading</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in revenues from wholesale energy marketing
  and trading activities was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Bilateral/Spot market</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(68</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(107</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Cost-based</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(14</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Gas &amp; oil</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(45</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(75</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(183</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(86</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(79</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(269</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in eastern U.S. markets in both periods was attributable
  to lower bilateral/spot market revenues primarily due to lower prices, partially
  offset by higher volumes. A decline in prices adversely impacted revenues by
  $138 million and $167 million for the three and six months ended June 30, 2002,
  compared to the same periods in 2001. Partially offsetting the price decline
  were increased volumes which had a positive effect on revenues of $70 million
  and $60 million for the three and six months ended June 30, 2002, compared to
  the same periods in 2001. This was the result of PPL EnergyPlus' increasing
  emphasis on competing in the wholesale markets. Also, contributing to the decrease
  was the expiration of capacity and energy agreements (cost-based) with BG&amp;E.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Gas and oil revenues decreased for the six months ended June
  30, 2002, compared to the same period in 2001. This decrease was primarily due
  to significantly lower prices in the first quarter of 2002, which impacted revenues
  by $28 million, and lower volumes with a revenue impact of $17 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in western U.S. markets in both periods was due
  to a decline in wholesale energy prices from the high prices experienced during
  the energy supply shortage in the western U.S. in the first half of 2001. In
  June 2001, the FERC instituted a series of price controls designed to mitigate
  (or cap) prices in the entire western U.S. as a result of the California energy
  crisis. These price controls have had the effect of significantly lowering spot
  and forward energy prices in the western U.S. See Note 8 to the Financial Statements
  for further discussion on the California situation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Fuel</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Fuel costs decreased by $40 million for the six months ended
  June 30, 2002, compared with the same period in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Electric fuel costs decreased by $24 million for the six months
  ended June 30, 2002, compared with the same period in 2001. After eliminating
  $3 million for PPL Wallingford, which began operations at the end of December
  2001 and $4 million for Griffith Energy, which began operations in January 2002,
  electric fuel costs decreased by $31 million in the first half of 2002. The
  decrease was attributed to $30 million in lower generation in the east's oil/gas
  fired stations due to reduced plant usage due to more favorable energy prices
  on the open market.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The cost of natural gas and propane decreased by $16 million
  for the six months ended June 30, 2002, compared with the same period in 2001.
  The decrease reflects $18 million in lower gas purchases due to milder weather
  and $8 million in lower off-system purchases due to a decrease in per unit gas
  prices, which was offset by $10 million in higher purchased gas costs.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL subsidiaries have entered into new coal supply agreements
  in 2002 that will provide a large percentage of coal requirements of their coal-fired
  generating plants. For PPL's eastern U.S. coal-fired generating plants, the
  new agreements, together with the existing agreements, secure 95%, 79%, 54%,
  34% and 20% of the expected coal requirements for 2002 through 2006. For PPL's
  western U.S. coal-fired generating plants, the new agreements, together with
  the existing agreements, secure 100% of the 2002 and 2003 requirements and 92%
  of the 2004 through 2006 expected coal requirements.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Purchases</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in energy purchases was attributable
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Domestic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(218</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(8</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> International</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(84</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(221</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="50%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="21%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decreases in the eastern U.S. markets were primarily due
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Gains on long-term forward<BR>
      &nbsp;&nbsp;transactions</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(60</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(62</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower wholesale electricity prices</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower wholesale electricity <BR>
      &nbsp;&nbsp;volumes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(19</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Gain on NUG contract buy-out</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower gas purchases for trading </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(49</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower gas purchases for retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Other - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(218</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Other Operation Expenses</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Other operation expenses decreased by $6 million for the three
  months ended June 30, 2002, compared to the same period in 2001. This decrease
  was primarily due to a $6 million delay in outage related activities at the
  Susquehanna generating station and $3 million of pension income in 2002 due
  to the adoption of double corridor accounting.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the second quarter of 2002, the workforce reduction
  (see &quot;Workforce Reduction&quot; discussion below) and union-negotiated
  benefit enhancements had a significant impact on PPL's primary pension plan,
  increasing the benefit obligation by $140 million. As a result of these changes,
  PPL remeasured its net periodic pension cost for that plan, which included recognition
  of asset losses totaling $153 million as of June 30, 2002 due to weakened financial
  markets. These combined events decreased the funded status of PPL's pension
  plan by approximately $290 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Through June 30, 2002, PPL recorded approximately $20 million
  of pension income. As a result of the events and remeasurements previously discussed,
  PPL expects to record approximately $9 million of pension income in the second
  half of 2002 for a full year total of $29 million. PPL expects to continue to
  record pension income in 2003, but at lower levels due to the above events and
  continued weakness in the financial markets.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Maintenance</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Maintenance expenses decreased by $12 million for the three
  months ended June 30, 2002, compared to the same period in 2001. This decrease
  was primarily due to $13 million of higher costs incurred in the second quarter
  of 2001 for the Susquehanna generating station refueling outage and additional
  overtime and contractor costs to improve plant equipment reliability.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Amortization of Recoverable Transition Costs</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Amortization of recoverable transition costs decreased by $23
  million for the six months ended June 30, 2002, compared with the same period
  in 2001. This decrease was primarily due to $19 million of lower ITC amortization
  in 2002 as a result of lower billed ITC revenues. Billed ITC revenues were lower
  as a result of the decrease in electricity delivery sales and lower ITC rates.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Taxes, Other Than Income</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Taxes, other than income, increased by $8 million and $18 million
  during the three and six months ended June 30, 2002, compared with the same
  periods in 2001. These changes were primarily due to an increase in the revenue-neutral
  reconciliation (RNR) tax component of the effective Pennsylvania gross receipts
  tax rate in January 2002. The RNR, which adjusts the base gross receipts tax
  rate of 4.4%, was enacted as part of the Customer Choice Act as a tax revenue
  replacement component to recoup losses to the Commonwealth of Pennsylvania that
  may result from the restructuring of the electric industry. Changes in gross
  receipts tax do not significantly affect earnings as they are substantially
  recovered through customer rate revenues.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Write-down of International Energy Projects</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 14 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 and a $94 million
  charge in the three months ended June 30, 2002 to reflect additional write-downs
  of PPL Global's investment in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Workforce Reduction</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 15 to the Financial Statements for information regarding
  the $74 million charge recorded in June 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Financing Costs</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Interest expense increased by $12 million for the three months
  ended June 30, 2002, compared with the same period in 2001. This increase was
  primarily the net effect of an $18 million increase in interest on long-term
  debt, partially offset by a $7 million decrease in interest on short-term debt.
  The increase in interest on long-term debt reflects the issuance of $800 million
  of senior secured bonds by PPL Electric, $500 million of senior unsecured notes
  by PPL Energy Supply and debt issued by PPL Global's consolidated affiliates.
  A portion of these proceeds was used to pay down commercial paper balances,
  which decreased short-term interest expense.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Dividends and distributions on preferred securities increased
  by $13 million for the six months ended June 30, 2002, compared with the same
  period in 2001. This increase was due to a $15 million increase in distributions
  on the PEPS Units, issued in the second quarter of 2001, offset by a $2 million
  decrease in preferred stock dividends due to redemptions and retirements of
  preferred stock and preferred securities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Income Taxes</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $31 million for the three months
  ended June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $70 million reduction in income
  taxes. This decrease was offset by $33 million of deferred income tax valuation
  allowances recorded on PPL's investment in CEMAR and a $4 million reduction
  in the amount of federal synfuel tax credits recognized.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $95 million for the six months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $126 million reduction in income
  taxes, offset by $33 million of deferred income tax valuation allowances recorded
  on PPL's investment in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Change in Accounting Principle</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL adopted SFAS 142, &quot;Goodwill and Other Intangible Assets,&quot;
  on January 1, 2002. SFAS 142 requires an annual impairment test of goodwill
  and other intangible assets that are not subject to amortization. PPL conducted
  a transition impairment analysis in the first quarter of 2002 and recorded a
  transition goodwill impairment charge of $150 million, which was reported as
  a &quot;Cumulative Effect of a Change in Accounting Principle&quot; on the Statement
  of Income. See Note 12 to the Financial Statements for additional information
  on the adoption of SFAS 142.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Financial Condition</u></b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Liquidity</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL had $193 million in cash and cash equivalents
  and $281 million of short-term debt. At December 31, 2001, PPL had $933 million
  in cash and cash equivalents and $118 million of short-term debt. The decrease
  in net cash position from December resulted from less cash provided from operating
  activities due primarily to the effect of $150 million of turbine cancellation
  payments, a $50 million payment to terminate the outstanding liability under
  an energy purchase contract with a NUG, mild weather and seasonal cash outflows
  that normally occur in the first half of each year (such as the prepayment of
  the Pennsylvania gross receipts tax). In addition, PPL incurred one-time acquisition
  costs of approximately $105 million for certain generation equipment it purchased
  from two lessor trusts in the first half of 2002, and $151 million of additional
  project development costs. PPL and its subsidiaries also retired $291 million
  of securities in the first half of 2002.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In the second quarter of 2002, PPL filed a universal shelf
  registration statement with the SEC for the issuance of up to $950 million in
  various securities. Subject to market conditions, PPL currently plans to issue
  approximately $200 million of common stock and a lesser amount of equity-linked
  securities during the third quarter of 2002 under this registration statement.
  PPL expects to use the proceeds of these issuances to retire other securities,
  for general corporate purposes, including the repayment of short-term debt,
  and to provide liquidity.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Capital Funding currently has outstanding 7.70% Reset Put
  Securities due 2007 in the aggregate principal amount of $200 million, which
  are subject to remarketing in the fourth quarter of 2002. If the securities
  are remarketed, their term would be extended for an additional five years to
  the final maturity date in 2007, and the interest rate on the securities would
  be reset at a rate equal to 6.115% plus a credit spread based on PPL Capital
  Funding's credit profile at the time of remarketing. To the extent that the
  actual five-year U.S. Treasury rate (the &quot;Treasury Rate&quot;), at the
  time of remarketing is less than 6.115%, PPL Capital Funding would incur an
  effective incremental cost of funds over the subsequent five-year period approximately
  equal to the difference between 6.115% and the actual Treasury Rate. On August
  6, 2002, the Treasury Rate was 3.26%. If the remarketing fails, which could
  occur due to a number of reasons beyond PPL Capital Funding's control, or if
  PPL Capital Funding elects not to remarket these securities, PPL would incur
  a pre-tax charge to earnings during the third or fourth quarter of 2002. Based
  on the Treasury Rate on August 6, 2002, the amount of this pre-tax charge would
  be approximately $25 million. However, at this time, PPL cannot predict whether
  it will incur a charge in 2002, or if it does incur a charge, the amount of
  such charge.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For additional information on PPL's liquidity, see Item 7,
  &quot;Review of the Financial Condition and Results of Operations,&quot; in
  PPL's Annual Report to the SEC on Form 10-K for the year ended December 31,
  2001.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Marketing and Trading Activities</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Through PPL EnergyPlus, PPL sells and purchases, and PPL Montana
  sells, physical energy at the wholesale level under FERC market-based tariffs
  throughout the U.S. Because of the generating assets PPL owns or controls, the
  majority of PPL's energy transactions qualify for accrual or hedge accounting.
  In addition, PPL enters into financial contracts to hedge the price risk associated
  with its electricity, gas and oil positions. At June 30, 2002, PPL had net assets
  of $20 million related to its energy hedging activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Certain transactions, however, meet the definition of trading
  activities as defined by EITF 98-10, &quot;Accounting for Contracts Involved
  in Energy Trading and Risk Management Activities.&quot; These trading activities
  include physical and financial energy contracts, such as forwards, futures,
  options, and swaps that do not qualify for hedge accounting or were entered
  into to profit from market fluctuations. Trading activities also include certain
  transactions for capacity and ancillary products, such as transmission congestion
  credits (TCCs) and fixed transmission rights (FTRs).</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In June 2002, the FASB's EITF adopted the position in EITF
  02-3, which addresses accounting for contracts involved in trading and risk
  management activities, that revenues from energy trading contracts must be reported
  &quot;net&quot; in financial statements for periods ending after June 30, 2002.
  The EITF requires that all comparative financial statements should be restated
  (reclassified) to conform to this consensus. Although this new accounting guidance
  will require changes to certain line items in the financial statements, it will
  not impact PPL's overall financial position or earnings. Rather, the portion
  of PPL's revenues from wholesale energy marketing and trading will be netted
  against expenses from energy purchases that represent energy trading activities.
  PPL has not yet quantified the financial statement impact from this revised
  guidance.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL's trading contracts mature at various times through 2006.
  The following chart sets forth the gains/(losses) in the net fair market value
  of PPL's trading contracts for the following periods (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three</b><BR>
        <B>Months</B><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six</b><BR>
        <B>Months</B><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="61%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="15%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2> Fair value of contracts outstanding
      at the<BR>
      &nbsp;&nbsp;beginning of the period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">
      <div align="right">$</div>
    </TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2> Contracts realized or otherwise
      settled <BR>
      &nbsp;&nbsp;during the period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2> Fair value of new contracts when
      entered<BR>
      &nbsp;&nbsp;into during the period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2> Other changes in fair values</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">9</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="61%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="15%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=2> Fair value of contracts outstanding
      at the <BR>
      &nbsp;&nbsp;end of the period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">
      <div align="right">$</div>
    </TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="61%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="15%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the six months ended June 30, 2002, PPL reversed net
  gains of approximately $1 million related to contracts entered into prior to
  January 1, 2002. This amount does not reflect intra-year contracts that were
  entered into and settled during the period. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As of June 30, 2002, the net loss on PPL's trading activities
  expected to be recognized in earnings during the next three months is approximately
  $3 million. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following chart segregates estimated fair values of PPL's
  trading portfolio at June 30, 2002 based on whether the fair values are determined
  by quoted market prices or other more subjective means (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=97%>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="76%" VALIGN="BOTTOM" COLSPAN=19>
      <div align="center"><B>Fair Value of Contracts at June 30, 2002</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="76%" VALIGN="BOTTOM" COLSPAN=19>
      <div align="center"><B>Gains/(Losses)</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center">Maturity<BR>
        less than<BR>
        1 year</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center">Maturity<BR>
        1-3 years</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center">Maturity<BR>
        4-5 years</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center">Maturity<BR>
        in excess <BR>
        of 5 years</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center">Total fair <BR>
        value</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="22%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> <B>Source of Fair Value</B></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM"> Prices actively <BR>
      &nbsp;&nbsp;quoted</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM"> Prices provided by<BR>
      &nbsp;&nbsp;other external <BR>
      &nbsp;&nbsp; sources</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM"> Prices based on <BR>
      &nbsp;&nbsp;models and<BR>
      &nbsp;&nbsp;other valuation <BR>
      &nbsp;&nbsp;methods </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="22%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="22%" VALIGN="BOTTOM"> Fair value of <BR>
      &nbsp;&nbsp;contracts <BR>
      &nbsp;&nbsp;outstanding at <BR>
      &nbsp;&nbsp;the end of the <BR>
      &nbsp;&nbsp;period </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="22%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For additional information on PPL's Energy Marketing and Trading
  Activities, see Item 7, &quot;Review of the Financial Condition and Results
  of Operations,&quot; in PPL's Annual Report to the SEC on Form 10-K for the
  year ended December 31, 2001.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Related Party Transactions</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL is not aware of any material ownership interests or operating
  responsibility by senior management of PPL or its subsidiaries in outside partnerships,
  including leasing transactions with special-purpose entities, or other entities
  doing business with PPL.</P>
<p align="justify"><b>Acquisitions and Development</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">From time-to-time, PPL and its subsidiaries are involved in
  negotiations with third parties regarding acquisitions, joint ventures and other
  arrangements which may or may not result in definitive agreements. See Note
  7 to the Financial Statements for information regarding recent acquisitions
  and development activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. Subsequently, the Sundance, University Park, Edgewood
  and Shoreham projects began commercial operation, which added 1,150 MW to PPL's
  generation capacity.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Global is continuously reexamining development projects
  based on market conditions and other factors to determine whether to proceed
  with these projects, sell them, cancel them, expand them, execute tolling agreements
  or pursue other opportunities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Financing Activities</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 6 to the Financial Statements for a discussion of
  financing activities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Cash Flow</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Cash and cash equivalents decreased by $422 million more during
  the six months ended June 30, 2002, compared with the same period in 2001. The
  reasons for this change were:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">a $178 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayment of Pennsylvania
      gross receipts tax, $150 million of turbine cancellation payments, and a
      $50 million payment to terminate an energy purchase contract with a NUG;</P>
  <li>
    <p align="justify">a $333 million increase in cash used in investing activities,
      in part due to an increase of $107 million in capital expenditures. Also,
      there were no repayments of loans by affiliated companies in 2002; and</P>
</UL>
<UL>
  <li>
    <p align="justify">an $89 million decrease in cash used in financing activities
      primarily due to a $59 million reduction in retirements of long-term debt
      and preferred securities.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Environmental Matters</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 8 to the Financial Statements for a discussion of
  environmental matters.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Critical Accounting Policies</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL's financial condition and results of operations are necessarily
  impacted by the methods, assumptions and estimates used in the application of
  critical accounting policies. The following accounting policies are particularly
  important to the financial condition or results of operations of PPL and require
  estimates or other judgments of matters inherently uncertain: price risk management,
  pension and other postretirement benefits, asset impairment, leasing and contingencies.
  See Item 7, &quot;Review of the Financial Condition and Results of Operations,&quot;
  in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31,
  2001 for a discussion of each critical accounting policy. For an additional
  discussion of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements and &quot;Other Operation
  Expenses&quot; in Results of Operations. For an additional discussion of the
  impact of the CEMAR write-down on asset impairment, see Note 14 to the Financial
  Statements.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM2ES"></A>PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES</B><BR>
</P>
<p align="center"><b><u>Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following analysis of the financial condition and results
  of operations of PPL Energy Supply is abbreviated, as PPL Energy Supply meets
  the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q.
  This discussion should be read in conjunction with the Financial Statements
  and Combined Notes to Condensed Consolidated Financial Statements included in
  Item 1 above, and with the section entitled &quot;Review of the Financial Condition
  and Results of Operations&quot; in PPL Energy Supply's Annual Report to the
  SEC on Form 10-K for the year ended December 31, 2001. Terms and abbreviations
  appearing in Management's Discussion and Analysis of Financial Condition and
  Results of Operations are explained in the glossary.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Earnings</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net income in 2002 was impacted by three unusual items as shown
  below. Refer to specific Notes to the Financial Statements for discussion of
  these items.</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> (Millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income - actual</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">9</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Unusual items (net of<BR>
      &nbsp;&nbsp;tax):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> SFAS 142 goodwill<BR>
      &nbsp;&nbsp;impairment <BR>
      &nbsp;&nbsp;(Note 12)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(150</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> Write-down of <BR>
      &nbsp;&nbsp;investment in <BR>
      &nbsp;&nbsp;CEMAR (Note 14)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(94</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(98</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> Workforce reduction<BR>
      &nbsp;&nbsp;(Note 15)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(23</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(23</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income from core<BR>
      &nbsp;&nbsp;operations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">126</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">124</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">275</div>
    </TD>
    <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">325</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Core earnings increased by $2 million for the three months
  ended June 30, 2002, compared to the same period in 2001. Core earnings decreased
  by $50 million for the six months ended June 30, 2002, compared to the same
  period in 2001. These changes in core earnings were primarily due to (after-tax
  earnings impacts noted in millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower wholesale energy margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(26</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower unregulated retail energy
      <BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(11</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(33</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> PPL Global earnings (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Earnings from synfuel<BR>
      &nbsp;&nbsp;projects (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Higher regulated retail energy<BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">30</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">61</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Lower transmission and <BR>
      &nbsp;&nbsp;depreciation expenses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">17</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Other - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(50</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP"> (a)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=9> The increase for the three months
      ended was due to the discontinuance of goodwill amortization and lower development
      spending. The decrease for the six months ended was due to higher interest
      on Latin American debt and lower operating results at equity affiliates,
      offset by the discontinuance of goodwill amortization and a favorable termination
      settlement on a cancelled domestic development project.</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP"> (b)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=9> The decrease for the three months
      ended was due to $4 million less in tax credits. (The second quarter of
      2001 included additional tax credits which had been deferred pending the
      receipt of a private letter ruling from the IRS.) The increase for the six
      months ended was due to higher sales volumes.</TD>
  </TR>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply expects that the current low level of wholesale
  energy prices will adversely impact margins for the remainder of this year,
  and could continue to do so beyond 2002. Based upon current energy price levels,
  there is a risk that PPL Energy Supply may be unable to recover its investment
  in new gas-fired generation facilities. Under generally accepted accounting
  principles, PPL Energy Supply does not believe that there is an impairment charge
  to be recorded at this time. PPL Energy Supply is unable to predict the ultimate
  earnings impact of this issue, based upon energy price levels, applicable accounting
  rules and other factors, but such impact may be material. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply also expects that it will incur quarterly
  operating losses from CEMAR until such time as it exits its investment in CEMAR.
  See Note 14 to the Financial Statements for information on PPL Global's investment
  in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Domestic Energy Margins</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following tables provide summary data regarding changes
  in domestic gross margins of wholesale and retail energy for the three and six
  months ended June 30, 2002, compared with the same periods in 2001 (millions
  of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5> Wholesale energy marketing and<BR>
      &nbsp;&nbsp;trading revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(47</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(200</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5> Unregulated retail electric and<BR>
      &nbsp;&nbsp;gas revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(61</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(152</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Total revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(108</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(352</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5> Fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5> Purchased power</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(97</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(228</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5> Other cost adjustments (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM" COLSPAN=3> Total cost of sales</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(96</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(251</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="42%" VALIGN="BOTTOM"> Domestic gross energy <BR>
      &nbsp;&nbsp;margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(101</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=5>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="20%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="TOP" COLSPAN=3> (a)</TD>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=10> Adjusted to exclude the impact of
      any costs not associated with domestic energy margins, in particular, costs
      related to the international operations of PPL Global.</TD>
  </TR>
</TABLE>
<p align="justify"><u>Changes in Gross Domestic Energy Margins By Customer:</U>
</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Wholesale - Eastern U.S.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(44</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Wholesale - Western U.S.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(20</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(106</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Unregulated retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(19</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=3> Regulated retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Domestic gross energy margins</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(101</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Gross margin calculations are dependent on the allocation of
  fuel and purchased power costs to the customer segments. That allocation is
  based on hourly MWh consumption levels compared to hourly MWh supply costs.
  Any costs specific to a customer segment are charged to that customer segment.</P>
<p align="justify"></P>

<P ALIGN="JUSTIFY"><u>Wholesale - Eastern U.S.</u></P>

<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">East wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  lower wholesale prices. Average wholesale prices for the second quarter 2002
  were $16/MWh lower than those realized in the same period in 2001. As a result,
  wholesale revenues were lower by $17 million, despite a 36% increase in wholesale
  sales. Because of the higher levels of sales, costs were $7 million higher.
  Average wholesale prices for the year-to-date June 30, 2002 were $12/MWh lower
  than those realized for the same period in 2001, thereby providing $106 million
  less in revenues. Partially offsetting this decline were higher volumes of sales,
  which added $36 million to revenues and a buyout of a NUG contract, which reduced
  power purchases by $25 million.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale - Western U.S.</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">West wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  significantly lower wholesale prices. Average wholesale prices for the three
  and six months ended June 30, 2002, were $43/MWh and $85/MWh lower than those
  realized for the same periods in 2001. Lower wholesale prices for the three
  and six months ended June 30, 2002 account for about $76 million and $248 million
  of margin reductions. These reductions were offset by higher volumes of $56
  million and $142 million, due in part to the commercial operations of Griffith
  Energy.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Unregulated Retail</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Unregulated retail margins were lower for the three and six
  months ended June 30, 2002, compared to the same periods in 2001. These declines
  were primarily due to lower revenues resulting from the expiration of contracts
  which were not renewed in the East and to significantly lower retail prices
  in the West. However, the declines were partially offset by an increase in the
  number of customers. For the three and six months ended June 30, 2002, lower
  prices account for $18 million and $57 million of margin reductions.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Regulated Retail</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Regulated retail margins in the East were higher for the three
  and six months ended June 30, 2002, compared to the same periods in 2001. For
  the three months ended June 30, 2002, increased sales volumes improved margins
  by $11 million. Higher average sales prices, caused by changes in usage among
  customer classes, improved margins by $13 million. Finally, lower supply costs
  in 2002, due to lower purchased power costs, lower fuel costs and increased
  generating unit availability, improved margins by $27 million. For the six months
  ended June 30, 2002, increased sales volumes improved margins by $25 million.
  Higher average prices, caused by changes in usage among customer classes, improved
  margins by $25 million. Finally, lower supply costs in 2002, due to lower purchased
  power costs, lower fuel costs and increased generating unit availability, improved
  margins by $52 million.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Revenues</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale Energy Marketing and Trading</U> </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in revenues from wholesale energy marketing and
  trading activities was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Bilateral/Spot market</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(68</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(107</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Cost-based</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(14</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Gas &amp; oil</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(45</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(75</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(183</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(86</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(81</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(269</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="50%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="21%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in eastern U.S. markets in both periods was attributable
  to lower bilateral/spot market revenues primarily due to lower prices, partially
  offset by higher volumes. A decline in prices adversely impacted revenues by
  $138 million and $167 million for the three and six months ended June 30, 2002,
  compared to the same periods in 2001. Partially offsetting the price decline
  were increased volumes which had a positive effect on revenues of $70 million
  and $60 million for the three and six months ended June 30, 2002, compared to
  the same periods in 2001. This was the result of PPL EnergyPlus' increasing
  emphasis on competing in the wholesale markets. Also, contributing to the decrease
  was the expiration of capacity and energy agreements (cost-based) with BG&amp;E.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Gas and oil revenues in eastern U.S. markets decreased for
  the six months ended June 30, 2002, compared to the same period in 2001. This
  decrease was primarily due to significantly lower prices in the first quarter
  of 2002, which impacted revenues by $28 million, and lower volumes with a revenue
  impact of $17 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in western U.S. markets in both periods was due
  to a decline in wholesale energy prices from the high prices experienced during
  the energy supply shortage in the western U.S. in the first half of 2001. In
  June 2001, the FERC instituted a series of price controls designed to mitigate
  (or cap) prices in the entire western U.S. as a result of the California energy
  crisis. These price controls have had the effect of significantly lowering spot
  and forward energy prices in the western U.S. See Note 8 to the Financial Statements
  for further discussion on the California situation. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale Energy Marketing to Affiliates</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in revenues from wholesale energy marketing
  activities to affiliates was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="49%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> Sales to PPL Electric (PLR)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">39</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">74</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2> Sales to PPL Gas Utilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">34</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">69</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL EnergyPlus has a power sales agreement to supply PPL Electric's
  entire PLR load, so PPL Energy Supply's wholesale electric sales to affiliate
  are a direct reflection of PPL Electric's success as a PLR. During the past
  12 months, about 80% to 90% of kWh in PPL Electric's service territory that
  had been served by alternate suppliers under the Customer Choice Act have returned
  to PPL Electric as the supplier. Therefore, there was a corresponding increase
  in PPL Energy Supply's wholesale sales to PPL Electric. Because the bulk of
  the shoppers returned to PPL Electric as their supplier in July 2001, there
  should not be similar levels of increase for the remainder of the year.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Utility</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply's utility operations consist of the delivery
  of electricity by PPL Global subsidiaries. The $8 million increase in utility
  revenue in the three months ended June 30, 2002, compared to the same period
  in 2001 was due to an increase in the volume of deliveries in Brazil, Chile
  and El Salvador.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Unregulated Retail Electric and Gas</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in revenues from unregulated retail electric and
  gas operations was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=2> &nbsp; <B>&nbsp;</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=2> Retail Electric </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(60</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(146</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=2> Retail Gas </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="50%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(61</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="19%" VALIGN="BOTTOM">
      <div align="right">(152</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="47%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="23%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in operating revenues from unregulated retail
  electric operations was primarily due to the expiration of certain PPL EnergyPlus
  contracts with existing customers and increased emphasis on competing in wholesale
  markets.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL EnergyPlus experienced lower retail gas revenues in the
  six months ended June 30, 2002, compared with the same period in 2001, primarily
  due to milder weather.</P>
<P ALIGN="JUSTIFY"></P>
<p><b>Fuel</b></p>
<P ALIGN="JUSTIFY">Fuel costs decreased by $24 million in the six months ended
  June 30, 2002, compared with the same period in 2001. After eliminating $3 million
  for PPL Wallingford, which began operations at the end of December 2001, and
  $4 million for Griffith Energy, which began operations in January 2002, fuel
  costs decreased by $31 million in the first half of 2002. The decrease was attributed
  to $30 million in lower generation in the east's oil/gas fired stations due
  to reduced plant usage due to more favorable energy prices on the open market.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply subsidiaries have entered into new coal supply
  agreements in 2002 that will provide a large percentage of coal requirements
  of their coal-fired generating plants. For PPL Energy Supply's eastern U.S.
  coal-fired generating plants, the new agreements, together with the existing
  agreements, secure 95%, 79%, 54%, 34% and 20% of the expected coal requirements
  for 2002 through 2006. For PPL Energy Supply's western U.S. coal-fired generating
  plants, the new agreements, together with the existing agreements, secure 100%
  of the 2002 and 2003 requirements and 92% of the 2004 through 2006 expected
  coal requirements.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Purchases</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in energy purchases was attributed
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Domestic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(214</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="45%" VALIGN="BOTTOM"> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> International</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(84</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(216</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="48%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="22%" valign="BOTTOM" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decreases in the eastern U.S. markets were primarily due
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Gains on long-term forward<BR>
      &nbsp;&nbsp;transactions</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(60</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(62</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower wholesale electricity prices</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower wholesale electricity <BR>
      &nbsp;&nbsp;volumes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(28</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Gain on NUG contract buy-out</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower gas purchases for trading </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(49</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower gas purchases for retail</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Other - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">8</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(9</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(214</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Purchases from Affiliates</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in energy purchases from affiliates was attributable
  to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Purchases of gas</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(9</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2> Purchases of NUG electricity</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(13</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in gas purchases from PPL Gas Utilities was due
  to a decrease in gas trading activities by PPL EnergyPlus. Purchases of NUG
  energy are the result of PPL EnergyPlus' contract to buy from PPL Electric the
  electricity that PPL Electric purchases under contracts with NUGs. (See Note
  9 to the Financial Statements for a discussion of the NUG purchase contract.)
  With the termination in February 2002 of its NUG contract with Foster Wheeler,
  PPL Electric purchased less NUG energy, and therefore had less electricity to
  sell to PPL EnergyPlus.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Other Operation and Maintenance</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Other operation and maintenance expenses decreased by $18 million
  for the three months ended June 30, 2002, compared to the same period in 2001.
  The decrease was primarily due to $22 million of lower costs at the Susquehanna
  generating station. Of this, $13 million were higher costs incurred in the second
  quarter of 2001 for the refueling outage and additional overtime and contractor
  costs to improve plant equipment reliability and $6 million resulted from a
  delay in outage related activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the second quarter of 2002, the workforce reduction,
  (see &quot;Workforce Reduction&quot; discussion below) and union negotiated
  benefit enhancements had a significant impact on PPL's primary pension plan,
  increasing the benefit obligation by $140 million. As a result of these changes,
  PPL remeasured its net periodic pension cost for that plan, which included recognition
  of asset losses totaling $153 million as of June 30, 2002 due to weakened financial
  markets. These combined events decreased the funded status of PPL's pension
  plan by approximately $290 million. PPL Energy Supply participates in that plan
  and is allocated approximately 35% of the obligations of that plan.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Through June 30, 2002, PPL Energy Supply was allocated approximately
  $7 million of pension income. As a result of the events and remeasurements previously
  discussed, PPL Energy Supply will be allocated approximately $3 million of pension
  income in the second half of 2002 for a full year total of $10 million. PPL
  expects to continue to record pension income in 2003, but at lower levels due
  to the above events and continued weakness in the financial markets.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Transmission </b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Transmission expense decreased by $9 million for the three
  months ended June 30, 2002, compared with the same period in 2001. The decrease
  was attributed to $5 million in lower wholesale energy purchases needed to meet
  wholesale trading activity and $3 million in lower energy purchases due to a
  decrease in retail sales by PPL EnergyPlus.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Transmission expense decreased by $21 million for the six months
  ended June 30, 2002, compared with the same period in 2001. The decrease was
  attributed to $11 million in lower wholesale energy purchases needed to meet
  wholesale trading activity and $8 million in lower energy purchases due to a
  decrease in retail sales by PPL EnergyPlus. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Depreciation</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Depreciation decreased by $9 million for the six months ended
  June 30, 2002, compared to the same period in 2001. This decrease was primarily
  the result of:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">$8 million due to the extension of the depreciable life
      of the Susquehanna station by 20 years;</P>
  <li>
    <p align="justify">$4 million due to PPL Global's write-down of CEMAR assets
      in 2001, resulting in no depreciation on these assets in 2002; and</P>
  <li>
    <p align="justify">$5 million due to a decrease in PPL Global's goodwill amortization,
      which is no longer being recorded effective January 1, 2002.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">These decreases were partially offset by an increase of $7
  million due to depreciation of the PPL Wallingford facility, which began in
  January 2002, and higher depreciation at several facilities due to plant upgrades
  and installation of SCR technology.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Write-down of International Energy Projects</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 14 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 and a $94 million
  charge in the three months ended June 30, 2002 to reflect additional write-downs
  of PPL Global's investment in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Workforce Reduction</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 15 to the Financial Statements for information regarding
  the $40 million charge recorded in June 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Other Income - net</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Other income decreased by $11 million for the six months ended
  June 30, 2002, compared with the same period in 2001. The primary reasons for
  this decrease were an $8 million decrease in affiliated interest income, which
  was a result of less intercompany loans to affiliates in 2002, and a decrease
  of $5 million in miscellaneous other income due to lower miscellaneous income
  from PPL Global affiliates.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Interest Expense</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Total interest expense increased by $14 million and $9 million
  for the three and six months ended June 30, 2002, compared with the same periods
  in 2001. The source of borrowing has changed between the two years. In 2001,
  the interest was on short-term borrowings, primarily with affiliated companies.
  Interest expense in 2002 reflects long-term debt issuances. PPL Energy Supply
  issued $500 million of senior unsecured notes in October 2001 and PPL Global
  subsidiaries issued long-term debt in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Income Taxes</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $9 million for the three months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $48 million reduction in income
  taxes. This decrease was offset by $33 million of deferred income tax valuation
  allowances recorded on the PPL Energy Supply's investment in CEMAR and a $4
  million reduction in the amount of federal synfuel tax credits recognized.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $54 million for the six months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $91 million reduction in income
  taxes, offset by $33 million of deferred income tax valuation allowances recorded
  on PPL Energy Supply's investment in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY"><b>Change in Accounting Principle</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply adopted SFAS 142, &quot;Goodwill and Other
  Intangible Assets,&quot; on January 1, 2002. SFAS 142 requires an annual impairment
  test of goodwill and other intangible assets that are not subject to amortization.
  PPL Energy Supply conducted a transition impairment analysis in the first quarter
  of 2002 and recorded a transition goodwill impairment charge of $150 million,
  which was reported as a &quot;Cumulative Effect of a Change in Accounting Principle&quot;
  on the Statement of Income. See Note 12 to the Financial Statements for additional
  information on the adoption of SFAS 142.</P>
<p><b>Acquisitions and Development</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">From time-to-time, PPL Energy Supply and its subsidiaries are
  involved in negotiations with third parties regarding acquisitions, joint ventures
  and other arrangements which may or may not result in definitive agreements.
  See Note 7 to the Financial Statements for information regarding recent acquisitions
  and development activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. Subsequently, the Sundance, University Park, Edgewood
  and Shoreham projects began commercial operation, which added 1,150 MW to PPL's
  generation capacity.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Global is continuously reexamining development projects
  based on market conditions and other factors to determine whether to proceed
  with these projects, sell them, cancel them, expand them, execute tolling agreements
  or pursue other opportunities.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Critical Accounting Policies</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. The following accounting policies
  are particularly important to the financial condition or results of operations
  of PPL Energy Supply, and require estimates or other judgments of matters inherently
  uncertain: price risk management, pension and other postretirement benefits,
  asset impairment, leasing and contingencies. See Item 7, &quot;Review of the
  Financial Condition and Results of Operations,&quot; in PPL Energy Supply's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy. For an additional discussion
  of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements and &quot;Other Operation
  and Maintenance&quot; in Results of Operations. For an additional discussion
  of the impact of the CEMAR write-down on asset impairment, see Note 14 to the
  Financial Statements.</P>
  <br><hr noshade><br>
<p align="center"><b><A NAME="ITEM2EU"></A>PPL ELECTRIC UTILITIES CORPORATION
  AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">This discussion should be read in conjunction with the Financial
  Statements and Combined Notes to Condensed Consolidated Financial Statements
  included in Item 1 above, and with the section entitled &quot;Review of the
  Financial Condition and Results of Operations&quot; in PPL Electric's Annual
  Report to the SEC on Form 10-K for the year ended December 31, 2001. Terms and
  abbreviations appearing in Management's Discussion and Analysis of Financial
  Condition and Results of Operations are explained in the glossary.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Earnings</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net income in 2002 was impacted by the workforce reduction
  charge, as described in Note 15 to the Financial Statements.</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended June 30,</B>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="14%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> (Millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income (loss) -<BR>
      &nbsp;&nbsp;actual</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(8</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">21</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Unusual item (net of tax):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="32%" VALIGN="BOTTOM"> Workforce reduction<BR>
      &nbsp;&nbsp;(Note 15)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">(19</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(19</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=2> Net income from core<BR>
      &nbsp;&nbsp;operations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="12%" VALIGN="BOTTOM">
      <div align="right">11</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">21</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="37%" colspan=2>&nbsp;</td>
    <td width="14%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="13%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decline in core earnings of $10 million and $24 million
  for the three and six months ended June 30, 2002, compared to the same periods
  in 2001, was primarily due to (after-tax earnings impacts noted in millions
  of dollars):</P>

<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Higher energy purchase costs<BR>
      &nbsp;&nbsp;including amortization of <BR>
      &nbsp;&nbsp;up-front payment on PLR<BR>
      &nbsp;&nbsp;contract</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> PJM ancillary service expense</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower delivery revenues (net of<BR>
      &nbsp;&nbsp;CTC/ITC amortization)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Lower other operating costs</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">3</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">1</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM"> Other - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(10</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="22%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Revenues</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Retail Electric</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in revenues from retail electric operations
  was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=90%>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><B>June 30, 2002 vs. June 30, 2001</b>
        <hr noshade>
      </div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Three Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>Six Months</b><BR>
        <B>Ended</B></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="48%" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="1%">&nbsp;</TD>
    <TD colspan="2">
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Electric delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> PLR electric generation supply</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">37</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">73</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="48%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">37</div>
    </TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="20%" VALIGN="BOTTOM">
      <div align="right">44</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="48%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="3%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase in operating revenues from retail electric operations
  in both periods was primarily due to higher revenues from providing electric
  generation supply as a PLR. During the past 12 months, about 80% to 90% of kWh
  in PPL Electric's service territory that had been served by alternate suppliers
  under the Customer Choice Act have returned to PPL Electric as the supplier.
  Because the bulk of the shoppers returned to PPL Electric as their supplier
  in July of 2001, there should not be similar levels of increase for the remainder
  of the year.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Revenues from delivery of electricity decreased for the six
  months ended June 30, 2002, compared to the same period in 2001. This reflected
  a 3.3% decrease in deliveries of electricity, primarily due to milder winter
  weather in the first quarter of 2002 and adverse economic conditions.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale Electric to Affiliate</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric has a contract to sell to PPL EnergyPlus the electricity
  that PPL Electric purchases under contracts with NUGs. With the termination
  in February 2002 of its NUG contract with Foster Wheeler, PPL Electric purchased
  less NUG energy, and therefore had less electricity to sell to PPL EnergyPlus.</P>
<p align="justify"><b>Energy Purchases</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Energy purchases increased by $7 million for the three months
  ended June 30, 2002, compared with the same period in 2001. This increase includes
  $10 million in service costs from PJM needed to support the increase in return
  of customers to PPL Electric as their PLR. Effective January 1, 2002, PPL Electric
  began incurring the cost of certain ancillary services in connection with its
  power supply contract with PPL EnergyPlus. (See Note 9 to the Financial Statements
  for a discussion of the power supply contract.) These costs were offset by a
  $4 million decrease in NUG purchases due to the termination of an energy purchase
  contract with a NUG in February 2002.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Energy purchases increased by $16 million for the six months
  ended June 30, 2002, compared with the same period in 2001. This increase includes
  $22 million in service costs from PJM needed to support the increase in return
  of customers to PPL Electric as their PLR. These costs were offset by a $6 million
  decrease in NUG purchases due to the termination of an energy purchase contract
  with a NUG in February 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Purchases from Affiliate</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Energy purchases from affiliate increased by $39 million and
  $74 million for the three and six months ended June 30, 2002, compared with
  the same periods in 2001. These increases reflect higher purchases under the
  power supply contract with PPL EnergyPlus needed to support a higher PLR load,
  due to the return of customers to PPL Electric as their PLR. See Note 9 to the
  Financial Statements for a discussion of the power supply contract.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Amortization of Recoverable Transition Costs</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Amortization of recoverable transition costs decreased by $23
  million for the six months ended June 30, 2002, compared with the same period
  in 2001. This decrease was primarily due to $19 million of lower ITC amortization
  in 2002 as a result of lower billed ITC revenues. Billed ITC revenues were lower
  as a result of the decrease in electricity delivery sales and lower ITC rates.
</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Taxes, Other Than Income</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Taxes other than income increased by $11 million and $24 million
  during the three and six months ended June 30, 2002, compared to the same periods
  in 2001. These changes were primarily due to an increase in the revenue-neutral
  reconciliation (RNR) tax component of the effective Pennsylvania gross receipts
  tax rate in January 2002. The RNR, which adjusts the base gross receipts tax
  rate of 4.4%, was enacted as part of the Customer Choice Act as a tax revenue
  replacement component to recoup losses to the Commonwealth of Pennsylvania that
  may result from the restructuring of the electric industry. Changes in gross
  receipts tax do not significantly affect earnings, as they are substantially
  recovered through customer rate revenues.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Workforce Reduction</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 15 to the Financial Statements for information regarding
  the $33 million charge recorded in June 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Income Taxes</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $22 and $33 million for the three
  and six months ended June 30, 2002, compared to the same periods in 2001, as
  a result of lower pre-tax book income.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Financial Condition</u></b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Liquidity</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Electric had $35 million of cash and
  cash equivalents and no short-term debt. At December 31, 2001, PPL Electric
  had $79 million of cash and cash equivalents and no short-term debt. The decrease
  in cash position from December resulted from the retirement of $271 million
  of long-term debt and capital expenditures of $86 million, partially offset
  by a $270 million repayment of a notes receivable from an affiliate and cash
  provided from operating activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For additional information on PPL Electric's liquidity, see
  Item 7, &quot;Review of the Financial Condition and Results of Operations,&quot;
  in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December
  31, 2001.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Related Party Transactions</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric is not aware of any material ownership interests
  or operating responsibility by senior management of PPL Electric or its subsidiaries
  in outside partnerships or other entities doing business with PPL Electric.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">For additional information on related party transactions, see
  Note 9 to the Financial Statements.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Cash Flow</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Cash and cash equivalents decreased by $218 million less during
  the six months ended June 30, 2002, compared with the same period in 2001. The
  reasons for this change were:</P>
<UL>
  <li>
    <p align="justify">a $73 million decrease in cash provided by operating activities,
      primarily due to lower net income, and payment of collateral to PPL EnergyPlus
      under the power supply contract;</P>
</UL>
<UL>
  <li>
    <p align="justify">a $192 million increase in cash provided by investing activities,
      primarily due to the repayment of notes receivable from parent and affiliates
      which was $200 million greater during the six months ended June 30, 2002;
      and</P>
  <li>
    <p align="justify">a $99 million decrease in cash used in financing activities,
      primarily due to a $198 million reduction in retirements of long-term and
      short-term debt. These decreases were offset by the retirement of $100 million
      of preferred securities.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Environmental Matters</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 8 to the Financial Statements for a discussion of
  environmental matters.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Critical Accounting Policies</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. Accounting policies for pensions
  and other postretirement benefits and for contingencies are particularly important
  to the financial condition or results of operations of PPL Electric, and require
  estimates or other judgments of matters inherently uncertain. See Item 7, &quot;Review
  of the Financial Condition and Results of Operations,&quot; in PPL Electric's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy. For an additional discussion
  of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements.</P>
  <br><hr noshade><br>
<p align="center"><b><A NAME="ITEM2MONTANA"></A>PPL MONTANA, LLC AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following analysis of the results of operations and financial
  condition of PPL Montana is abbreviated as PPL Montana meets the conditions
  set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q. This discussion
  should be read in conjunction with the Financial Statements and Combined Notes
  to Condensed Consolidated Financial Statements included in Item 1 above, and
  with the section entitled &quot;Review of the Financial Condition and Results
  of Operations&quot; in PPL Montana's Annual Report to the SEC on Form 10-K for
  the year ended December 31, 2001. Terms and abbreviations appearing in Management's
  Discussion and Analysis of Financial Condition and Results of Operations are
  explained in the glossary.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Results of Operations</u></b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the six months ended June 30, 2002,
  to the comparable period in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Earnings</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Net income decreased by $83 million for the six months ended
  June 30, 2002, compared with the same period in 2001. The decrease was primarily
  due to lower wholesale prices in the western U.S. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Revenues</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Operating revenues decreased by $146 million for the six months
  ended June 30, 2002, compared with the same period in 2001. The decrease was
  primarily due to a decline in wholesale energy prices from the high prices experienced
  in the first half of 2001, resulting from an energy supply shortage in the western
  U.S. The decrease in power prices resulted in a decrease in revenues of $190
  million, while an increase in volume sold resulted in an increase in revenues
  of $44 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In June 2001, the FERC instituted a series of price controls
  designed to mitigate (or cap) prices in the entire western U.S. as a result
  of the California energy crisis. These price controls have had the effect of
  significantly lowering spot and forward energy prices in the western U.S. See
  Note 8 to the Financial Statements for further discussion on the California
  situation.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Expense</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Operating expenses decreased by $9 million during the six months
  ended June 30, 2002, compared with the same period in 2001. Operating expenses
  consist mainly of expenses for fuel, energy purchases, transmission tariffs,
  plant operations and maintenance, lease rental payments, and general and administrative
  expenses. The decrease was primarily due to a $12 million decrease in energy
  purchases, related to the decreased power costs in the western U.S. during the
  first half of 2002. The decrease in power prices resulted in a $33 million decrease
  in energy purchases, while an increase in volumes purchased resulted in an increase
  in energy purchases of $21 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Generation increased by 211 million kWh during the six months
  ended June 30, 2002, compared with the same period in 2001. This increase was
  primarily the result of higher hydroelectric generation caused by improved water
  flows in the first half of 2002.</P>
<p align="center"><b><u>Critical Accounting Policies</u></b></p>

<P ALIGN="JUSTIFY">PPL Montana's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. The following accounting policies
  are particularly important to the financial condition or results of operations
  of PPL Montana, and require estimates or other judgments of matters inherently
  uncertain: price risk management, leasing and contingencies. See Item 7, &quot;Review
  of the Financial Condition and the Results of Operations,&quot; in PPL Montana's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy.</P>

<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM3CORP"></A>PPL CORPORATION AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 3. Quantitative and Qualitative Disclosures About
  Market Risk</u></b></p>
<P ALIGN="CENTER"></P>
<p align="justify"><b>Market Risk-Sensitive Instruments</b></p>

<P ALIGN="JUSTIFY">PPL actively manages the market risk inherent in its commodity,
  debt, and foreign currency and equity positions, as detailed in Note 10 to the
  Financial Statements. PPL has a comprehensive risk management policy to manage
  the risk exposures related to counterparty credit, energy prices, interest rates
  and foreign currency exchange rates. An RMC comprised of senior officers oversees
  the risk management function. Nonetheless, adverse changes in commodity prices,
  interest rates, foreign currency exchange rates and equity prices may result
  in losses in earnings, cash flows and/or fair values. The forward-looking information
  presented below provides estimates of what may occur in the future, assuming
  certain adverse market conditions, due to reliance on model assumptions. Actual
  future results may differ materially from those presented. These disclosures
  are not precise indicators of expected future losses, but only indicators of
  reasonably possible losses.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Commodity Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL uses various methodologies to simulate forward price curves
  in the energy markets to estimate the size and probability of changes in market
  value resulting from commodity price movements. The methodologies require several
  key assumptions, including selection of confidence levels, the holding period
  of the commodity positions and the depth and applicability to future periods
  of historical commodity price information.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As of June 30, 2002, PPL estimated that a 10% adverse movement
  in market prices across all geographic areas and time periods would have decreased
  the value of its non-hedge portfolio by $5 million. A similar adverse movement
  in market prices would have decreased the value of its hedge portfolio by approximately
  $126 million at June 30, 2002. However, the change in the value of the hedge
  portfolio would have been substantially offset by an increase in the value of
  the underlying commodity, the electricity generated, because these contracts
  serve to reduce the market risk inherent in the generation of electricity. In
  addition to commodity price risk associated with PPL's trading portfolio and
  any unhedged positions in its non-trading portfolio, PPL's commodity positions
  are also subject to operational and event risks including, among others, increases
  in load demand, decreases in hydro availability and forced outages at power
  plants.</P>

<P ALIGN="JUSTIFY">PPL's risk management program is designed to manage the risks
  associated with market fluctuations in the price of electricity, fuel and fuel-related
  costs. PPL's risk management policy and programs include risk identification
  and risk limits management, with measurement and controls for daily monitoring.
  PPL has entered into forward, option and tolling contracts that require physical
  delivery of the commodity, as well as futures, exchange-for-physical transactions
  and other financial contracts (such as swap agreements where settlement is generally
  based on the difference between a fixed-price and an index-based price for the
  underlying commodity). PPL expects to continue to use these contracts. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL enters into contracts to hedge the impact of market fluctuations
  on PPL's energy-related assets, liabilities and other contractual arrangements.
  PPL also executes these contracts to take advantage of market opportunities.
  As a result, PPL may at times create a net open position in its portfolio that
  could result in significant losses if prices do not move in the manner or direction
  anticipated.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Interest Rate Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL and its subsidiaries have issued debt to finance their
  operations. PPL utilizes various financial derivative products to adjust the
  mix of fixed and floating-rate interest rates in its debt portfolios, adjusting
  the duration of its debt portfolios and locking in U.S. Treasury rates (and
  interest rate spreads over treasuries) in anticipation of future financing,
  when appropriate. Risk limits under the risk management program are designed
  to balance risk exposure to volatility in interest expense and losses in the
  fair value of PPL's debt portfolio due to changes in the absolute level of interest
  rates.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL's potential annual exposure to increased
  interest expense, based on a 10% increase in interest rates, was estimated at
  $3 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL is also exposed to changes in the fair value of its debt
  portfolio. At June 30, 2002, PPL estimated that its potential exposure to a
  change in the fair value of its debt portfolio, through a 10% adverse movement
  in interest rates, was $126 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL utilizes various risk management instruments to reduce
  its exposure to adverse interest rate movements for future anticipated financings.
  While PPL is exposed to changes in the fair value of these instruments, they
  are designed such that an economic loss in value should generally be offset
  by interest rate savings at the time the future anticipated financing is completed.
  At June 30, 2002, PPL estimated that its potential exposure to a change in the
  fair value of these instruments, through a 10% adverse movement in interest
  rates, was approximately $11 million. See Note 10 to the Financial Statements
  for a discussion of financial derivative instruments outstanding at June 30,
  2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Foreign Currency Risk </u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL is exposed to foreign currency risk, primarily through
  investments in affiliates in Latin America and Europe. In addition, PPL may
  make purchases of equipment in currencies other than U.S. dollars.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL has adopted a foreign currency risk management program
  designed to hedge certain foreign currency exposures, including firm commitments,
  recognized assets or liabilities and net investments.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the first quarter of 2001, PPL entered into contracts
  for the forward purchase of 51 million euros to pay for certain equipment in
  2002 and 2003. The estimated value of these forward purchases as of June 30,
  2002, being the amount PPL would receive to terminate them, was $2 million.
</P>

<P ALIGN="JUSTIFY">During the second quarter of 2002, PPL executed three forward
  sale transactions, maturing in December 2002, for 12 million British pounds
  sterling to hedge the net investment in WPDH Limited. The estimated value of
  these agreements as of June 30, 2002, being the amount PPL would have to pay
  to terminate them, was insignificant.</P>
<p align="justify"></P>
<P ALIGN="JUSTIFY"><u>Nuclear Decommissioning Fund - Securities Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In connection with certain NRC requirements, PPL Susquehanna
  maintains trust funds to fund certain costs of decommissioning the Susquehanna
  station. As of June 30, 2002, these funds were invested primarily in domestic
  equity securities and fixed-rate, fixed-income securities and are reflected
  at fair value on PPL's Balance Sheet. The mix of securities is designed to provide
  returns to be used to fund Susquehanna's decommissioning and to compensate for
  inflationary increases in decommissioning costs. However, the equity securities
  included in the trusts are exposed to price fluctuation in equity markets, and
  the values of fixed-rate, fixed-income securities are exposed to changes in
  interest rates. PPL Susquehanna actively monitors the investment performance
  and periodically reviews asset allocation in accordance with its nuclear decommissioning
  trust policy statement. At June 30, 2002, a hypothetical 10% increase in interest
  rates and a 10% decrease in equity prices would have resulted in an estimated
  $17 million reduction in the fair value of the trust assets.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric's 1998 restructuring settlement agreement provides
  for the collection of authorized nuclear decommissioning costs through the CTC.
  Additionally, PPL Electric is permitted to seek recovery from customers of up
  to 96% of certain increases in these costs. Under the power supply agreements
  between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL
  EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under
  a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues
  are used to fund the trusts.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM3ES"></A>PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 3. Quantitative and Qualitative Disclosures About
  Market Risk</u></b></p>
<P ALIGN="CENTER"></P>
<p align="justify"><b>Market Risk Sensitive Instruments</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply actively manages the market risk inherent
  in its commodity, debt, and foreign currency and equity positions as detailed
  in Note 10 to the Financial Statements. PPL Energy Supply has a comprehensive
  risk management policy to manage the risk exposures related to counterparty
  credit, energy prices, interest rates and foreign currency exchange rates. An
  RMC comprised of senior officers of PPL oversees the risk management function.
  Nonetheless, adverse changes in commodity prices, interest rates, foreign currency
  exchange rates and equity prices may result in losses in earnings, cash flows
  and/or fair values. The forward-looking information presented below provides
  estimates of what may occur in the future, assuming certain adverse market conditions,
  due to reliance on model assumptions. Actual future results may differ materially
  from those presented. These disclosures are not precise indicators of expected
  future losses, but only indicators of reasonably possible losses.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Commodity Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply uses various methodologies to simulate forward
  price curves in the energy markets to estimate the size and probability of changes
  in market value resulting from commodity price movements. The methodologies
  require several key assumptions, including selection of confidence levels, the
  holding period of the commodity positions, and the depth and applicability to
  future periods of historical commodity price information.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">As of June 30, 2002, PPL Energy Supply estimated that a 10%
  adverse movement in market prices across all geographic areas and time periods
  would have decreased the value of its non-hedge portfolio by $5 million. A similar
  adverse movement in market prices would have decreased the value of its hedge
  portfolio by approximately $126 million. However, the change in the value of
  the hedge portfolio would have been substantially offset by an increase in the
  value of the underlying commodity, the electricity generated, because these
  contracts serve to reduce the market risk inherent in the generation of electricity.
  In addition to commodity price risk associated with PPL Energy Supply's trading
  portfolio and any unhedged positions in its non-trading portfolio, PPL Energy
  Supply's commodity positions are also subject to operational and event risks
  including, among others, increases in load demand, decreases in hydro availability
  and forced outages at power plants.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply's risk management program is designed to
  manage the risks associated with market fluctuations in the price of electricity,
  fuel and fuel-related costs. PPL Energy Supply's risk management policy and
  programs include risk identification and risk limits management, with measurement
  and controls for daily monitoring. PPL Energy Supply has entered into forward,
  option, and tolling contracts that require physical delivery of the commodity,
  as well as futures, exchange-for-physical transactions and other financial contracts
  (such as swap agreements where settlement is generally based on the difference
  between a fixed price and an index-based price for the underlying commodity).
  PPL Energy Supply expects the use of these contracts to be ongoing.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply enters into contracts to hedge the impact
  of market fluctuations on PPL Energy Supply's energy-related assets, liabilities
  and other contractual obligations. PPL Energy Supply also executes these contracts
  to take advantage of market opportunities. As a result, PPL Energy Supply may
  at times create a net open position in its portfolio that could result in significant
  losses if prices do not move in the manner or direction anticipated.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Commodity Price Risk - PLR Contracts </u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric and PPL EnergyPlus have power supply agreements
  under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing
  arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through
  2009. As a result, PPL Electric has shifted any electric price risk relating
  to its PLR obligation to PPL EnergyPlus for 2002 through 2009.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Interest Rate Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply and its subsidiaries have issued debt to
  finance their operations. PPL manages interest rate risk for PPL Energy Supply
  by using financial derivative products to adjust the mix of fixed and floating-rate
  interest rates in its debt portfolios, adjusting the duration of its debt portfolios
  and locking in U.S. treasury rates (and interest rate spreads over treasuries)
  in anticipation of future financing, when appropriate. Risk limits under the
  risk management program are designed to balance risk exposure to volatility
  in interest expense and losses in the fair value of PPL Energy Supply's debt
  portfolio due to changes in the absolute level of interest rates.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At June 30, 2002, PPL Energy Supply's potential annual exposure
  to increased interest expense, based on a 10% increase in interest rates, was
  estimated at $3 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply is also exposed to changes in the fair value
  of its debt portfolio. At June 30, 2002, PPL Energy Supply estimated that its
  potential exposure to a change in the fair value of its debt portfolio, through
  a 10% adverse movement in interest rates, was $22 million.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL utilizes various risk management instruments to reduce
  PPL Energy Supply's exposure to adverse interest rate movements for future anticipated
  financings. While PPL Energy Supply is exposed to changes in the fair value
  of these instruments, they are designed such that any economic loss in value
  should be offset by interest rate savings at the time the future anticipated
  financing is completed. At June 30, 2002, PPL Energy Supply had not entered
  into any such instruments.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 10 to the Financial Statements for a discussion of
  financial derivative instruments outstanding at June 30, 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Foreign Currency Risk </u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply is exposed to foreign currency risk, primarily
  through investments in affiliates in Latin America and Europe. In addition,
  PPL Energy Supply may make purchases of equipment in currencies other than U.S.
  dollars.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL has adopted a foreign currency risk management program
  designed to hedge certain foreign currency exposures, including firm commitments,
  recognized assets or liabilities and net investments.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the first quarter of 2001, PPL entered into contracts
  for the forward purchase of 51 million euros to pay for certain equipment in
  2002 and 2003. The estimated value of these forward purchases as of June 30,
  2002, being the amount PPL would receive to terminate them, was $2 million.
</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the second quarter of 2002, PPL executed three forward
  sale transactions, maturing in December 2002, for 12 million British pounds
  sterling to hedge the net investment in WPDH Limited. The estimated value of
  these agreements as of June 30, 2002, being the amount PPL would have to pay
  to terminate them, was insignificant.</P>
<P ALIGN="JUSTIFY"></P>

<p align="justify"><u>Nuclear Decommissioning Fund - Securities Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In connection with certain NRC requirements, PPL Susquehanna
  maintains trust funds to fund certain costs of decommissioning the Susquehanna
  station. As of June 30, 2002, these funds were invested primarily in domestic
  equity securities and fixed-rate, fixed-income securities and are reflected
  at fair value on PPL Energy Supply's Balance Sheet. The mix of securities is
  designed to provide returns to be used to fund Susquehanna's decommissioning
  and to compensate for inflationary increases in decommissioning costs. However,
  the equity securities included in the trusts are exposed to price fluctuation
  in equity markets, and the values of fixed-rate, fixed-income securities are
  exposed to changes in interest rates. PPL Susquehanna actively monitors the
  investment performance and periodically reviews asset allocation in accordance
  with its nuclear decommissioning trust policy statement. At June 30, 2002, a
  hypothetical 10% increase in interest rates and a 10% decrease in equity prices
  would have resulted in an estimated $17 million reduction in the fair value
  of the trust assets.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric's 1998 restructuring settlement agreement provides
  for the collection of authorized nuclear decommissioning costs through the CTC.
  Additionally, PPL Electric is permitted to seek recovery from customers of up
  to 96% of certain increases in these costs. Under the power supply agreements
  between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL
  EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under
  a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues
  are used to fund the trusts.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM3EU"></A>PPL ELECTRIC UTILITIES CORPORATION
  AND SUBSIDIARIES</b></p>
<P ALIGN="CENTER"></P>
<p align="center"><b><u>Item 3. Quantitative and Qualitative Disclosures About
  Market Risk</u></b></p>
<P ALIGN="CENTER"></P>
<p align="justify"><b>Market Risk Sensitive Instruments</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Commodity Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric and PPL EnergyPlus have power supply agreements
  under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing
  arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through
  2009. As a result, PPL Electric has shifted any electric price risk relating
  to its PLR obligation to PPL EnergyPlus for 2002 through 2009.</P>

<P ALIGN="JUSTIFY"><u>Interest Rate Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric has issued debt to finance its operations, which
  increases its interest rate risk. PPL Electric's potential annual exposure to
  increased interest expense, based on a 10% increase in interest rates, was an
  insignificant amount at June 30, 2002.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Electric is also exposed to changes in the fair value of
  its debt portfolio. At June 30, 2002 PPL Electric estimated that its potential
  exposure to a change in the fair value of its debt portfolio, through a 10%
  adverse movement in interest rates, was approximately $56 million.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM3MONTANA"></A>PPL MONTANA, LLC AND SUBSIDIARIES</b></p>
<p align="center"></P>

<p align="center"><b><u>Item 3. Quantitative and Qualitative Disclosures About Market
  Risk</u></b></p>

<p align="justify"><b>Market Risk Sensitive Instruments</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana actively manages the market risk inherent in its
  business. PPL Montana has adopted a comprehensive risk management policy to
  manage risk exposures related to energy prices, and through PPL, interest rates
  and counterparty credit. An RMC comprised of senior officers of PPL oversees
  the risk management function. Nonetheless, adverse changes in commodity prices
  and interest rates may result in losses in earnings, cash flows and/or fair
  values. The forward-looking information presented below provides estimates of
  what may occur in the future, assuming certain adverse market conditions, due
  to reliance on model assumptions. As a result, actual future results may differ
  materially from those presented. These disclosures are not precise indicators
  of expected future losses, but only indicators of reasonably possible losses.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Commodity Price Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana uses various methodologies to simulate forward
  price curves in the energy markets to estimate the size and probability of changes
  in market value resulting from commodity price movements. The methodologies
  require several key assumptions, including selection of confidence levels, the
  holding period of the commodity positions and the depth and applicability to
  future periods of historical commodity price information.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana estimated that a 10% adverse movement in market
  prices across the markets PPL Montana operates in, and across all time periods,
  would have decreased the value of the hedge portfolio by approximately $66 million
  at June 30, 2002. A similar adverse movement in market prices would have decreased
  the value of the non-hedge portfolio by an insignificant amount at June 30,
  2002. However, the change in the value of the hedge portfolio would have been
  substantially offset by an increase in the value of the underlying commodity,
  the electricity generated, because these contracts serve to reduce the market
  risk inherent in the generation of electricity. In addition to commodity price
  risk associated with PPL Montana's trading portfolio and any unhedged positions
  in its non-trading portfolio, PPL Montana's commodity positions are also subject
  to operational and event risks including, among others, increases in load demand,
  decreases in hydro availability and forced outages at generating plants. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana's risk management program is designed to manage
  the risks associated with market fluctuations in the price of electricity. PPL
  Montana's risk management policy and programs include risk identification and
  risk limits management, with measurement and controls for daily risk monitoring.
  PPL Montana has entered into forward contracts that require physical delivery
  of electricity and derivative financial instruments, consisting mainly of financial
  swaps where settlement is generally based on the difference between a fixed-price
  and an index-based price for the underlying commodity. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Interest Rate Risk</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Montana may use borrowings to provide funds for its operations.
  PPL Montana may utilize various financial derivative products and risk management
  techniques to adjust the mix of fixed and floating-rate interest rates in its
  debt portfolio and thereby reduce its exposure to adverse interest rate movements.
  PPL Montana had $40 million in borrowings outstanding as of June 30, 2002, and
  its interest rate risk was not significant.</P>
<br><hr noshade><br>
<p align="center"><b><A NAME="ITEM1"></A>PPL CORPORATION</B><BR>
  <B>PPL ENERGY SUPPLY, LLC</B><BR>
  <B>PPL ELECTRIC UTILITIES CORPORATION</B><BR>
  <B>PPL MONTANA, LLC AND SUBSIDIARIES</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>PART II. OTHER INFORMATION</u></b></p>

<p align="justify"><b><u>Item 1. Legal Proceedings</u></B></P>
<p align="justify"><i>General</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Item 3 &quot;Legal Proceedings&quot; in PPL's, PPL Energy
  Supply's, PPL Electric's and PPL Montana's Annual Report to the SEC on Form
  10-K for the year ended December 31, 2001 and Note 8 of the companies' &quot;Combined
  Notes to Condensed Consolidated Financial Statements&quot; in Part I of this
  report for additional information regarding various pending administrative and
  judicial proceedings involving regulatory, environmental and other matters,
  which information is incorporated by reference into this Part II. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><i>Tax Assessment Appeals</i></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Pursuant to changes in PURTA, enacted in 1999, PPL subsidiaries
  have filed a number of tax assessment appeals in various Pennsylvania counties
  where PPL facilities are located. These appeals challenge existing local tax
  assessments, which now comprise the basis for payment of the PURTA tax on PPL's
  properties. Also, as of January 1, 2000, generation facilities are no longer
  taxed under PURTA, and these local assessments will be used directly to determine
  local real estate tax liability for PPL's power plants. In July 1999, PPL filed
  retroactive appeals for tax years 1998 and 1999, as permitted by the new law,
  as well as prospective appeals for 2000, as permitted under normal assessment
  procedures. Additional prospective appeals were filed in 2000 for the 2001 tax
  year and in 2001 for the 2002 tax year. It is anticipated that assessment appeals
  will now be an annual occurrence.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Hearings on the pending appeals were held by the boards of
  assessment appeals in each county, and decisions have now been rendered by most
  counties. To the extent the appeals were denied or PPL was not otherwise satisfied
  with the results, PPL filed further appeals from the board decisions with the
  appropriate county Courts of Common Pleas.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Of all the pending proceedings, the most significant appeal
  concerns the assessed value of the Susquehanna nuclear station. The county assessment
  of the Susquehanna station indicated a market value of $3.9 billion. Based on
  this value, the annual local taxes for the Susquehanna station would have been
  about $70 million. However, PPL was able to reach a settlement with the local
  taxing authorities in December 2000, for tax years 2000 and 2001. This settlement
  will result in the payment of annual local taxes of about $3 million. PPL and
  the local taxing authorities also reached a settlement concerning the 1998 and
  1999 tax years which, if effectuated, would not result in any additional PURTA
  tax liability for PPL. This portion of the settlement with the local tax authorities
  is subject, however, to the outcome of claims asserted by certain intervenors
  which are described below.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In August 2000, over PPL's objections, the court permitted
  Philadelphia City and County, the Philadelphia School District and the Southeastern
  Pennsylvania Transportation Authority (SEPTA) (collectively, the &quot;Philadelphia
  parties&quot;) to intervene in the case. The Philadelphia parties have intervened
  because they believe a change in the assessment of the plant will affect the
  amount they would collect under PURTA for the tax years 1998 and 1999. As part
  of the change in the law, the local real estate assessment determines what the
  1998 and 1999 PURTA payments by PPL will be. In November 2000, the Philadelphia
  parties submitted their own appraisal report, which indicates that the taxable
  fair market value of the Susquehanna station under PURTA for 1998 and 1999 is
  approximately $2.3 billion. Based on this appraisal, PPL would have to pay up
  to an extra $213 million in PURTA taxes for tax years 1998 and 1999.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL's appeal of the Susquehanna station assessment for 1998
  and 1999 was decided in PPL's favor by the Luzerne County Court of Common Pleas.
  The Philadelphia parties appealed this decision to the Commonwealth Court and
  PPL cross-appealed on the issue of the right of the Philadelphia parties to
  intervene. As a result of these proceedings and potential appeals, a final determination
  of market value and the associated tax liability for 1998 and 1999 may not occur
  for several years. </P>
<br><hr noshade><br>

<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD VALIGN="TOP" COLSPAN=19 HEIGHT=26> <B><U><A NAME="ITEM4"></A>Item 4. Submission
      of Matters to a Vote of Security Holders</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26> At PPL's Annual Meeting
      of Shareowners held on April 26, 2002, the shareowners:</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26> (1)</TD>
    <TD colspan="17" VALIGN="TOP" HEIGHT=26> Elected the two nominees for the
      office of director. The vote for all nominees was 114,994,066. The votes
      for individual nominees were as follows:</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="29%" VALIGN="TOP" COLSPAN=6 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=11 HEIGHT=26>
      <div align="center"><B><U>Number of Votes</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="29%" VALIGN="TOP" COLSPAN=6 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=4 HEIGHT=26>
      <div align="center"><B><U>For</u></b></div>
    </TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=6 HEIGHT=26>
      <div align="center"><B><U>Withhold Authority</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=7 HEIGHT=26> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Frederick
      M. Bernthal</TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=4 HEIGHT=26>
      <div align="center">114,994,066</div>
    </TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=6 HEIGHT=26>
      <div align="center">2,390,719</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=7 HEIGHT=26> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John
      R. Biggar</TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=4 HEIGHT=26>
      <div align="center">115,493,150</div>
    </TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=6 HEIGHT=26>
      <div align="center">1,891,635</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=3 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="10%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26> The vote to withhold authority
      for all nominees was 1,461,310.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26> (2)</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26> Ratified the appointment
      of PricewaterhouseCoopers LLP as independent auditors for the year ended
      December 31, 2002. The vote was 113,482,318 in favor and 2,741,632 against,
      with 1,160,835 abstaining.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26> At PPL Electric's Annual
      Meeting of Shareowners held on April 22, 2002, the shareowners:</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26> (1)</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26> Elected all nine nominees
      for the office of director. The vote for all nominees was 78,029,863. The
      votes for individual nominees were as follows:</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=16 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26></TD>
    <TD VALIGN="TOP" COLSPAN=7 HEIGHT=26>
      <div align="center"><B><U>Number of Votes for</u></b></div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> John R. Biggar</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Michael E. Bray</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Paul T. Champagne</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Dean A. Christiansen</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Lawrence E. De Simone</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Robert J. Grey</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> William F. Hecht</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> James H. Miller</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="27%" VALIGN="TOP" COLSPAN=4 HEIGHT=26> Roger L. Petersen</TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=26>
      <div align="center">78,029,863</div>
    </TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" COLSPAN=2 HEIGHT=26></TD>
    <TD WIDTH="9%" VALIGN="TOP" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=26></TD>
    <TD WIDTH="96%" VALIGN="TOP" COLSPAN=18 HEIGHT=26> The vote to withhold authority
      for all nominees was 0.</TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=5 HEIGHT=26> <B><U><A NAME="ITEM6"></A>Item 6.
      Exhibits and Reports on Form 8-K</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26> (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26> Exhibits</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
              <A href="ppl10q_6-02ex10a.htm">10(a)</a> - PPL Energy Supply
      $300 Million 364-Day Credit Agreement</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
              <A href="ppl10q_6-02ex10b.htm">10(b)</a> - PPL Energy Supply
      $300 Million Three-Year Credit Agreement</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
              <A href="ppl10q_6-02ex10c.htm">10(c)</a> - PPL Electric
      $400 Million 364-Day Credit Agreement</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A NAME="EX12"></A><A HREF="ppl10q_6-02ex12a.htm">12(a)</A> - Computation of
      Ratio of Earnings to Combined Fixed Charges and Preferred Stock<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A HREF="ppl10q_6-02ex12b.htm">12(b)</A>,
          <A HREF="ppl10q_6-02ex12c.htm">12(c)</A> and
          <A HREF="ppl10q_6-02ex12d.htm">12(d)</a>
      - Computation of Ratio of Earnings to Fixed Charges</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A NAME="EX99"></A><A HREF="ppl10q_6-02ex99a.htm">99(a)</a> - Certificate of
      PPL's principal executive officer pursuant to Section 906 of the<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sarbanes-Oxley
      Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
         <A HREF="ppl10q_6-02ex99b.htm">99(b)</A> - Certificate of
      PPL's principal financial officer pursuant to Section 906 of the<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sarbanes-Oxley
      Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A HREF="ppl10q_6-02ex99c.htm">99(c)</A> - Certificate of
      PPL Energy Supply's principal executive officer pursuant to<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A HREF="ppl10q_6-02ex99d.htm">99(d)</A> - Certificate of
      PPL Energy Supply's principal financial officer pursuant to<br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
          <A HREF="ppl10q_6-02ex99e.htm"> 99(e)</A> - Certificate of
      PPL Electric's principal executive officer pursuant to <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
           <A HREF="ppl10q_6-02ex99f.htm">99(f)</A> - Certificate of
      PPL Electric's principal financial officer pursuant to <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
           <A HREF="ppl10q_6-02ex99g.htm"> 99(g)</A> - Certificate of
      PPL Montana's principal executive officer pursuant to <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26>
             <A HREF="ppl10q_6-02ex99h.htm">99(h)</A> - Certificate of
      PPL Montana's principal financial officer pursuant to <br>
      &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
      906 of the Sarbanes-Oxley Act of 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26> (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26> Reports on Form 8-K</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26> <U>Report dated April
      24, 2002 - PPL</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26> Item 5.</TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Reported earnings for the first
      quarter of 2002 and confirmed earnings <br>
      &nbsp;&nbsp;&nbsp;&nbsp;forecast for 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26> Item 7.</TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Financial Statements and Exhibits</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Press release regarding PPL's results
      for the first quarter of 2002 and<br>
      &nbsp;&nbsp;&nbsp;&nbsp;earnings forecast for 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="91%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=26> <U>Report dated June
      19, 2002 - PPL, PPL Energy Supply and PPL Electric</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26> Item 5.</TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Announced the costs of a productivity
      enhancement program associated with employee separations. PPL expects to
      record a consolidated non-cash charge against second quarter earnings of
      approximately $75 million. PPL Electric and PPL Energy Supply expect to
      record primarily non-cash charges against second quarter earnings of approximately
      $34 million and $40 million, respectively.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26> Item 7.</TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Financial Statements and Exhibits</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26> Press release regarding PPL's productivity
      enhancement program.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM" HEIGHT=26></TD>
    <TD WIDTH="83%" VALIGN="BOTTOM" HEIGHT=26></TD>
  </TR>
</TABLE>
<br><hr noshade><br>
<p align="center"><u><A NAME="SIGNATURES"></A>SIGNATURES</u></P>

<P ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrants have duly caused this report to be signed on their
  behalf by the undersigned thereunto duly authorized. The signature for each
  undersigned company shall be deemed to relate only to matters having reference
  to such company or its subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="CENTER">

  <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=100%>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD colspan="2" VALIGN="TOP"> <B><U>PPL Corporation</u></b></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(Registrant)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD colspan="2" VALIGN="TOP"> <B><U>PPL Energy Supply, LLC</u></b></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(Registrant)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD colspan="2" VALIGN="TOP"> <B><U>PPL Electric Utilities Corporation</u></b></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(Registrant)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD colspan="2" VALIGN="TOP"> <B><U>PPL Montana, LLC</u></b></TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(Registrant)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP"> Date: August 13, 2002</TD>
      <TD WIDTH="32%" VALIGN="TOP"> /s/&nbsp;&nbsp;John R. Biggar
        <hr noshade>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">John R. Biggar</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Executive Vice President and</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Chief Financial Officer</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(PPL Corporation)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(principal financial officer)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP"> /s/&nbsp;&nbsp;James E. Abel
        <hr noshade>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">James E. Abel</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Treasurer</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(PPL Energy Supply, LLC)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(principal financial officer)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP"> /s/&nbsp;&nbsp;Joseph J. McCabe
        <hr noshade>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Joseph J. McCabe</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Vice President and Controller</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(PPL Electric Utilities Corporation)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(principal accounting officer)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP"> /s/&nbsp;&nbsp;Craig D. Bartholomew
        <hr noshade>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Craig D. Bartholomew</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">Controller </div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(PPL Montana, LLC)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
    <TR>
      <TD WIDTH="52%" VALIGN="TOP">&nbsp;</TD>
      <TD WIDTH="32%" VALIGN="TOP">
        <div align="center">(principal accounting officer)</div>
      </TD>
      <TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
    </TR>
  </TABLE>
<br><hr noshade><br>

<br><hr noshade><br>
</BODY>
</HTML>
[{"type": "10-Q", "sequence": "1", "filename": "ppl10q_6-02.htm", "description": "PPL CORPORATION 10-Q JUNE 30, 2002", "secsgml_size_bytes": 1226581}]
[{"company-data": {"conformed-name": "PPL CORP", "cik": "0000922224", "assigned-sic": "4911", "irs-number": "232758192", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-11459", "film-number": "02728314"}, "business-address": {"street1": "TWO N NINTH ST", "city": "ALLENTOWN", "state": "PA", "zip": "181011179", "phone": "6107745151"}, "mail-address": {"street1": "TWO N NINTH ST", "city": "ALLENTOWN", "state": "PA", "zip": "18101-1179"}, "former-company": {"former-conformed-name": "PP&L RESOURCES INC", "date-changed": "19941123"}}, {"company-data": {"conformed-name": "PPL ELECTRIC UTILITIES CORP", "cik": "0000317187", "assigned-sic": "4911", "irs-number": "230959590", "state-of-incorporation": "PA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-00905", "film-number": "02728315"}, "business-address": {"street1": "TWO N NINTH ST", "city": "ALLENTOWN", "state": "PA", "zip": "18101", "phone": "6107745151"}, "mail-address": {"street1": "TWO NORTH NINTH STREET", "city": "ALLENTOWN", "state": "PA", "zip": "18101-1179"}, "former-company": [{"former-conformed-name": "PP & L INC", "date-changed": "19970912"}, {"former-conformed-name": "PP&L INC", "date-changed": "19970912"}]}, {"company-data": {"conformed-name": "PPL ENERGY SUPPLY LLC", "cik": "0001161976", "assigned-sic": "4911"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "333-74794", "film-number": "02728316"}, "business-address": {"street1": "TWO NORTH NINETH STREET", "city": "ALLENTOWN", "state": "PA", "zip": "18101", "phone": "6107745151"}, "mail-address": {"street1": "TWO NORTH NINTH STREET", "city": "ALLENTOWN", "state": "PA", "zip": "18101"}}, {"company-data": {"conformed-name": "PPL MONTANA LLC", "cik": "0001127712", "assigned-sic": "4911", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "333-50350", "film-number": "02728317"}, "business-address": {"street1": "303 NORTH BROADWAY", "street2": "STE 400", "city": "BILLINGS", "state": "MT", "zip": "59101", "phone": "4068695108"}, "mail-address": {"street1": "303 NORTH BROADWAY", "street2": "STE 400", "city": "BILLINGS", "state": "MT", "zip": "59101"}}]
PPL Corporation Form 10-Q June 30, 2002
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the period ended
June 30, 2002
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION
        13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition
        period from _________ to ___________
Commission File
Number
Registrant; State of Incorporation;
Address and Telephone Number
IRS Employer
Identification No.
1-11459
PPL Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101-1179
(610) 774-5151
23-2758192
333-74794
PPL Energy Supply, LLC
(Exact name of Registrant as specified in its charter)
(Delaware)
Two North Ninth Street
Allentown, PA 18101-1179
(610) 774-5151
23-3074920
1-905
PPL Electric Utilities Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA 18101-1179
(610) 774-5151
23-0959590
333-50350
PPL Montana, LLC
(Exact name of Registrant as specified in its charter)
(Delaware)
303 North Broadway - Suite 400
Billings, MT 59101
(406) 237-6900
54-1928759
Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has 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
PPL Montana, LLC
Yes
X
No
Indicate the number of shares outstanding of each of the issuer's
  classes of common stock, as of the latest practicable date:
PPL Corporation
Common stock, $.01 par value, 147,468,950
shares outstanding at July 31, 2002, excluding
30,993,637 shares held as treasury stock
PPL Energy Supply, LLC
PPL Corporation indirectly holds all of the
member interests in PPL Energy Supply, LLC.
PPL Electric Utilities Corporation
Common stock, no par value, 78,029,863
shares outstanding and all held by PPL
Corporation at July 31, 2002, excluding
79,270,519 shares held as treasury stock
PPL Montana, LLC
PPL Corporation indirectly holds all of the
member interests in PPL Montana, LLC.
PPL Energy Supply, LLC and PPL Montana, LLC meet the conditions
  set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and are therefore
  filing this form with the reduced disclosure format.
This document is available at the Investor Center on PPL's
  website at www.pplweb.com. However, information on this website does not constitute
  a part of this Form 10-Q.
(THIS PAGE LEFT BLANK INTENTIONALLY.)
PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION
PPL MONTANA, LLC
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2002
Table of Contents
Page
GLOSSARY OF TERMS AND ABBREVIATIONS
FORWARD-LOOKING INFORMATION
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PPL Corporation and Subsidiaries
Condensed Consolidated Statement of
        Income
2
Condensed Consolidated Statement of
        Cash Flows
3
Condensed Consolidated Balance Sheet
4
Condensed Consolidated Statement of
        Shareowners' Common Equity
and Comprehensive Income
6
PPL Energy Supply, LLC and Subsidiaries
Condensed Consolidated Statement of
        Income
8
Condensed Consolidated Statement of
        Cash Flows
9
Condensed Consolidated Balance Sheet
10
Condensed Consolidated Statement of
        Member's Equity
and Comprehensive Income
12
PPL Electric Utilities Corporation
        and Subsidiaries
Condensed Consolidated Statement of
        Income
14
Condensed Consolidated Statement of
        Cash Flows
15
Condensed Consolidated Balance Sheet
16
Condensed Consolidated Statement of
        Shareowner's Common Equity
and Comprehensive Income
18
PPL Montana, LLC and Subsidiaries
Condensed Consolidated Statement of
        Income
19
Condensed Consolidated Statement of
        Cash Flows
20
Condensed Consolidated Balance Sheet
21
Condensed Consolidated Statement of
        Member's Equity
and Comprehensive Income
22
Combined Notes to Condensed Consolidated
        Financial Statements
23
Item 2. Management's Discussion and
        Analysis of Financial Condition and
Results of Operations
PPL Corporation and Subsidiaries
43
PPL Energy Supply, LLC and Subsidiaries
50
PPL Electric Utilities Corporation
        and Subsidiaries
56
PPL Montana, LLC and Subsidiaries
59
Item 3. Quantitative and Qualitative
        Disclosures About Market Risk
PPL Corporation and Subsidiaries
60
PPL Energy Supply, LLC and Subsidiaries
62
PPL Electric Utilities Corporation
        and Subsidiaries
64
PPL Montana, LLC and Subsidiaries
64
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
65
Item 4. Submission of Matters to a
        Vote of Security Holders
66
Item 6. Exhibits and Reports on Form
        8-K
67
SIGNATURES
68
COMPUTATION OF RATIO OF EARNINGS TO
        FIXED CHARGES
PPL Corporation and Subsidiaries
69
PPL Energy Supply, LLC and Subsidiaries
70
PPL Electric Utilities Corporation
        and Subsidiaries
71
PPL Montana, LLC and Subsidiaries
72
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER
         AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY
         ACT OF 2002
PPL Corporation
73
PPL Energy Supply, LLC
75
PPL Electric Utilities Corporation
77
PPL Montana, LLC
79
GLOSSARY OF TERMS AND ABBREVIATIONS
1945 First Mortgage Bond Indenture
- PPL Electric's
  Mortgage and Deed of Trust, dated as of October 1, 1945, to Bankers Trust Company,
  as trustee, as supplemented.
APA
- Asset Purchase Agreement.
APB
- Accounting Principles Board.
BG&E
- Baltimore Gas & Electric Company.
CEMAR
- Companhia Energética do Maranhão,
  a Brazilian electric distribution company in which PPL Global has a majority
  ownership interest.
Clean Air Act
- federal legislation enacted to
  address certain environmental issues related to air emissions including acid
  rain, ozone and toxic air emissions.
CO
2
- carbon dioxide.
CTC
- competitive transition charge on customer
  bills to recover allowable transition costs under the Customer Choice Act.
Customer Choice Act
(Pennsylvania Electricity
  Generation Customer Choice and Competition Act) - legislation enacted to restructure
  the state's electric utility industry to create retail access to a competitive
  market for generation of electricity.
DEP
- Department of Environmental Protection,
  a state government agency.
Derivative
- a financial instrument or other
  contract with all three of the following characteristics:
It has (1) one or more underlyings and (2) one or more
      notional amounts or payment provisions or both. Those terms determine the
      amount of the settlement or settlements, and, in some cases, whether or
      not a settlement is required.
If it is an option-based contract, it has an initial net
      investment equal to the fair value of the option component. If it is not
      an option-based contract, it requires an initial net investment that is
      less than five percent of the fully prepaid amount.
Its terms require or permit net settlement, it can readily
      be settled net by a means outside the contract, or it provides for delivery
      of an asset that puts the recipient in a position not substantially different
      from net settlement.
DIG
- Derivatives Implementation Group.
DRIP
- Dividend Reinvestment Plan.
EITF
(
Emerging Issues Task Force) - an
  organization that assists the FASB in improving financial reporting through
  the identification, discussion and resolution of financial issues within the
  framework of existing authoritative literature.
EPA
- Environmental Protection Agency, a U.S.
  government agency.
EPS
- earnings (loss) per share.
ESOP
- Employee Stock Ownership Plan.
FASB
(Financial Accounting Standards Board) -
  a rulemaking organization that establishes financial accounting and reporting
  standards.
FERC
(Federal Energy Regulatory Commission) -
  federal agency that regulates interstate transmission and wholesale sales of
  electricity and related matters.
Griffith Energy
- Griffith Energy LLC, a 600
  MW gas-fired station in Kingman, Arizona, which is jointly owned by subsidiaries
  of PPL Generation and Duke Energy Corporation.
Hyder
- Hyder Limited, a subsidiary of WPDL and
  previous owner of South Wales Electricity plc. In March 2001, South Wales Electricity
  plc was acquired by WPDH Limited and renamed WPD (South Wales).
ICP
- Incentive Compensation Plan.
ICPKE
- Incentive Compensation Plan for Key Employees.
IRS
- Internal Revenue Service, in the U.S. Department
  of Treasury.
ISO
- Independent System Operator.
ITC
- intangible transition charge on customer
  bills to recover intangible transition costs associated with securitizing stranded
  costs under the Customer Choice Act.
kWh
- kilowatthour, basic unit of electrical
  energy.
LIBOR
- London Interbank Offered Rate.
Mirant
- Mirant Corporation, formerly Southern
  Energy Inc., a diversified energy company based in Atlanta. PPL Global and Mirant
  jointly own WPDH Limited.
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
  Energy.
MPSC
- Montana Public Service Commission.
MW
- megawatt.
MWh
- megawatthour.
NorthWestern Energy
- NorthWestern Energy, L.L.C.,
  a Montana limited liability company that acquired Montana Power's electricity
  delivery business in the first quarter of 2002, including Montana Power's rights
  and obligations under existing contracts with PPL Montana.
NO
x
- nitrogen oxide.
NPDES
- National Pollutant Discharge Elimination
  System.
NRC
(Nuclear Regulatory Commission) - federal
  agency that regulates operation of nuclear power facilities.
NUGs
(Non-Utility Generators) - generating plants
  not owned by public utilities, whose electrical output must be purchased by
  utilities under the PURPA if the plant meets certain criteria.
PCB
(Polychlorinated Biphenyl) - additive to
  oil used in certain electrical equipment up to the late-1970s. Now classified
  as a hazardous chemical.
PEPS Units
(Premium Equity Participating Security
  Units) - securities issued by PPL Capital Funding Trust I, consisting of a Preferred
  Security and a forward contract to purchase PPL common stock.
PJM
(PJM Interconnection, LLC) - operator of
  the electric transmission network and electric energy market in the mid-Atlantic
  region of the U.S.
PLR
(Provider of Last Resort) - PPL Electric
  providing electricity to retail customers within its delivery territory who
  have chosen not to shop for electricity under the Customer Choice Act.
PPL
- PPL Corporation, the parent holding company
  of PPL Electric, PPL Energy Funding and other subsidiaries.
PPL Capital Funding
- PPL Capital Funding, Inc.,
  a PPL financing subsidiary.
PPL Capital Funding Trust I
- a Delaware statutory
  business trust created to issue PEPS Units, whose common securities are held
  by PPL.
PPL Capital Trust
- a Delaware statutory
business
  trust created to issue Preferred Securities, whose common securities are held
  by PPL Electric.
PPL Capital Trust II
- a Delaware statutory business
  trust created to issue Preferred Securities, whose common securities are held
  by PPL Electric.
PPL Electric
- PPL Electric Utilities Corporation,
  a regulated utility subsidiary of PPL that transmits and distributes electricity
  in its service territory, and provides electric supply to retail customers in
  this territory as a PLR.
PPL Energy Funding
- PPL Energy Funding Corporation,
  which is a subsidiary of PPL and the parent company of PPL Energy Supply.
PPL EnergyPlus
- PPL EnergyPlus, LLC, a subsidiary
  of PPL Energy Supply, which markets wholesale and retail electricity, and supplies
  energy and energy services in newly deregulated markets.
PPL Energy Supply
- PPL Energy Supply, LLC, the
  parent company of PPL Generation, PPL EnergyPlus, PPL Global and other subsidiaries.
  Formed in November 2000, PPL Energy Supply is a subsidiary of PPL Energy Funding.
PPL Gas Utilities
- PPL Gas Utilities Corporation,
  a regulated utility subsidiary of PPL specializing in natural gas distribution,
  transmission and storage services, and the sale of propane.
PPL Generation
- PPL Generation, LLC, a subsidiary
  of PPL Energy Supply which owns and operates U.S. generating facilities through
  various subsidiaries.
PPL Global
- PPL Global, LLC, a subsidiary of
  PPL Energy Supply, which acquires and develops domestic generation projects,
  and holds international energy projects that are primarily focused on the distribution
  of electricity.
PPL Holtwood
- PPL Holtwood, LLC, a subsidiary
  of PPL Generation which owns PPL's hydroelectric generating operations in Pennsylvania.
PPL Martins Creek
- PPL Martins Creek, LLC, a
  fossil generating subsidiary of PPL Generation.
PPL Montana
- PPL Montana, LLC, an indirect subsidiary
  of PPL Generation which generates electricity for wholesale sales in Montana
  and the Pacific Northwest.
PPL Services
- PPL Services Corporation, a subsidiary
  of PPL which provides shared services for PPL and its subsidiaries.
PPL Susquehanna
- PPL Susquehanna, LLC, the nuclear
  generating subsidiary of PPL Generation.
PPL Transition Bond Company
- PPL Transition
  Bond Company, LLC, a wholly-owned subsidiary of PPL Electric, formed to issue
  transition bonds under the Customer Choice Act.
PPL Wallingford
-
PPL Wallingford LLC,
  a 225 MW gas-fired station in Wallingford, Connecticut, and a subsidiary of
  PPL Generation.
Preferred Securities
- Company-obligated mandatorily
  redeemable preferred securities issued by PPL Capital Trust, PPL Capital Trust
  II and PPL Capital Funding Trust I, holding solely debentures of PPL Electric
  in the case of PPL Capital Trust and PPL Capital Trust II, and solely debentures
  of PPL Capital Funding in the case of PPL Capital Funding Trust I.
PUC
(Pennsylvania Public Utility Commission)
  - state agency that regulates certain ratemaking, services, accounting, and
  operations of Pennsylvania utilities.
PURPA
(Public Utility Regulatory Policies Act
  of 1978) - legislation passed by the U.S. Congress to encourage energy conservation,
  efficient use of resources, and equitable rates.
PURTA
- Public Utility Realty Tax Act.
RMC
- Risk Management Committee.
SCR
- selective catalytic reduction, a pollution
  control process.
SEC
- Securities and Exchange Commission.
SFAS
(Statement of Financial Accounting Standards)
  - accounting and financial reporting rules issued by the FASB.
SO
2
- sulfur dioxide.
Superfund
- federal environmental legislation
  that addresses remediation of contaminated sites; states also have similar statutes.
Synfuel projects
- production facilities that
  manufacture synthetic fuel from coal or coal byproducts. Favorable federal tax
  credits are available on qualified synfuel products.
Tolling agreement
- agreement whereby PPL, as
  owner of an electric generating facility, agrees to use that facility to convert
  ("toll") fuel provided by a third party into electric energy for delivery
  back to the third party.
WPD (South Wales)
- Western Power Distribution
  (South Wales) plc, a Welsh regional electric utility company.
WPD (South West)
- Western Power Distribution
  (South West) plc, a British regional electric utility company.
WPDH Limited
- Western Power Distribution Holdings
  Limited, formerly WPD 1953 Limited, a jointly-owned subsidiary of PPL Global
  and Mirant. WPDH Limited owns WPD Holdings U.K., which owns WPD (South West)
  and WPD (South Wales).
WPDL
- Western Power Distribution Limited, a
  wholly-owned subsidiary of WPD Investment Holdings Limited, which is a jointly-owned
  subsidiary of PPL Global and Mirant. WPDL owns 100% of the common shares of
  Hyder.
Forward-looking Information
Certain statements contained in this Form 10-Q concerning expectations,
  beliefs, plans, objectives, goals, strategies, future events or performance
  and underlying assumptions and other statements which are other than statements
  of historical facts are "forward-looking statements" within the meaning
  of the federal securities laws. Although PPL, PPL Energy Supply, PPL Electric
  and PPL Montana believe that the expectations and assumptions reflected in these
  statements are reasonable, there can be no assurance that these expectations
  will prove to be correct. These forward-looking statements involve a number
  of risks and uncertainties, and actual results may differ materially from the
  results discussed in the forward-looking statements. In addition to the specific
  factors discussed in the Management's Discussion and Analysis of the Financial
  Condition and Results of Operations sections herein, the following are among
  the important factors that could cause actual results to differ materially from
  the forward-looking statements:
market demand and prices for energy, capacity and fuel;
weather variations affecting customer energy usage;
competition in retail and wholesale power markets;
the effect of any business or industry restructuring;
the profitability and liquidity of PPL and its subsidiaries;
new accounting requirements or new interpretations or applications
      of existing requirements;
operation of existing facilities and operating costs;
environmental conditions and requirements;
system conditions and operating costs;
development of new projects, markets and technologies;
performance of new ventures;
political, regulatory or economic conditions in states,
      regions or countries where PPL or its subsidiaries conduct business;
receipt and renewals of necessary governmental approvals;
impact of state or federal investigations applicable to
      PPL and its subsidiaries and the energy industry;
capital market conditions and decisions regarding capital
      structure;
stock price performance;
securities and credit ratings;
foreign exchange rates;
new state or federal legislation;
national or regional economic conditions, including any
      potential effects arising from the September 11, 2001 terrorist attacks
      in the U.S. and any consequential hostilities; and
the commitments and liabilities of PPL and its subsidiaries.
Any such forward-looking statements should be considered in
  light of such important factors and in conjunction with other documents of PPL,
  PPL Energy Supply, PPL Electric and PPL Montana on file with the SEC.
New factors that could cause actual results to differ materially
  from those described in forward-looking statements emerge from time to time,
  and it is not possible for PPL, PPL Energy Supply, PPL Electric or PPL Montana
  to predict all of such factors, or the extent to which any such factor or combination
  of factors may cause actual results to differ from those contained in any forward-looking
  statement. Any forward-looking statement speaks only as of the date on which
  such statement is made, and PPL, PPL Energy Supply, PPL Electric and PPL Montana
  undertake no obligations to update the information contained in such statement
  to reflect subsequent developments or information.
PPL
      CORPORATION AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of PPL, the unaudited financial
      statements that follow reflect all adjustments necessary to present fairly
      the Condensed Consolidated Balance Sheet as of June 30, 2002 and December
      31, 2001, and the Condensed Consolidated Statement of Income, the Condensed
      Consolidated Statement of Cash Flows and the Condensed Consolidated Statement
      of Shareowners' Common Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except per share
      data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Operating Revenues
Utility
$
742
$
695
$
1,547
$
1,522
Unregulated retail electric and gas
42
104
91
243
Wholesale energy marketing and trading
352
431
620
889
Energy related businesses
165
181
318
323
Total
1,301
1,411
2,576
2,977
Operating Expenses
Operation
Fuel
128
127
274
314
Energy purchases
343
427
602
823
Other
186
192
377
376
Amortization of recoverable transition costs
50
55
103
126
Maintenance
82
94
144
148
Depreciation
64
67
126
133
Taxes, other than income
47
39
98
80
Energy related businesses
146
162
272
275
Other charges
Write-down of international energy projects
94
100
Workforce reduction
74
74
Total
1,214
1,163
2,170
2,275
Operating Income
87
248
406
702
Other Income - net
6
6
11
12
Interest Expense
100
88
197
192
Income (Loss) Before Income Taxes and
Minority Interest
(7
)
166
220
522
Income Taxes
4
35
66
161
Minority Interest
1
1
2
3
Income (Loss) Before Cumulative Effect of
a Change in Accounting Principle
(12
)
130
152
358
Cumulative Effect of a Change in
Accounting Principle
(150
)
Income (Loss) Before Dividends and
Distributions on Preferred Securities
(12
)
130
2
358
Dividends and Distributions - Preferred Securities
15
13
32
19
Net Income (Loss)
$
(27
)
$
117
$
(30
)
$
339
Earnings (Loss) Per Share of Common Stock
Basic
$
(0.18
)
$
0.80
$
(0.20
)
$
2.33
Diluted
$
(0.18
)
$
0.80
$
(0.20
)
$
2.31
Dividends Declared per Share of Common Stock
$
0.36
$
0.265
$
0.72
$
0.53
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
Six Months Ended
June 30,
2002
2001
Net Cash Provided by Operating Activities
$
19
$
197
Cash Flows From Investing Activities
Expenditures for property, plant and equipment
(248
)
(207
)
Investment in generating assets and electric energy
      projects
(256
)
(190
)
Decrease in notes receivable from affiliates
210
Other investing activities - net
(19
)
(3
)
Net cash used in investing activities
(523
)
(190
)
Cash Flows From Financing Activities
Issuance of company-obligated mandatorily redeemable
      preferred securities
575
Retirement of company-obligated mandatorily redeemable
      preferred
securities
(100
)
Issuance of common stock
20
42
Retirement of long-term debt
(191
)
(355
)
Payment of common and preferred dividends
(127
)
(90
)
Net increase (decrease) in short-term debt
163
(473
)
Other financing activities - net
(1
)
(24
)
Net cash used in financing activities
(236
)
(325
)
Net Decrease In Cash and Cash Equivalents
(740
)
(318
)
Cash and Cash Equivalents at Beginning of Period
933
480
Cash and Cash Equivalents at End of Period
$
193
$
162
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Assets
Current Assets
Cash and
      cash equivalents
$
193
$
933
Accounts
      receivable (less reserve: 2002, $124; 2001, $121)
635
539
Unbilled
      revenues
218
248
Fuel, materials
      and supplies - at average cost
237
251
Prepayments
114
43
Deferred
      income taxes
91
77
Price risk
      management assets
111
123
Other
102
116
1,701
2,330
Investments
Investment
      in unconsolidated affiliates - at equity
646
586
Investment
      in unconsolidated affiliates - at cost
120
114
Nuclear
      plant decommissioning trust fund
281
276
Other
18
23
1,065
999
Property, Plant and Equipment
      - net
Electric
      plant in service
Transmission
      and distribution
2,677
2,566
Generation
2,521
2,464
General
311
310
5,509
5,340
Construction
      work in progress
315
181
Nuclear
      fuel
116
127
Electric
      plant
5,940
5,648
Gas and
      oil plant
199
196
Other property
109
103
6,248
5,947
Regulatory and Other Noncurrent
      Assets
Recoverable
      transition costs
2,069
2,172
Other
1,111
1,118
3,180
3,290
$
12,194
$
12,566
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Short-term debt
$
281
$
118
Long-term debt
566
498
Above market NUG contracts
76
87
Accounts payable
376
558
Taxes
42
138
Interest
59
61
Dividends
62
51
Price risk management liabilities
112
106
Other
206
213
1,780
1,830
Long-term Debt
4,882
5,081
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes and investment tax credits
1,500
1,449
Above market NUG contracts
390
493
Other
927
911
2,817
2,853
Commitments and Contingent Liabilities
Minority Interest
38
38
Company-obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trusts Holding Solely
Company Debentures
725
825
Preferred Stock
With sinking fund requirements
31
31
Without sinking fund requirements
51
51
82
82
Shareowners' Common Equity
Common stock
2
2
Capital in excess of par value
1,976
1,956
Treasury stock
(836
)
(836
)
Earnings reinvested
887
1,023
Accumulated other comprehensive loss
(120
)
(251
)
Capital stock expense and other
(39
)
(37
)
1,870
1,857
$
12,194
$
12,566
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED STATEMENT OF SHAREOWNERS' COMMON EQUITY
AND COMPREHENSIVE INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Common stock at beginning of period
$
2
$
2
$
2
$
2
Common stock at end of period
2
2
2
2
Capital in excess of par value
      at beginning of period
1,975
1,919
1,956
1,895
Common stock issued (a)
1
18
20
42
Capital in excess of par value
      at end of period
1,976
1,937
1,976
1,937
Treasury stock at beginning of
      period
(836
)
(836
)
(836
)
(836
)
Treasury stock at end of period
(836
)
(836
)
(836
)
(836
)
Earnings reinvested at beginning
      of period
967
1,182
1,023
999
Net income (loss) (b)
(27
)
117
(30
)
339
Cash dividends declared on common
      stock
(53
)
(39
)
(106
)
(78
)
Earnings reinvested at end of period
887
1,260
887
1,260
Accumulated other comprehensive
      loss at beginning of period
(255
)
(253
)
(251
)
(36
)
Foreign currency translation adjustments
      (b) (c)
136
(46
)
144
(71
)
Unrealized loss on available-for-sale
      securities (b)
(1
)
(1
)
(2
)
(3
)
Unrealized gain (loss) on qualifying
      derivatives (b) (d)
225
(11
)
35
Accumulated other comprehensive
      loss at end of period
(120
)
(75
)
(120
)
(75
)
Capital stock expense and other
      at beginning of period
(39
)
(12
)
(37
)
(12
)
Issuance costs and other charges
      to issue PEPS Units
(24
)
(24
)
Other
(2
)
Capital stock expense and other
      at end of period
(39
)
(36
)
(39
)
(36
)
Total Shareowners' Common Equity
$
1,870
$
2,252
$
1,870
$
2,252
Common stock shares at beginning
      of period (a)
147,122
145,623
146,580
145,041
Common stock issued through the
      ESOP, DRIP,
ICP, ICPKE and structured equity program
43
410
585
992
Common stock shares at end of period
147,165
146,033
147,165
146,033
(a)
In thousands. $.01 par value, 390
      million shares authorized. Each share entitles the holder to one vote on
      any question presented to any shareowners' meeting.
(b)
Statement of Comprehensive Income:
Net income (loss)
$
(27
)
$
117
$
(30
)
$
339
Other comprehensive income (loss):
Foreign currency translation adjustments,
      net of tax (benefit) of $(4), $(3), $(10), $(13)
136
(46
)
144
(71
)
Unrealized loss on available-for-sale
      securities, net of tax (benefit) of $(1), $0, $(1), $(2)
(1
)
(1
)
(2
)
(3
)
Unrealized gain (loss) on qualifying
      derivatives, net of tax (benefit) of $149, $(7), $17
225
(11
)
35
Total other comprehensive income
      (loss)
135
178
131
(39
)
Comprehensive Income
$
108
$
295
$
101
$
300
(c)
Includes a $94 million credit
      for the write-off of the CEMAR cumulative translation adjustment in June
      2002. See Note 14 for additional information.
(d)
Includes a $(182) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001.
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
(THIS PAGE LEFT BLANK INTENTIONALLY.)
PPL
      ENERGY SUPPLY, LLC AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of PPL Energy Supply, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Member's Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Operating Revenues
Wholesale energy marketing and
      trading
$
352
$
433
$
620
$
889
Wholesale energy marketing to affiliates
339
305
708
639
Utility
109
101
212
212
Unregulated retail electric and
      gas
42
103
91
243
Energy related businesses
164
170
315
306
Total
1,006
1,112
1,946
2,289
Operating Expenses
Operation
Fuel
109
106
221
245
Energy purchases
286
370
484
700
Energy purchases from affiliates
40
53
86
98
Other operation and maintenance
197
215
387
388
Transmission
6
15
13
34
Depreciation
39
42
76
85
Taxes, other than income
10
12
19
24
Energy related businesses
136
146
251
240
Other charges
Write-down of international energy projects
94
100
Workforce reduction
40
40
Total
957
959
1,677
1,814
Operating Income
49
153
269
475
Other Income - net
12
18
21
32
Interest Expense
19
2
36
2
Interest Expense with Affiliate
3
1
26
Income Before Income Taxes and
      Minority
Interest
42
166
253
479
Income Taxes
32
41
97
151
Minority Interest
1
1
2
3
Income Before Cumulative Effect
      of a Change
in Accounting Principle
9
124
154
325
Cumulative Effect of a Change in
      Accounting
Principle
(150
)
Net Income
$
9
$
124
$
4
$
325
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED
      STATEMENT OF CASH FLOWS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Six Months Ended
June 30,
2002
2001
Net Cash Provided by (Used in) Operating Activities
$
(36
)
$
72
Cash Flows From Investing Activities
Expenditures for property, plant and equipment
(157
)
(131
)
Investment in generating assets and electric energy
      projects
(256
)
(190
)
Net decrease in notes receivable from affiliates
152
262
Other investing activities - net
(17
)
8
Net cash used in investing activities
(278
)
(51
)
Cash Flows From Financing Activities
Retirement of long-term debt
(10
)
(21
)
Contributions from Member
5
1,567
Distributions to Member
(552
)
(324
)
Net increase (decrease) in short-term debt
165
(78
)
Net decrease in short-term debt payable to affiliates
(1,191
)
Other financing activities - net
(3
)
Net cash used in financing activities
(395
)
(47
)
Net Decrease In Cash and Cash Equivalents
(709
)
(26
)
Cash and Cash Equivalents at Beginning of Period
815
130
Cash and Cash Equivalents at End of Period
$
106
$
104
Non-cash contributions from Member:
Intercompany notes and accounts receivable
$
920
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED BALANCE SHEET
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
106
$
815
Accounts receivable (less reserve:
      2002, $102; 2001,
$100)
393
343
Unbilled revenues
118
114
Accounts receivable from affiliates
184
113
Notes receivable from affiliates
153
305
Fuel, materials and supplies -
      at average cost
203
209
Price risk management assets
107
123
Other
125
100
1,389
2,122
Investments
Investment in unconsolidated affiliates
      - at equity
646
586
Investment in unconsolidated affiliates
      - at cost
120
114
Note receivable from affiliates
90
90
Nuclear plant decommissioning trust
      fund
281
276
Other
4
7
1,141
1,073
Property, Plant and Equipment
      - net
Electric plant in service
Transmission and distribution
535
465
Generation
2,521
2,464
General
119
122
3,175
3,051
Construction work in progress
279
146
Nuclear fuel
116
127
Electric plant
3,570
3,324
Gas and oil plant
24
23
Other property
74
71
3,668
3,418
Other Noncurrent Assets
541
548
$
6,739
$
7,161
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED BALANCE SHEET
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Short-term debt
$
281
$
118
Long-term debt
37
24
Accounts payable
313
493
Accounts payable to affiliates
24
47
Above market NUG contracts
76
87
Taxes
49
94
Collateral on PLR energy supply to
      affiliate
68
Deferred revenue on PLR energy supply
      to affiliate
12
11
Price risk management liabilities
108
97
Other
140
165
1,108
1,136
Long-term Debt
745
737
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes and investment
      tax credits
160
55
Above market NUG contracts
390
493
Nuclear plant decommissioning
290
294
Deferred revenue on PLR energy supply
      to affiliate
75
79
Other
374
357
1,289
1,278
Commitments and Contingent Liabilities
Minority Interest
38
38
Member's Equity
3,559
3,972
$
6,739
$
7,161
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED
      STATEMENT OF MEMBER'S EQUITY AND
COMPREHENSIVE INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Member's Equity at beginning of
      period
$
3,742
$
3,255
$
3,972
$
2,577
Member contributions
4
1,567
5
2,486
Net income (a)
9
124
4
325
Other comprehensive income (loss),
      net of tax:
Foreign currency translation adjustments
      (a)
(b)
136
(46
)
144
(71
)
Unrealized gain (loss) on qualifying
derivatives (a) (c)
(1
)
218
(14
)
33
Distributions to Member
(331
)
(552
)
(232
)
Member's Equity at end of period
$
3,559
$
5,118
$
3,559
$
5,118
(a)
Statement of Comprehensive Income:
Net income
$
9
$
124
$
4
$
325
Other comprehensive income (loss):
Foreign currency translation adjustments,
net of tax (benefit) of $(4),
$(3), $(10), $(13)
136
(46
)
144
(71
)
Unrealized loss on qualifying derivatives,
net of tax (benefit) of $(1),
$147, $(10), $23
(1
)
218
(14
)
33
Total other comprehensive income
      (loss)
135
172
130
(38
)
Comprehensive Income
$
144
$
296
$
134
$
287
(b)
Includes a $94 million credit
      for the write-off of the CEMAR cumulative translation adjustment in June
      2002. See Note 14 for additional information.
(c)
Includes a $(182) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001.
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
(THIS PAGE LEFT BLANK INTENTIONALLY.)
PPL
      ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of PPL Electric, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Shareowner's Common Equity and Comprehensive Income for the
      periods ended June 30, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Electric Utilities Corporation and
      Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Operating Revenues
Retail electric
$
595
$
558
$
1,236
$
1,192
Retail electric to affiliate
8
6
13
11
Wholesale electric
6
7
13
17
Wholesale electric to affiliate
40
43
82
88
Energy related businesses
2
11
4
17
Total
651
625
1,348
1,325
Operating Expenses
Operation
Energy purchases
51
44
105
89
Energy purchases from affiliate
339
300
708
634
Other
61
62
116
121
Amortization of recoverable transition costs
50
55
103
126
Maintenance
16
13
27
26
Depreciation
23
22
46
45
Taxes, other than income
38
27
79
55
Energy related businesses
1
10
3
16
Workforce reduction
33
33
Total
612
533
1,220
1,112
Operating Income
39
92
128
213
Other Income - net
2
1
7
5
Interest Expense
53
52
109
114
Income (Loss) Before Income
      Taxes
(12
)
41
26
104
Income Taxes (Benefit)
(9
)
13
3
36
Income (Loss) Before Dividends
      on Preferred
Securities
(3
)
28
23
68
Dividends - Preferred Securities
5
7
11
13
Net Income (Loss)
$
(8
)
$
21
$
12
$
55
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED
      STATEMENT OF CASH FLOWS
PPL Electric Utilities Corporation and
      Subsidiaries
(Unaudited)
(Millions of Dollars)
Six Months Ended
June 30,
2002
2001
Net Cash Provided by Operating
      Activities
$
82
$
155
Cash Flows From Investing Activities
Expenditures for property, plant
      and equipment
(86
)
(65
)
Net decrease in notes receivable
      from parent and affiliates
270
70
Other investing activities - net
3
(10
)
Net cash provided by (used in)
      investing activities
187
(5
)
Cash Flows From Financing Activities
Retirement of long-term debt
(171
)
(329
)
Retirement of company-obligated
      mandatorily redeemable preferred securities
(100
)
Deposit of funds for the retirement
      of long-term debt
(5
)
Payment of common and preferred
      dividends
(42
)
(37
)
Redemption of preferred stock
(1
)
Net decrease in short-term debt
(40
)
Net cash used in financing activities
(313
)
(412
)
Net Decrease in Cash and Cash
      Equivalents
(44
)
(262
)
Cash and Cash Equivalents at Beginning
      of Period
79
267
Cash and Cash Equivalents at End
      of Period
$
35
$
5
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and
      Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
35
$
79
Accounts receivable (less reserve:
      2002, $21; 2001, $19)
206
179
Unbilled revenues
99
131
Accounts receivable from affiliates
23
18
Notes receivable from affiliates
80
350
Income tax receivable
35
35
Prepayments
55
4
Prepayment on PLR energy supply
      from affiliate
12
11
Deferred income taxes
43
41
Collateral on PLR energy supply
      from affiliate
68
Other
35
35
691
883
Property, Plant and Equipment
      - net
Electric plant in service
Transmission and distribution
2,142
2,101
General
184
183
2,326
2,284
Construction work in progress
37
32
Electric plant
2,363
2,316
Other property
3
3
2,366
2,319
Regulatory and Other Noncurrent
      Assets
Recoverable transition costs
2,069
2,172
Prepayment on PLR energy supply
      from affiliate
75
79
Other
450
468
2,594
2,719
$
5,651
$
5,921
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and
      Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Long-term debt
$
269
$
274
Accounts payable
32
34
Accounts payable to affiliates
159
122
Taxes
48
74
Interest
35
34
Other
52
46
595
584
Long-term Debt
3,019
3,185
Deferred Credits and Other Noncurrent
      Liabilities
Deferred income taxes and investment
      tax credits
750
757
Other
141
132
891
889
Commitments and Contingent Liabilities
Company-obligated Mandatorily Redeemable
      Preferred
Securities of Subsidiary Trusts Holding Solely
Company Debentures
150
250
Preferred Stock
With sinking fund requirements
31
31
Without sinking fund requirements
51
51
82
82
Shareowner's Common Equity
Common stock
1,476
1,476
Additional paid-in capital
51
51
Treasury stock
(912
)
(912
)
Earnings reinvested
315
332
Capital stock expense and other
(16
)
(16
)
914
931
$
5,651
$
5,921
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED CONSOLIDATED
      STATEMENT OF SHAREOWNER'S COMMON EQUITY
AND COMPREHENSIVE INCOME
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Common stock at beginning of period
$
1,476
$
1,476
$
1,476
$
1,476
Common stock at end of period
1,476
1,476
1,476
1,476
Additional paid-in capital at beginning
      of period
51
55
51
55
Additional paid-in capital at end
      of period
51
55
51
55
Treasury stock at beginning of
      period
(912
)
(632
)
(912
)
(632
)
Treasury stock at end of period
(912
)
(632
)
(912
)
(632
)
Earnings reinvested at beginning
      of period
333
304
332
277
Net income (loss) (b)
(8
)
21
12
55
Cash dividends declared on common
      stock
(10
)
(24
)
(29
)
(31
)
Earnings reinvested at end of period
315
301
315
301
Accumulated other comprehensive
      income (loss) at
beginning of period
Unrealized loss on qualifying derivatives
      (b)
(1
)
(1
)
Accumulated other comprehensive
      loss at end of
period
(1
)
(1
)
Capital stock expense and other
      at beginning of
period
(16
)
(16
)
(16
)
(16
)
Capital stock expense and other
      at end of period
(16
)
(16
)
(16
)
(16
)
Total Shareowner's Common Equity
$
914
$
1,183
$
914
$
1,183
Common stock shares at beginning
      of period (a)
78,030
102,230
78,030
102,230
Common stock shares at end of period
78,030
102,230
78,030
102,230
(a)
In thousands. No par value. 170 million shares
      authorized. All common shares of PPL Electric stock are owned by PPL.
(b)
Statement of Comprehensive Income:
Net income (loss)
$
(8
)
$
21
$
12
$
55
Other comprehensive loss:
Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $0, $(1)
(1
)
(1
)
Total other comprehensive loss
(1
)
(1
)
Comprehensive Income (Loss)
$
(8
)
$
20
$
12
$
54
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
PPL
      MONTANA, LLC AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
In the opinion of PPL Montana, the unaudited
      financial statements that follow reflect all adjustments necessary to present
      fairly the Condensed Consolidated Balance Sheet as of June 30, 2002 and
      December 31, 2001, and the Condensed Consolidated Statement of Income, the
      Condensed Consolidated Statement of Cash Flows and the Condensed Consolidated
      Statement of Member's Equity and Comprehensive Income for the periods ended
      June 30, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Montana, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Operating Revenues
Wholesale energy marketing and
      trading
$
56
$
76
$
105
$
226
Wholesale energy marketing to affiliate
13
23
30
55
Other
1
1
Total
69
99
136
282
Operating Expenses
Operation
Fuel
6
5
14
14
Energy purchases
17
17
22
34
Other operation and maintenance
31
29
54
49
Transmission
1
2
3
5
Depreciation
2
2
5
5
Taxes, other than income
4
5
8
8
Total
61
60
106
115
Operating Income
8
39
30
167
Other Income - net
1
1
1
2
Interest Expense
2
2
3
4
Income Before Income Taxes
7
38
28
165
Income Taxes
3
15
11
65
Net Income
$
4
$
23
$
17
$
100
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Montana, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Six Months Ended
June 30,
2002
2001
Net Cash Provided by Operating
      Activities
$
20
$
123
Cash Flows From Investing Activities
Proceeds from sale of property,
      plant and equipment
1
Expenditures for property, plant
      and equipment
(13
)
(12
)
Net cash used in investing activities
(13
)
(11
)
Cash Flows From Financing Activities
Repayments on revolving line of
      credit
(14
)
Borrowings on revolving line of
      credit
10
Distribution to Member
(167
)
Net cash used in financing activities
(4
)
(167
)
Net Increase (Decrease) in Cash
      and Cash Equivalents
3
(55
)
Cash and Cash Equivalents at Beginning
      of Period
24
79
Cash and Cash Equivalents at End
      of Period
$
27
$
24
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED BALANCE SHEET
PPL Montana, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
June 30,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
27
$
24
Accounts receivable (less reserve: 2002,
      $47; 2001, $47)
25
22
Accounts receivable from joint owners
7
6
Accounts receivable from affiliates
2
4
Fuel, materials and supplies - at average
      cost
6
6
Price risk management assets
13
14
Deferred income taxes
8
4
Prepayments and other
5
4
93
84
Noncurrent Assets
Property, plant and equipment - net
433
425
Deferred income taxes
18
20
Other
122
122
573
567
$
666
$
651
Liabilities and Equity
Current Liabilities
Accounts payable
$
55
$
36
Accounts payable to Member
14
11
Revolving line of credit
40
44
Accrued expenses
22
14
Price risk management liabilities
5
4
Wholesale energy commitments
2
13
138
122
Noncurrent Liabilities
Employee benefit obligations
17
16
Wholesale energy commitments
63
65
Other
23
27
103
108
Commitments and Contingent Liabilities
Member's Equity
425
421
$
666
$
651
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
CONDENSED
      CONSOLIDATED STATEMENT OF MEMBER'S EQUITY AND
COMPREHENSIVE INCOME
PPL Montana, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
Three Months Ended
June 30,
Six Months Ended
June 30,
2002
2001
2002
2001
Member's Equity at beginning of
      period
$
420
$
248
$
421
$
453
Net income (a)
4
23
17
100
Other comprehensive income (loss),
      net of tax
Unrealized gain (loss) on qualifying
      derivatives
(a) (b)
1
183
(13
)
1
Distribution to Member
(67
)
(167
)
Member's Equity at end of period
$
425
$
387
$
425
$
387
(a)
Statement of Comprehensive Income:
Net income
$
4
$
23
$
17
$
100
Other comprehensive income (loss):
Unrealized gain (loss) on qualifying
      derivatives, net of tax (benefit) of $0, $117, $(9), $0
1
183
(13
)
1
Total other comprehensive income
      (loss)
1
183
(13
)
1
Comprehensive Income
$
5
$
206
$
4
$
101
(b)
Includes a $(156) million cumulative effect of
      a change in accounting principle from adoption of SFAS 133 on January 1,
      2001.
The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.
Combined Notes to Condensed Consolidated
  Financial Statements
Terms and abbreviations appearing in Combined Notes to Condensed
  Consolidated Financial Statements are explained in the glossary.
Interim Financial Statements
(PPL, PPL Energy Supply, PPL Electric and PPL Montana)
Certain information in footnote disclosures, normally included
      in financial statements prepared in accordance with accounting principles
      generally accepted in the U.S., has been condensed or omitted in this Form
      10-Q under the rules and regulations of the SEC. These financial statements
      should be read in conjunction with the financial statements and notes included
      in each company's Annual Report to the SEC on Form 10-K for the year ended
      December 31, 2001.
Certain amounts in the June 30, 2001 and December 31, 2001
      financial statements have been reclassified to conform to the presentation
      in the June 30, 2002 financial statements.
Summary of Significant Accounting Policies
The following accounting policy disclosures represent updates
      to the "Summary of Significant Accounting Policies" footnote in
      each company's Annual Report to the SEC on Form 10-K for the year ended
      December 31, 2001.
Utility Revenue
(PPL and PPL Energy Supply)
The Statement of Income "Operating Revenues - Utility"
      line item contains operating revenues from domestic and international rate
      regulated delivery operations. This revenue was previously reported as "Retail
      electric and gas" and "Wholesale energy marketing and trading"
      by PPL and as "Retail electric and gas" by PPL Energy Supply.
Independent System Operator
(PPL, PPL Energy Supply and PPL Electric)
Certain PPL subsidiaries participate in the PJM in several
      roles. Certain PPL subsidiaries also participate in the New England Power
      Pool (NEPOOL) and the New York ISO (NYISO) in a less significant way. In
      PJM, PPL EnergyPlus is a marketer, a load-serving entity to its customer-choice
      customers, and a buyer for PPL's Pennsylvania generation subsidiaries. PPL
      Electric is a transmission owner and provider of last resort load in PJM.
      In NEPOOL, PPL EnergyPlus is a marketer and a buyer for PPL's New England
      generating assets. In the NYISO, PPL EnergyPlus acts as a marketer. PPL
      Electric does not participate in NEPOOL or NYISO.
A function of interchange accounting is to "match"
      participants' MWh entitlements (generation plus scheduled bilateral purchases)
      against their MWh obligations (load plus scheduled bilateral sales) during
      every hour of every day. If the net result during any given hour is an entitlement,
      the participant is credited with a spot market sale to the ISO at the respective
      market price for that hour; if the net result is an obligation, the participant
      is charged with a spot market purchase from the ISO at the respective market
      price for that hour. ISO purchases and sales are not allocated to individual
      customers.
PPL records the hourly net sales and purchases in its financial
      statements as sales to and purchases from the respective ISOs, in accordance
      with FERC and industry accounting.
Segment and Related Information
(PPL and PPL Energy Supply)
PPL's reportable segments are Supply, Delivery and International.
      The Supply segment primarily consists of the domestic energy marketing,
      domestic generation and domestic development operations of PPL Energy Supply.
      The Delivery segment includes the regulated electric and gas delivery operations
      of PPL Electric and PPL Gas Utilities. The International segment includes
      PPL Global's responsibility for the acquisition, development, ownership
      and operation of international energy projects. The majority of PPL Global's
      international investments are located in the U.K., Chile and El Salvador.
PPL Energy Supply's reportable segments are Supply and
      International. The International segment at the PPL Energy Supply level
      is consistent with the International segment at the PPL level. The Supply
      segment information reported at the PPL Energy Supply level will not agree
      with the Supply segment information reported at the PPL level. Additional
      Supply segment functions, including telecommunications, exist at PPL that
      are outside of PPL Energy Supply. Furthermore, certain income items, including
      PLR revenue and certain interest income, exist at the PPL Energy Supply
      level, but are eliminated in consolidation at the PPL level. Finally, certain
      expense items are fully allocated to the segments at the PPL level only.
Segments include direct charges, as well as an allocation
      of indirect corporate costs, for services provided by PPL Services. These
      service costs include functions such as financial, legal, human resources
      and information services.
See Note 9 for a discussion of the PLR contracts between
      PPL Electric and PPL EnergyPlus. PPL EnergyPlus' sales to PPL Electric,
      to meet PPL Electric's PLR load, are included in the Supply segment of PPL
      Energy Supply. PPL Electric's sales of this electricity to its PLR customers
      are included in the Delivery segment of PPL. There are no intersegment revenues
      for PPL or PPL Energy Supply.
Previously reported information has been reclassified to
      conform to the current presentation. Changes from previous reports include
      the allocation of interest expense to segments, and the reporting of PLR
      revenues at PPL in the Delivery segment rather than in the Supply segment.
      Financial data for the segments are as follows (millions of dollars):
(PPL)
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Income Statement Data
Revenues from external customers
Supply
$
514
$
607
$
943
$
1,239
International
153
140
294
303
Delivery
634
664
1,339
1,435
1,301
1,411
2,576
2,977
Net Income (Loss)
Supply
58
78
174
239
International (a)
(77
)
18
(222
)
38
Delivery
(8
)
21
18
62
$
(27
)
$
117
$
(30
)
$
339
June 30,
2002
December 31,
2001
Balance Sheet Data
Total assets
Supply
$
4,687
$
4,720
International
1,736
1,749
Delivery
5,771
6,097
$
12,194
$
12,566
(a)
The International segment includes the "Cumulative
          Effect of a Change in Accounting Principle" recorded in March 2002.
          See Note 12 for additional information. The international segment also
          includes the write-downs of the CEMAR investment described in Note 14.
(PPL Energy Supply)
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Income Statement Data
Revenues from external customers
Supply
$
853
$
972
$
1,652
$
1,986
International
153
140
294
303
1,006
1,112
1,946
2,289
Net Income
Supply
86
106
226
287
International (a)
(77
)
18
(222
)
38
$
9
$
124
$
4
$
325
June 30,
2002
December 31,
2001
Balance Sheet Data
Total assets
Supply
$
5,003
$
5,412
International
1,736
1,749
$
6,739
$
7,161
(a)
The International segment includes the "Cumulative
          Effect of a Change in Accounting Principle" recorded in March 2002.
          See Note 12 for additional information. The international segment also
          includes the write-downs of the CEMAR investment described in Note 14.
Investment in Unconsolidated Affiliates - at Equity
(PPL and PPL Energy Supply)
Investments in unconsolidated affiliates accounted for under
  the equity method by both PPL and PPL Energy Supply were $646 million and $586
  million at June 30, 2002 and December 31, 2001. The most significant investment
  was PPL Global's investment in WPDH Limited, which was $406 million at June
  30, 2002 and $328 million at December 31, 2001. At June 30, 2002, PPL Global
  had a 51% equity ownership interest in WPDH Limited, but shared joint control
  with Mirant. The respective Shareholders' Agreements provide for PPL Global
  and Mirant each to elect four directors to the Board, with majority Board approval
  generally required for significant operating and financial decisions, including
  but not limited to:
issuance, purchase, redemption, reorganization or reduction
      of share capital or any equity security;
alteration of any of the provisions of the articles of
      association;
petition for the appointment of an administrator or liquidator
      or invite any person to appoint an administrative receiver;
fundamentally change the nature of the business;
make any election in respect of UK Corporation Tax which
      would have a material adverse effect on one shareholder but not on the other;
declare dividends; and
incur additional indebtedness if to do so would result
      in a reduction of the company's credit rating to below that of investment
      grade.
Accordingly, PPL Global accounts for its investment in WPDH
  Limited (and other investments where it has majority ownership but lacks voting
  control) under the equity method of accounting.
Summarized below is information from the financial statements
  of unconsolidated affiliates accounted for under the equity method, underlying
  the amounts included in PPL's and PPL Energy Supply's consolidated financial
  statements (millions of dollars):
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Income Statement Data
Revenues
$
172
$
156
$
350
$
332
Operating Income
114
80
211
167
Net Income
52
65
81
144
June 30,
2002
December 31,
2001
Balance Sheet Data
Current Assets
$
1,235
$
612
Noncurrent Assets
4,792
5,517
Current Liabilities
423
502
Noncurrent Liabilities
3,974
3,955
Earnings Per Share
(PPL)
Basic EPS is calculated by dividing "Net Income (Loss)"
      on the Statement of Income by the weighted average number of common shares
      outstanding during the period. In the calculation of diluted EPS, weighted
      average shares outstanding are increased for additional shares that would
      be outstanding if potentially dilutive securities were converted to common
      stock. Potentially dilutive securities consist of stock options granted
      under the incentive compensation plans, stock units representing common
      stock granted  under  directors  compensation  programs
      and PEPS Units.
Preferred dividends are included in net income in the computation
      of basic and diluted EPS.
The basic and diluted EPS calculations, and the reconciliation
      of the shares used in the calculations, are shown below:
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of Dollars
          or Thousands of Shares)
Income (Numerator)
Net Income (Loss) - before
cumulative effect of a
change in accounting
principle
$
(27
)
$
117
$
120
$
339
Cumulative effect of
a change in
accounting
principle
(150
)
Net Income (Loss)
$
(27
)
$
117
$
(30
)
$
339
Shares (Denominator)
Shares for Basic EPS
147,149
145,901
146,927
145,608
Add: Incremental shares:
Stock options
730
275
794
Stock units
69
73
69
Shares for Diluted EPS
147,149
146,700
147,275
146,471
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of Dollars
          or Thousands of Shares)
Basic EPS
Net Income (Loss) - before
cumulative effect of a
change in accounting
principle
$
(0.18
)
$
0.80
$
0.82
$
2.33
Cumulative effect
of a change in
accounting
principle
(1.02
)
Net Income (Loss)
$
(0.18
)
$
0.80
$
(0.20
)
$
2.33
Diluted EPS
Net Income (Loss) - before
cumulative effect of a
change in accounting
principle
$
(0.18
)
$
0.80
$
.82
$
2.31
Cumulative effect
of a change in
accounting
principle
(1.02
)
Net Income (Loss)
$
(0.18
)
$
0.80
$
(0.20
)
$
2.31
In May 2001, PPL issued 23 million PEPS Units that contain
      a purchase contract component for PPL's common stock. The PEPS Units will
      only be dilutive if the average price of PPL's common stock exceeds $65.03
      for any period. Therefore, they were excluded from the diluted EPS calculations
      for the three and six months ended June 30, 2002 and June 30, 2001.
Stock options to purchase 3,058,000 PPL common shares and
      67,000 directors stock units for the three months ended June 30, 2002 were
      not included in that period's computation of diluted EPS. Since PPL had
      a loss before the cumulative effect of a change in accounting principle,
      the effect would have been antidilutive.
Stock options to purchase 879,000 PPL common shares for
      the six months ended June 30, 2002 were not included in that period's computation
      of diluted EPS because the exercise price of the options was greater than
      the average market price of the common shares. Therefore, the effect would
      have been antidilutive.
Credit Arrangements, Financing Activities and Leases
Credit Arrangements
(PPL, PPL Energy Supply and PPL Electric)
In order to enhance liquidity, and as a credit back-stop
      to their respective commercial paper programs, PPL Electric maintains a
      $400 million 364-day credit facility maturing in June 2003 (replacing a
      similar facility that had expired in June 2002) and PPL Energy Supply maintains
      three credit facilities: a $300 million 364-day credit facility maturing
      in June 2003, a $500 million three-year credit facility maturing in June
      2004, and a $300 million three-year credit facility maturing in June 2005
      (the two $300 million credit facilities replace a $600 million 364-day credit
      facility which expired in June 2002). At June 30, 2002, no borrowings were
      outstanding under any of these facilities. Both PPL Electric and PPL Energy
      Supply have the ability to cause lenders to issue letters of credit under
      their respective facilities. At June 30, 2002, PPL Electric had no letters
      of credit outstanding under its facility and PPL Energy Supply had $17 million
      of letters of credit outstanding under its $500 million facility.
(PPL, PPL Energy Supply and PPL Montana)
PPL Montana maintains a $100 million three-year credit
      facility maturing in November 2002 to meet its liquidity needs and to provide
      for the issuance of up to $75 million in letters of credit. At June 30,
      2002, PPL Montana had outstanding borrowings of $40 million and had outstanding
      letters of credit of $35 million under this facility. Additionally, PPL
      Montana had maintained a $150 million credit facility which matured in April
      2002, designed for the sole purpose of issuing letters of credit. This facility
      was not renewed.
(PPL, PPL Energy Supply, PPL Electric and PPL Montana)
The subsidiaries of PPL are separate legal entities. PPL's
      subsidiaries are not liable for the debts of PPL. Accordingly, creditors
      of PPL may not satisfy their debts from the assets of the subsidiaries absent
      a specific contractual undertaking by a subsidiary to pay PPL's creditors
      or as required by applicable law or regulation. Similarly, absent a specific
      contractual undertaking or as required by applicable law or regulation,
      PPL is not liable for the debts of its subsidiaries. Accordingly, creditors
      of PPL's subsidiaries may not satisfy their debts from the assets of PPL
      absent a specific contractual undertaking by PPL to pay the creditors of
      its subsidiaries or as required by applicable law or regulation.
Similarly, the subsidiaries of PPL Energy Supply, PPL Electric
      and PPL Montana are separate legal entities. These subsidiaries are not
      liable for the debts of PPL Energy Supply, PPL Electric and PPL Montana.
      Accordingly, creditors of PPL Energy Supply, PPL Electric and PPL Montana
      may not satisfy their debts from the assets of their subsidiaries absent
      a specific contractual undertaking by a subsidiary to pay the creditors
      or as required by applicable law or regulation. In addition, absent a specific
      contractual undertaking or as required by applicable law or regulation,
      PPL Energy Supply, PPL Electric and PPL Montana are not liable for the debts
      of their subsidiaries. Accordingly, creditors of these subsidiaries may
      not satisfy their debts from the assets of PPL Energy Supply, PPL Electric
      or PPL Montana absent a specific contractual undertaking by that parent
      to pay the creditors of its subsidiaries or as required by applicable law
      or regulation.
Financing Activities
(PPL)
In February 2002, PPL Capital Funding repurchased $10 million,
      par value, of its medium-term notes, 7.75% Series due 2005, at a market
      value of $11 million.
During the first quarter of 2002, PPL issued $13 million
      of common stock in small amounts on a periodic basis under its Structured
      Equity Shelf Program.
(PPL and PPL Energy Supply)
At June 30, 2002, PPL Energy Supply had $155 million of
      commercial paper outstanding. As of June 30, 2002, some foreign subsidiaries
      of PPL Energy Supply had short-term borrowings from banks of $86 million
      that are non-recourse to PPL Energy Supply.
(PPL and PPL Electric)
In May 2002, PPL Electric:
retired $11 million of its outstanding First Mortgage Bonds,
      8-1/2% Series due 2022, at par value, through the maintenance and replacement
      fund provisions of the 1945 First Mortgage Bond Indenture;
retired $28 million of its outstanding First Mortgage Bonds,
      7-3/4% Series due May 2002, at par value; and
instructed the property trustee of PPL Capital Trust to
      redeem, at par value, all of the $100 million of outstanding 8.20% Preferred
      Securities due 2027 that were previously issued by PPL Capital Trust.
During the first six months of 2002, PPL Transition Bond Company
  made principal payments on bonds totaling $132 million.
At June 30, 2002, there was no commercial paper or
  bank borrowings outstanding for PPL Electric.
(PPL Energy Supply)
During the six months ended June 2002, PPL Energy Supply distributed
  $552 million to its parent company, PPL Energy Funding.
Leases
(PPL, PPL Energy Supply and PPL Montana)
Colstrip Generating Plant
In July 2000, PPL Montana sold its interest in the Colstrip
  generating plant to owner lessors who are leasing the assets back to PPL Montana
  under four 36-year operating leases. PPL Montana leases a 50% interest in Colstrip
  Units 1 and 2 and a 30% interest in Unit 3, through four non-cancelable operating
  leases. These leases provide two renewal options based on the economic useful
  life of the generation assets. The amount outstanding under these leases at
  June 30, 2002 was $334 million. There is no residual value guarantee in these
  Montana leases. However, upon an event of default or an event of loss, the lessee
  could be required to pay a termination value of amounts sufficient to allow
  the lessor to repay amounts owing on the lessor notes and make the lessor whole
  for its equity investment and anticipated return on investment. The events of
  default include payment defaults, breaches of representations of covenants,
  acceleration of other indebtedness of PPL Montana, change in control of PPL
  Montana and certain bankruptcy events.
(PPL and PPL Energy Supply)
Cancellation of Lease for Turbine Generator Units and Related
  Equipment
In November 2000, a PPL Global subsidiary entered into a $555
  million operating lease arrangement for turbine generator units and related
  equipment (SCRs, transformers and spare engines). In June 2002, this operating
  lease was cancelled in connection with the decision in December 2001 to cancel
  several development projects. Prior to terminating the lease, certain equipment
  under this lease was either purchased by a PPL Global subsidiary or sold to
  another lessor.
University Park and Sundance
In May 2001, a PPL Global subsidiary entered into a $1.06 billion
  operating lease arrangement, as lessee, for the development, construction and
  operation of several commercial power generation facilities. In February 2002,
  in connection with the December 2001 decision to cancel several development
  projects, the available commitment under this lease was reduced to approximately
  $700 million to cover only two projects located in University Park, Illinois,
  and Sundance, Arizona. In July 2002, these facilities were substantially completed
  and the initial lease term commenced. The lease terminates in June 2008. At
  the end of the lease term, the lessee has the option to extend the lease or
  purchase the facilities. If the lessee does not choose either of these options,
  then it will guarantee a residual value of up to $545 million based on an estimated
  total lessors' investment of $657 million for both projects combined. If the
  financing is terminated early as a result of significant environmental damage,
  or an event of default, the lessee could be obligated to pay up to 100% of the
  lessors' investment in the facilities. These events of default include, subject
  to certain exceptions, payment or judgment defaults, breach of representations
  or covenants, defaults in other indebtedness, termination of the financing documents
  or loss of a required approval. The obligations of the lessee under this lease,
  including payment obligations, have been guaranteed by PPL Energy Supply.
Lower Mt. Bethel
In December 2001, a PPL Global subsidiary entered into an operating
  lease arrangement, as lessee, for $455 million for the development, construction
  and operation of a 600 MW gas-fired combined-cycle generation facility located
  in Lower Mt. Bethel Township, Northampton County, Pennsylvania. The initial
  lease term is approximately 10 years beginning on the date of commercial operation
  which is expected to occur in early 2004. At the end of the lease term, the
  lessee has the option to extend the lease or purchase the facility. If the lessee
  does not choose either of these options, then it will guarantee a residual value
  estimated to be up to $321 million. The lessee could be obligated to pay up
  to 100% of the lessors' investment and other obligations in the facilities if
  the financing is terminated early as a result of a loss, destruction or condemnation
  of the project, or in an event of default. These events of default during the
  construction period include a violation of environmental law, material environmental
  damage, revocation or failure to obtain environmental approval, defaults arising
  out of any fraudulent act, illegal act, misapplication of funds or willful misconduct,
  or if a bankruptcy event occurs. These events of default during the lease term
  include, subject to certain exceptions, payment or judgment defaults, breach
  of representations or covenants, defaults in other indebtedness, termination
  of the financing documents, or violations of environmental law, material environmental
  damage or loss of a required environmental approval. The total exposure as a
  result of any of these events of default occurring is estimated to be up to
  $330 million as of June 30, 2002. The maximum exposure is estimated to be up
  to $565 million as of the commencement of the lease based on current market
  conditions. The obligations of the lessee under this lease, including payment
  obligations, have been guaranteed by PPL Energy Supply.
Under the terms of this lease financing, PPL Martins Creek,
  which operates the adjacent Martins Creek facility, will provide water services
  for the Lower Mt. Bethel facility. PPL Martins Creek and the owner/lessor have
  entered into a water services agreement, which is still subject to the approval
  of the trustee for the debtholders of the lease financing and a majority of
  the debtholders. PPL Martins Creek is currently in discussions with the trustee
  and the debtholders regarding the water services agreement. In addition, the
  Air Quality Plan Approval issued by the Pennsylvania DEP for construction of
  the Lower Mt. Bethel facility has been appealed by the New Jersey DEP to the
  Pennsylvania DEP Environmental Hearing Board. The PPL Global subsidiary involved
  in this lease financing has joined with the Pennsylvania DEP in opposing this
  appeal. Finally, in August 2002, the Northampton County Court of Common Pleas
  issued a decision concerning the permissible noise levels from the Lower Mt.
  Bethel facility when it becomes operational. Specifically, the court's decision
  addressed the noise measurement criteria and the point at which the noise levels
  are to be measured. PPL is currently evaluating the court's decision. The Lower
  Mt. Bethel facility is expected to be operational in 2004. PPL cannot predict
  the outcome of these various matters or their ultimate impact on the development
  of the Lower Mt. Bethel facility, on PPL or on PPL Energy Supply, but such impact
  may be material.
Dividend Restrictions
(PPL, PPL Energy Supply and PPL Montana)
The PPL Montana Colstrip lease places certain restrictions
  on PPL Montana's ability to declare dividends. At this time, PPL believes that
  these covenants will not limit PPL Montana's ability to operate as desired and
  will not affect PPL's ability to meet any of its cash obligations. Certain of
  PPL Global's international subsidiaries also have financing arrangements which
  limit their ability to pay dividends. However, PPL does not, at this time, expect
  that any of such limitations would significantly impact its ability to meet
  its cash obligations.
Acquisitions, Development and Divestitures
(PPL and PPL Energy Supply)
Domestic Generation Projects
PPL Global is currently completing the negotiation of a
      Project Coordination Agreement with the Village of Freeport, New York, which
      allows for the development and construction of a single LM-6000 simple-cycle
      facility at a site adjacent to the Village of Freeport's existing Power
      Plant No. 2. The facility is projected to begin commercial operation in
      the summer of 2003. The cost of PPL's unit is estimated to be approximately
      $50 - $55 million. Negotiations are also proceeding with respect to a Site
      Lease, a Project Interconnection Agreement and a Shared Facilities Agreement.
      In addition, negotiations for the sale of power from the facility to the
      Long Island Power Authority under a ten-year Power Purchase Agreement are
      proceeding. These agreements are subject to approval of the respective governing
      boards, various regulatory approvals, and agreement on satisfactory definitive
      documentation.
In addition, in December 2001, PPL Global made a decision
      to cancel approximately 2,100 MW of previously planned generation development
      in Pennsylvania and Washington state. These projects were in the early stage
      of development and would have had an estimated capital cost of approximately
      $1.3 billion. The charge for cancellation of these generation projects,
      which was primarily due to cancellation fees under turbine purchase contracts,
      was approximately $150 million, and was reported on the 2001 Statement of
      Income as "Cancellation of generation projects," a component of
      "Other Charges." At June 30, 2002, PPL Global had completed payment
      of the cancellation fees.
Commitments and Contingent Liabilities
(PPL, PPL Energy Supply, PPL Electric and PPL Montana)
PPL and its subsidiaries are involved in numerous legal
      proceedings, claims and litigation in the ordinary course of business. PPL
      and its subsidiaries cannot predict the ultimate outcome of such matters,
      or whether such matters may result in material liabilities.
Wholesale Energy Commitments
(PPL, PPL Energy
      Supply and PPL Montana)
As part of the purchase of generation assets from Montana
      Power, PPL Montana agreed to supply electricity under two wholesale transition
      service agreements with Montana Power to serve its retail load not served
      by other providers or provided by Montana Power's remaining generation.
      The first agreement expired in December 2001, and the second agreement expired
      in June 2002. In addition, as part of its purchase of the generation assets
      from Montana Power, PPL Montana assumed a power purchase agreement and another
      power sales agreement. In accordance with purchase accounting guidelines,
       PPL  Montana recorded a liability of  $118  million
      as  the estimated fair value of these agreements at the acquisition
      date. The liability is being amortized over the terms of the agreements
      as adjustments to "Wholesale energy marketing and trading" revenues
      and "Energy purchases" on the Statement of Income. The unamortized
      balance of the liability at June 30, 2002 was $65 million and is included
      on the Balance Sheet in "Deferred Credits and Other Noncurrent Liabilities
      - Other" for PPL, in "Current Liabilities - Other" and "Deferred
      Credits and Other Noncurrent Liabilities - Other" for PPL Energy Supply
      and in "Wholesale energy commitments" for PPL Montana.
On July 1, 2002, PPL EnergyPlus began to sell to NorthWestern
      Energy an aggregate of 450 MW of energy to be supplied by PPL Montana. Under
      this five-year agreement, PPL EnergyPlus will supply 300 MW of around-the-clock
      electricity and 150 MW of on-peak electricity.
Liability for Above Market NUG Contracts
(PPL,
      PPL Energy Supply and PPL Electric)
In 1998, PPL Electric recorded a loss accrual for above
      market contracts with NUGs of $854 million, due to its generation business
      being deregulated. Effective January 1999, PPL Electric began reducing this
      liability as an offset to "Energy purchases" on the Statement
      of Income. This reduction is based on the estimated timing of the purchases
      from the NUGs and projected market prices for this generation. The final
      existing NUG contract expires in 2014. In connection with the corporate
      realignment, effective July 1, 2000, the remaining balance of this liability
      was transferred to PPL EnergyPlus. At June 30, 2002, the remaining liability
      associated with the above market NUG contracts was $466 million.
In the first quarter of 2002, PPL Energy Supply paid $50
      million to terminate the liability outstanding under an energy contract
      with one of the NUGs. The liability associated with this NUG contract was
      $75 million. The excess of the liability over the payment resulted in a
      $25 million credit to "Energy purchases" on the Statement of Income.
Commitments - Acquisitions and Development Activities
(PPL and PPL Energy Supply)
PPL Global and its subsidiaries have outstanding purchase
      commitments with respect to domestic construction projects. At June 30,
      2002, PPL Global and its subsidiaries had approximately $89 million of such
      commitments.
Commitments - Leases
(PPL and PPL Energy Supply)
See "Leases" in Note 6 for additional information
      on residual value guarantees under operating lease arrangements.
Sales to California Independent System Operator and
      to Other Pacific Northwest Purchasers
(PPL, PPL Energy Supply and
      PPL Montana)
Through its subsidiaries, PPL has made approximately $18
      million of sales to the California ISO, of which $17 million has not been
      paid to PPL subsidiaries. Given the myriad of electricity supply problems
      presently faced by the California electric utilities and the California
      ISO, PPL cannot predict whether or when it will receive payment. As of June
      30, 2002, PPL has fully reserved for possible underrecoveries of payments
      for these sales.
Litigation arising out of the California electricity supply
      situation has been filed at the FERC and in California courts against sellers
      of energy to the California ISO. The plaintiffs and intervenors in these
      proceedings allege abuses of market power, manipulation of market prices,
      unfair trade practices and violations of state antitrust laws, among other
      things, and seek price caps on wholesale sales in California and other western
      power markets, refunds of excess profits allegedly earned on these sales
      of energy, and other relief, including treble damages and attorneys' fees.
      Certain of PPL's subsidiaries have intervened in the FERC proceedings in
      order to protect their interests, but have not been named by any plaintiffs
      in any of the court actions alleging abuses of market power, manipulation
      of market prices, unfair trade practices and violations of state antitrust
      laws. However, in April 2002, PPL Montana was named by a defendant in a
      consolidated court proceeding, which combined into one master proceeding
      several of the lawsuits alleging antitrust violations and unfair trade practices.
      Specifically, one of the original generators being sued by the various plaintiffs
      in the consolidated court proceeding filed a cross-complaint against 30
      other generators and power marketers, including PPL Montana. This generator
      denies that any unlawful, unfair or fraudulent conduct occurred or caused
      any harm to the plaintiffs, and explains that the plaintiffs' claims are
      completely barred by federal law. Nonetheless, this generator alleges that
      it filed its complaint against the other generators and power marketers
      in order to assist the court in resolving the proceeding and asserts that
      if it is found liable, the other generators and power marketers, including
      PPL Montana, caused, contributed to and/or participated in the plaintiffs'
      alleged losses. This litigation, originally brought in state court in California,
      has been removed to federal court in California.
In addition, PPL Montana has been named as a defendant
      in a declaratory judgment action initiated by the State of California to
      prevent certain members of the California Power Exchange from seeking compensation
      for the state's seizure of certain energy contracts. PPL Montana is a member
      of the California Power Exchange, but it has no energy contracts with or
      through the California Power Exchange and has not sought compensation in
      connection with the state's seizure.
Attorneys general in several western states, including
      California, have begun investigations related to the electricity supply
      situation in California and other western states. The FERC has determined
      that all sellers of energy into markets operated by the California ISO and
      the California Power Exchange, including PPL Montana, should be subject
      to refund liability for the period beginning October 2, 2000 through June
      20, 2001 and has initiated an evidentiary hearing concerning refund amounts.
      The FERC also is considering whether to order refunds for spot market bilateral
      sales made in the Pacific Northwest, including sales made by PPL Montana
      during the period December 2000 through June 2001. The FERC Administrative
      Law Judge assigned to the Pacific Northwest proceeding has recommended that
      no refunds be ordered for such sales into the Pacific Northwest. The FERC
      presently is considering this recommendation. The FERC has been conducting
      an additional investigation of alleged price manipulation in power markets
      in California and the western U.S. In connection with this investigation,
      the FERC has served several sets of data requests on sellers of energy in
      those markets, including PPL Montana. PPL Montana sold only a small amount
      of electricity into the California market during 2000 and 2001 and currently
      is not selling into that market. In its response to a FERC data request
      concerning PPL Montana's California trading strategies, PPL Montana explained
      that it did not engage in the type of California trading strategies that
      have been attributed to Enron. In responses to FERC data requests concerning
      whether PPL Montana and PPL EnergyPlus engaged in so-called "wash trades"
      in the western U.S., PPL Montana and PPL EnergyPlus explained that they
      have not, and do not, engage in such trades.
While PPL believes that it has not engaged in any improper
      trading practices, PPL cannot predict whether, or the extent to which, any
      of its subsidiaries will be the target of any additional governmental investigations
      or named in other lawsuits or refund proceedings, the outcome of any such
      lawsuits or proceedings or whether the ultimate impact on PPL of the electricity
      supply situation in California and other western states will be material.
MPSC Order
(PPL, PPL Energy Supply and PPL Montana)
In June 2001, the MPSC issued an order (MPSC Order) in
      which it found that Montana Power must continue to provide electric service
      to its customers at tariffed rates until its transition plan under the Montana
      Electricity Utility Industry Restructuring and Customer Choice Act is finally
      approved, and that purchasers of generating assets from Montana Power must
      provide electricity to meet Montana Power's full load requirements at prices
      to Montana Power that reflect costs calculated as if the generating assets
      had not been sold. PPL Montana purchased Montana Power's interests in two
      coal-fired plants and 11 hydroelectric units in 1999, and NorthWestern Energy
      purchased Montana Power's electricity delivery business in the first quarter
      of 2002.
In July 2001, PPL Montana filed a complaint against the
      MPSC with the U.S. District Court in Helena, Montana, challenging the MPSC
      Order. In its complaint, PPL Montana asserted, among other things, that
      the Federal Power Act preempts states from exercising regulatory authority
      over the sale of electricity in wholesale markets, and requested the court
      to declare the MPSC action preempted, unconstitutional and void. In addition,
      the complaint requested that the MPSC be enjoined from seeking to exercise
      any authority, control or regulation of wholesale sales from PPL Montana's
      generating assets. In March 2002, the District Court dismissed PPL Montana's
      lawsuit on procedural grounds, ruling that the Eleventh Amendment to the
      U.S. Constitution prevented PPL Montana from bringing the action in federal
      court. The District Court noted that the action could be filed in a state
      court in Montana. PPL Montana has appealed the District Court's ruling to
      the United States Court of Appeals for the Ninth Circuit. In July 2002,
      the MPSC filed an unopposed motion for summary disposition of the appeal,
      requesting the Ninth Circuit to reverse the District Court's ruling and
      send the case back to the District Court in light of a recent Eleventh Amendment
      decision by the U.S. Supreme Court. The Ninth Circuit has not yet acted
      on the MPSC's unopposed motion.
At this time, PPL Montana cannot predict the outcome of
      the proceedings related to the MPSC Order, what actions the MPSC, the Montana
      Legislature or any other governmental authority may take on these or related
      matters, or the ultimate impact on PPL, PPL Energy Supply and PPL Montana
      of any of these matters.
Montana Power Shareholders' Litigation
(PPL,
      PPL Energy Supply and PPL Montana)
In August 2001, a purported class-action lawsuit was filed by a group
      of shareholders of Montana Power against Montana Power, the directors of
      Montana Power, certain unnamed advisors and consultants of Montana Power
      and PPL Montana. The plaintiffs allege, among other things, that Montana
      Power was required to, and did not, obtain shareholder approval of the sale
      of Montana Power's generation assets to PPL Montana in 1999. Although most
      of the claims in the complaint are against Montana Power, its board of directors,
      and its consultants and advisors, two claims are asserted against PPL Montana.
      In the first claim, plaintiffs seek a declaration that because Montana Power
      shareholders did not vote on the 1999 sale of generating assets to PPL Montana,
      that sale "was null and void ab initio." The second claim alleges
      that PPL Montana was privy to and participated in a strategy whereby Montana
      Power would sell its generation assets to PPL Montana without first obtaining
      Montana Power shareholder approval, and that PPL Montana has made net profits
      in excess of $100 million as the result of this alleged illegal sale. In
      the second claim, plaintiffs request that the court impose a "resulting
      and/or constructive trust" on both the generation assets themselves
      and all profits, plus interest on the amounts subject to the trust. In November 2001,
      PPL Montana and the other defendants filed a motion to dismiss the plaintiffs'
      complaint on the basis that it fails to state a claim upon which relief may be
      granted, and the plaintiffs filed a motion for the lawsuit to be certified
      by the court as a class-action.  In August 2002, the court denied this motion
      to dismiss, except as to certain matters not relating to PPL Montana, and
      granted the plaintiffs' motion for certification of the lawsuit as a class-action.
      PPL Montana cannot predict the outcome of this matter.
Employee Litigation
(PPL Energy Supply and PPL
      Montana)
In April 2000, three employees at PPL Montana's Colstrip
      facility were burned when an equipment fault in Colstrip Unit 1 caused electrical
      arcing. In May 2000, the injured employees and their spouses filed litigation
      for their injuries in Montana district court against Montana Power. PPL
      Montana was subsequently named as a party defendant to the litigation. In
      April 2002, PPL Montana filed a pleading, naming Montana Power, seeking
      indemnification for any damages assessed against PPL Montana. In June 2002,
      PPL Montana settled this litigation and its indemnification claims against
      Montana Power pursuant to a settlement agreement with the plaintiffs and
      Montana Power.
PJM Market Monitor Report
(PPL, PPL Energy Supply
      and PPL Electric)
In November 2001, the PJM Market Monitor publicly released
      a report prepared for the PUC entitled "Capacity Market Questions"
      relating to the pricing of installed capacity in the PJM daily market during
      the first quarter of 2001. The report concludes that PPL EnergyPlus (identified
      in the report as "Entity 1") was able to exercise market power
      to raise the market-clearing price above the competitive level during that
      period. PPL EnergyPlus does not agree with the Market Monitor's conclusions
      that it exercised market power; in addition, the Market Monitor acknowledged
      in his report that PJM's standards and rules did not prohibit PPL EnergyPlus'
      conduct. In November 2001, the PUC issued an Investigation Order directing
      its Law Bureau to conduct an investigation into the PJM capacity market
      and the allegations in the Market Monitor's report. In June 2002, the PUC
      issued an investigation report alleging, among other things, that PPL had
      "unfairly manipulated electricity markets in early 2001," and
      that "there was an unlawful exercise of market power and market rules
      gaming by PPL" that was damaging to wholesale and retail electricity
      markets in Pennsylvania. The PUC stated that it was not authorized to, and
      was not attempting to, adjudicate the merits of PPL's defenses to these
      charges, but has referred the matter to the U.S. Department of Justice --
      Antitrust Division, or DOJ, the FERC and the Pennsylvania Attorney General.
      PPL had previously responded to certain information requests of the DOJ
      in connection with a civil investigative demand regarding capacity transactions
      in the PJM, and PPL has agreed to provide the Office of the Pennsylvania
      Attorney General with any information that it provided to the DOJ. In addition,
      in July 2002, PPL appealed the PUC order to the Commonwealth Court of Pennsylvania.
      Although PPL believes that the PUC's report is inaccurate, that its conclusions
      are groundless, and that PPL acted ethically and legally, in compliance
      with all applicable laws and regulations, PPL cannot predict the outcome
      or extent of any investigations, litigation or other proceedings related
      to this matter.
FERC Market-based Rates
(PPL and PPL Energy Supply)
In December 1998, the FERC issued an order authorizing
      PPL EnergyPlus to make wholesale sales of electric power and related products
      at market-based rates. In that order, the FERC directed PPL EnergyPlus to
      file an updated market analysis within three years of the date of the order,
      and every three years thereafter. PPL EnergyPlus filed its initial updated
      market analysis in December 2001. Several parties thereafter filed interventions
      and protests requesting that, in light of the PJM Market Monitor's report
      described above, PPL EnergyPlus be required to provide additional information
      demonstrating that it has met the FERC's market power tests necessary for
      PPL EnergyPlus to continue its market-based rate authority. PPL EnergyPlus
      has responded that the FERC does not require the economic test suggested
      by the intervenors and that, in any event, it would meet such economic test
      if required by the FERC. PPL EnergyPlus cannot predict the outcome of this
      matter.
FERC Notice of Proposed Rulemaking
(PPL, PPL
      Energy Supply, PPL Electric and PPL Montana)
On July 31, 2002, the FERC issued a Notice of Proposed
      Rulemaking entitled "Remedying Undue Discrimination through Open Access
      Transmission Service and Standard Electricity Market Design." The proposed
      rule is currently available for public comment, with a final rule expected
      in late 2002. The FERC plans to begin implementing the final rule by July
      31, 2003. This far-reaching proposed rule purports to establish uniform
      transmission rules and establish a standard market design by, among other
      things:
enacting standard transmission tariffs and uniform market
      mechanisms,
monitoring and mitigating "market power,"
managing transmission congestion through pricing and tradable
      financial rights,
requiring independent operational control over transmission
      facilities,
forming state advisory committees on regional transmission
      organizations and resource adequacy, and
exercising FERC jurisdiction over all transmission service.
This proposed rule may have a significant impact on PPL and
  its subsidiaries. PPL is evaluating this new proposal, but cannot predict, at
  this time, what impact any final rule will have on PPL.
Energy Supply to Energy West Resources, Inc.
(PPL
  Energy Supply and PPL Montana)
In July 2001, PPL Montana filed an action in state court and
  a responsive pleading in federal court, both related to a breach of contract
  by Energy West Resources, Inc. (Energy West), a Great Falls, Montana-based energy
  aggregator. PPL Montana is seeking a judgment that Energy West violated the
  terms of the contract under which it supplies energy to Energy West and should
  pay damages of at least $7.5 million. All litigation in this matter has been
  consolidated in the U. S. District Court for the District of Montana, Great
  Falls Division, and is proceeding in that forum. PPL Montana cannot predict
  the ultimate outcome of these proceedings.
Montana Hydroelectric Initiative
(PPL, PPL Energy
  Supply and PPL Montana)
In July 2002, the Montana Secretary of State certified, in
  accordance with applicable statutes, that a proposed Montana Hydroelectric Security
  Act initiative had received sufficient signatures to be placed on the November
  2002 statewide ballot. Among the stated purposes of the initiative is to create
  an elected Montana public power commission to determine whether purchasing hydroelectric
  dams in Montana is in the public interest. Such a commission could decide to
  acquire any or all of the hydroelectric dams owned by PPL Montana either pursuant
  to a negotiated purchase or an acquisition at fair market value through the
  power of condemnation. PPL Montana has declared its opposition to, and intends
  to vigorously oppose, the initiative. PPL Montana, in addition to several other
  Montana groups and individuals, has filed a lawsuit in Montana state court alleging
  that the initiative violates the Montana state constitution and should not be
  included on the November 2002 statewide ballot. At this time, PPL, PPL Energy
  Supply and PPL Montana cannot predict whether the legal challenge to the initiative
  will be successful, whether it would pass if on the ballot or what impact, if
  any, the measure might ultimately have upon PPL Montana or its hydroelectric
  operations.
Montana Hydroelectric License Contingencies
(PPL
  Montana)
PPL Montana has 11 hydroelectric facilities and one storage
  reservoir licensed by the FERC pursuant to the Federal Power Act under long-term
  licenses which expire on varying dates from 2009 through 2040. Pursuant to Section
  8(e) of the Federal Power Act, the FERC approved the transfer from Montana Power
  of all pertinent licenses, and any amendments thereto, for the ownership and
  operation of these facilities purchased by PPL Montana.
The Kerr Dam Project license was jointly issued by the FERC
  to Montana Power and the Confederated Salish and Kootenai Tribes of the Flathead
  Reservation in 1985, and required Montana Power to hold and operate the project
  for 30 years. The license required Montana Power, and subsequently PPL Montana
  as a result of the purchase of the Kerr Dam from Montana Power, to continue
  to implement a plan to mitigate the impact of the Kerr Dam on fish, wildlife
  and the habitat. Such implementation will require payments totaling approximately
  $6 million between 2002 to 2020.
Colstrip Transmission System
(PPL, PPL Energy Supply
  and PPL Montana)
PPL Global was party to separate APAs with Portland General
  Electric Company (PGE) and Puget Sound Energy, Inc. (PSE) to purchase their
  respective interests in the Colstrip Units and certain related transmission
  assets and rights. The interested parties mutually agreed to terminate the APAs.
The Montana Power APA, previously assigned to PPL Montana by
  PPL Global, includes a provision concerning the purchase by PPL Montana of a
  portion of NorthWestern Energy's interest in the 500-kilovolt Colstrip Transmission
  System (CTS) for $97 million. PPL Montana is currently in discussions with NorthWestern
  Energy regarding the purchase of the CTS and the claims that PPL Montana believes
  it has against NorthWestern Energy arising from the Montana Power APA and related
  agreements. Notwithstanding these ongoing discussions, on August 5, 2002, NorthWestern
  Energy filed, but has not yet served, a lawsuit against PPL Montana in Montana
  state court seeking specific performance of PPL Montana's purchase of the CTS
  or, alternatively, damages for breach of contract. PPL cannot predict the outcome
  of the ongoing discussions, whether PPL Montana will be served with the lawsuit
  or the outcome of the litigation filed by NorthWestern Energy.
Nuclear Insurance
(PPL and PPL Energy Supply)
PPL Susquehanna is a member of certain insurance programs which
  provide coverage for property damage to members' nuclear generating stations.
  Facilities at the Susquehanna station are insured against property damage losses
  up to $2.75 billion under these programs. PPL Susquehanna is also a member of
  an insurance program which provides insurance coverage for the cost of replacement
  power during prolonged outages of nuclear units caused by certain specified
  conditions. Under the property and replacement power insurance programs, PPL
  Susquehanna could be assessed retroactive premiums in the event of the insurers'
  adverse loss experience. Effective April 1, 2002, this maximum assessment increased
  from $20 million to $40 million, to increase the insurer's capacity to cover
  catastrophic losses.
PPL Susquehanna's public liability for claims resulting from
  a nuclear incident at the Susquehanna station is limited to about $9.5 billion
  under provisions of The Price Anderson Amendments Act of 1988. PPL Susquehanna
  is protected against this liability by a combination of commercial insurance
  and an industry assessment program. In the event of a nuclear incident at any
  of the reactors covered by The Price Anderson Amendments Act of 1988, PPL Susquehanna
  could be assessed up to $176 million per incident, payable at $20 million per
  year.
Environmental Matters
Air
(PPL, PPL Energy Supply and PPL Montana)
The Clean Air Act deals, in part, with acid rain, attainment
  of federal ambient ozone standards and toxic air emissions in the U.S. PPL's
  subsidiaries are in substantial compliance with the Clean Air Act.
The Bush administration and certain members of Congress have
  made proposals regarding possible amendments to the Clean Air Act. These amendments
  could require significant further reductions in NO
x
, SO
2
and mercury and could possibly require measures to limit CO
2
.
The Pennsylvania DEP has finalized regulations requiring further
  seasonal (May-June) NO
x
reductions to 80% from 1990 levels starting
  in 2003. These further reductions are based on the requirements of the Northeast
  Ozone Transport Region Memorandum of Understanding and two EPA ambient ozone
  initiatives: the September 1998 EPA State Implementation Plan (SIP) call (i.e.,
  EPA's requirement for states to revise their SIPs) issued under Section 110
  of the Clean Air Act, requiring reductions from 22 eastern states, including
  Pennsylvania; and the EPA's approval of petitions filed by Northeastern states,
  requiring reductions from sources in 12 Northeastern states and Washington D.C.,
  including PPL sources. The EPA's SIP-call was substantially upheld by the D.C.
  Circuit Court of Appeals on challenge. Although the Court extended the implementation
  deadline to May 2004, the Pennsylvania DEP has not changed its rules accordingly.
  PPL expects to achieve the 2003 NO
x
reductions with the recent installation
  of SCR technology on the Montour units, and the planned installation of SCR
  technology on a Brunner Island unit.
The EPA has also developed new standards for ambient levels
  of ozone and fine particulates in the U.S. These standards have been upheld
  following court challenges. The new particulates standard may require further
  reductions in SO
2
and year-round NO
x
reductions commencing
  in 2010-2012 at SIP-call levels in Pennsylvania for certain PPL subsidiaries,
  and at slightly less stringent levels in Montana. The revised ozone standard
  is not expected to have a material effect on facilities of PPL subsidiaries.
Under the Clean Air Act, the EPA has been studying the health
  effects of hazardous air emissions from power plants and other sources in order
  to determine what emissions should be regulated, and has determined that mercury
  emissions must be regulated. The EPA may determine that other hazardous air
  emissions from power plants should be regulated. In this regard, the EPA is
  expected to develop mercury regulations by 2004.
In 1999, the EPA initiated enforcement actions against several
  utilities, asserting that older, coal-fired power plants operated by those utilities
  have, over the years, been modified in ways that subject them to more stringent
  "New Source" requirements under the Clean Air Act. The EPA has since
  issued notices of violation and commenced enforcement activities against other
  utilities. Although the EPA has threatened to continue expanding its enforcement
  actions, the future direction of the "New Source" requirements is
  presently unclear. Therefore, at this time, PPL is unable to predict whether
  such EPA enforcement actions will be brought with respect to any of its affiliates'
  plants. However, the EPA regional offices that regulate plants in Pennsylvania
  (Region III) and Montana (Region VIII) have indicated an intention to issue
  information requests to all utilities in their jurisdiction. The Region VIII
  office issued such a request to PPL Montana's Corette plant in 2000 and the
  Region III office issued such a request to PPL Generation's Martins Creek plant
  in 2002. PPL and its subsidiaries have responded to the Corette information
  request and are in the process of responding to the Martins Creek information
  request. PPL cannot presently predict what, if any, action the EPA might take
  in this regard. Should the EPA or any state initiate one or more enforcement
  actions against PPL or its subsidiaries, compliance with any such enforcement
  actions could result in additional capital and operating expenses in amounts
  which are not now determinable, but which could be significant.
The EPA is also proposing to revise its regulations in a way
  that will require power plants to meet "New Source" performance standards
  and/or undergo "New Source" review for many maintenance and repair
  activities that are currently exempt.
The New Jersey DEP and some New Jersey residents have raised
  environmental concerns with respect to the Martins Creek plant, particularly
  with respect to SO
2
emissions. PPL Martins Creek is discussing these
  concerns with the New Jersey DEP. The cost of addressing New Jersey's SO
2
concerns and opacity issues is not now determinable but could be significant.
The Air Quality Plan Approval issued by the Pennsylvania DEP
  for construction of the Lower Mt. Bethel facility has been appealed by the New
  Jersey DEP to the Pennsylvania DEP Environmental Hearing Board. The PPL Global
  subsidiary involved in the Lower Mt. Bethel lease financing has joined with
  the Pennsylvania DEP in opposing this appeal. In addition, in August 2002, the
  Northampton County Court of Common Pleas issued a decision concerning the permissible
  noise levels from the Lower Mt. Bethel facility when it becomes operational.
  Specifically, the court's decision addressed the noise measurement criteria
  and the point at which the noise levels are to be measured. PPL is currently
  evaluating the court's decision. The Lower Mt. Bethel facility is expected to
  be operational in 2004. PPL cannot predict the outcome of these matters or their
  ultimate impact on the Lower Mt. Bethel facility, on PPL or on PPL Energy Supply,
  but such impact may be material.
Water/Waste
(PPL, PPL Energy Supply and PPL Montana)
The final NPDES permit for the Montour plant contains stringent
  limits for iron discharges. The results of a toxic reduction study show that
  additional water treatment facilities or operational changes are needed at this
  station. A plan for these changes was submitted and has been approved by the
  Pennsylvania DEP. PPL Energy Supply estimates that the cost of the treatment
  facilities will be under $3 million.
A final NPDES permit has been issued to the Brunner Island
  generating plant. The permit contains a provision requiring further studies
  on the thermal impact of the cooling water discharge from the plant. Depending
  on the outcome of these studies, the plant could be subject to capital and operating
  costs that are not now determinable, but which could be significant.
The EPA has significantly tightened the water quality standard
  for arsenic. The revised standard may require several PPL subsidiaries to further
  treat wastewater and/or take abatement action at their power plants, the cost
  of which is not now determinable, but which could be significant.
The EPA recently finalized requirements for new or modified
  water intake structures. These requirements will affect where generating facilities
  are built, will establish intake design standards, and could lead to requirements
  for cooling towers at new and modified power plants. Another new rule, expected
  to be finalized in 2003, will address existing structures. Each of these rules
  could impose significant operating costs on PPL subsidiaries, which are not
  now determinable, but which could be significant.
Superfund and Other Remediation
(PPL and PPL Electric)
In 1995, PPL Electric entered into a consent order with the
  Pennsylvania DEP to address a number of sites where it may be liable for remediation.
  This may include potential PCB contamination at certain PPL Electric substations
  and pole sites; potential contamination at a number of coal gas manufacturing
  facilities formerly owned or operated by PPL Electric; and oil or other contamination
  which may exist at some of PPL Electric's former generating facilities. As of
  June 30, 2002, work has been completed on over 80% of the sites included in
  the consent order.
In 1996, PPL Gas Utilities entered into a similar consent order
  with the Pennsylvania DEP to address a number of sites where subsidiaries of
  PPL Gas Utilities may be liable for remediation. The sites primarily include
  former coal gas manufacturing facilities. Subsidiaries of PPL Gas Utilities
  are also investigating the potential for any mercury contamination from gas
  meters and regulators. Accordingly, PPL Gas Utilities and Pennsylvania DEP have
  agreed to add 72 meter/regulation sites to the consent order and had addressed
  five of these sites by June 30, 2002.
At June 30, 2002, PPL Electric and PPL Gas Utilities had accrued
  approximately $5 million and $10 million, representing the estimated amounts
  they will have to spend for site remediation, including those sites covered
  by each company's consent orders mentioned above.
(PPL, PPL Energy Supply and PPL Montana)
In conjunction with its 1999 sale of generating assets to PPL
  Montana, Montana Power prepared a Phase I and Phase II Environmental Site Assessment.
  The assessment identifies approximately $7 million of future capital expenditures
  through the year 2020 related to various groundwater remediation issues. Additional
  capital expenditures could be required in amounts which are not now determinable,
  but which could be significant.
In 1999, the Montana Supreme Court held in favor of several
  citizens' groups that the right to a clean and healthful environment is a fundamental
  right guaranteed by the Montana Constitution. The court's ruling could result
  in significantly more stringent environmental laws and regulations, as well
  as an increase in citizens' suits under Montana's environmental laws. The effect
  on PPL Montana of any such changes in laws or regulations or any such increase
  in legal actions is not currently determinable, but it could be significant.
Under the Montana Power APA, PPL Montana is indemnified by
  Montana Power for any pre-acquisition environmental liabilities. However, this
  indemnification is conditioned on certain circumstances and subject to certain
  limitations set forth in the Montana Power APA, including circumstances under
  which PPL Montana and Montana Power would share in certain costs. As a result
  of the acquisition by NorthWestern Energy of Montana Power's electricity delivery
  business, PPL Montana may need to pursue any such indemnification claims against
  NorthWestern Energy.
Future cleanup or remediation work at sites currently under
  review, or at sites not currently identified, may result in material additional
  operating costs for PPL subsidiaries that cannot be estimated at this time.
General
(PPL and PPL Energy Supply)
Certain of PPL's affiliates have electric distribution operations
  in the U.K. and Latin America. PPL believes that these operations are in compliance
  in all material respects with all applicable laws and government regulations
  to protect the environment. PPL is not aware of any material administrative
  proceeding against these companies with respect to any environmental matter.
There have been increasing litigation claims throughout the
  U.S. based on exposure to asbestos against companies that manufacture or distribute
  asbestos products or that have these products on their premises. Certain of
  PPL's energy services subsidiaries, such as those that have supplied or installed
  asbestos material in connection with the repair or installation of heating,
  ventilating and air conditioning systems, have been named as defendants in asbestos-related
  lawsuits. PPL cannot predict the outcome of these lawsuits or whether additional
  claims may be asserted against its subsidiaries in the future. PPL does not
  expect that the ultimate resolution of the current lawsuits will have a material
  adverse effect on its financial condition.
(PPL, PPL Energy Supply, PPL Electric and PPL Montana)
Due to the environmental issues discussed above or other environmental
  matters, PPL subsidiaries may be required to modify, replace or cease operating
  certain facilities to comply with statutes, regulations and actions by regulatory
  bodies or courts. In this regard, PPL subsidiaries also may incur capital expenditures,
  operating expenses and other costs in amounts which are not now determinable,
  but which could be significant.
Credit Support
(PPL and PPL Energy Supply)
PPL and PPL Energy Supply provide certain guarantees for their
  subsidiaries. PPL has guaranteed fully and unconditionally all of the debt of
  its wholly-owned subsidiary, PPL Capital Funding, which at June 30, 2002, consisted
  of $1.3 billion of medium-term notes. At June 30, 2002, PPL has guaranteed certain
  obligations under power purchase and sales agreements of PPL EnergyPlus for
  $43 million and certain obligations of other subsidiaries, totaling $37 million.
  As of June 30, 2002, PPL Energy Supply had guaranteed certain obligations of
  its subsidiaries totaling $754 million.
(PPL Electric)
At June 30, 2002, PPL Electric provided a guarantee in the
  amount of $7 million in support of Safe Harbor Water Power Corporation, in which
  PPL Electric had an ownership interest prior to the corporate realignment. PPL
  Holtwood now has this ownership interest.
Related Party Transactions
PLR Contracts
(PPL Energy Supply and PPL Electric)
PPL Electric has power sales agreements with PPL EnergyPlus,
      effective January 1, 2002, to supply all of PPL Electric's PLR load through
      2009. Under these contracts, PPL EnergyPlus will provide electricity at
      the pre-determined capped prices that PPL Electric is authorized to charge
      its PLR customers. For the three and six months ended June 30, 2002, these
      sales totaled $339 million and $708 million, including nuclear decommissioning
      recovery and amortization of an up-front contract payment. For the three
      and six months ended June 30, 2001, these sales totaled $300 million and
      $634 million, including nuclear decommissioning recovery, under the previous
      PLR contract. These sales are included in the Statement of Income as "Energy
      purchases from affiliate" by PPL Electric and as "Wholesale energy
      marketing to affiliates" revenues by PPL Energy Supply.
Under the current PLR contracts, PPL Electric is required
      to make performance assurance deposits with PPL EnergyPlus when the market
      price of electricity is less than the contract price by more than its contract
      collateral threshold. Conversely, PPL EnergyPlus is required to make performance
      assurance deposits with PPL Electric when the market price of electricity
      is greater than the contract price by more than its contract collateral
      threshold. PPL Electric's deposit with PPL EnergyPlus was $68 million at
      June 30, 2002. This deposit is shown on the Balance Sheets as "Collateral
      on PLR energy supply to/from affiliate," a current asset of PPL Electric
      and a current liability of PPL Energy Supply. PPL Energy Supply pays interest
      equal to the three-month LIBOR plus 3% on this deposit, which is included
      in the Statement of Income as "Interest Expense with Affiliate."
NUG Purchases
(PPL Energy Supply and PPL Electric)
PPL Electric has a reciprocal contract with PPL EnergyPlus
      to sell electricity purchased under contracts with NUGs. PPL Electric purchases
      electricity from the NUGs at contractual rates and then sells the electricity
      at the same price to PPL EnergyPlus. For the three months ended June 30,
      2002 and 2001, these NUG purchases totaled $40 million and $43 million and
      for the six months ended June 30, 2002 and 2001 were $82 million and $88
      million. These amounts are included in the Statement of Income as "Wholesale
      electric to affiliate" revenues by PPL Electric, and as "Energy
      purchases from affiliates" by PPL Energy Supply.
Montana Retail Supply
(PPL Montana)
PPL Montana has a memorandum of understanding (MOU) with
      PPL EnergyPlus regarding the supply of energy to satisfy PPL EnergyPlus'
      obligations under its retail contracts, which expires on December 31, 2002.
      Under the MOU, energy sales to PPL EnergyPlus for the three months ended
      June 30, 2002 and 2001 were $13 million and $23 million and for the six
      months ended June 30, 2002 and 2001 were $30 million and $55 million. These
      amounts are included in "Wholesale energy marketing to affiliate"
      revenues on the Statement of Income.
Brokering and Contract Management Agreement
(PPL
      Montana)
Under a wholesale sales brokering and contract management
      agreement between PPL Montana and PPL EnergyPlus, PPL Montana paid PPL EnergyPlus
      $2 million and $1 million for the three months ended June 30, 2002 and 2001.
      For the six months ended June 30, 2002 and 2001, the payments were $4 million
      and $2 million. PPL Montana records this expense as "Other operation
      and maintenance" on the Statement of Income.
Allocations of Corporate Service Costs
(PPL Energy
      Supply, PPL Electric and PPL Montana)
Corporate functions such as financial, legal, human resources
      and information services were transferred to PPL Services in the corporate
      realignment. PPL Services bills the respective PPL subsidiaries for the
      cost of such services when they can be specifically identified. The cost
      of these services that is not directly charged to PPL subsidiaries is allocated
      to certain of the subsidiaries based on the relative capital invested by
      PPL in these subsidiaries. PPL Services allocated the following charges
      to PPL Energy Supply, PPL Electric and PPL Montana (in millions):
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Direct expenses
PPL Energy Supply
$
23
$
20
$
43
$
36
PPL Electric
14
17
28
33
PPL Montana
3
1
4
2
Overhead costs
PPL Energy Supply
6
3
13
12
PPL Electric
7
6
13
11
PPL Montana
3
1
5
2
Intercompany Borrowings
(PPL Energy Supply)
PPL, through PPL Capital Funding and other subsidiaries,
      provides certain funding and credit support for PPL Energy Supply and its
      subsidiaries. Such funding includes loans that are due on demand with interest
      charged at a rate based on PPL Capital Funding's short-term borrowing rate.
      PPL Energy Supply had no notes payable to affiliates at June 30, 2002 or
      December 31, 2001 and consequently had no intercompany interest expense
      in 2002 related to intercompany borrowings.
PPL Energy Supply, through its financing subsidiary PPL
      Investment Corporation, had notes receivable from affiliates of PPL totaling
      $243 million and $395 million at June 30, 2002 and December 31, 2001. Interest
      earned on loans to affiliates was $6 million and $11 million for the three
      months ended June 30, 2002 and 2001, and was $11 million and $19 million
      for the six months ended June 30, 2002 and 2001.
(PPL Electric)
In December 2001, PPL Electric made two loans from excess
      cash to PPL Energy Funding in the aggregate principal amount of $350 million.
      One loan was a demand promissory note in the original principal amount of
      $150 million requiring interest to be paid monthly at an annual interest
      rate of 4.0%. The other loan was a one-year term promissory note in the
      original principal amount of $200 million requiring interest to be paid
      monthly at an annual interest rate of 6.5%. The outstanding balance of these
      loans at June 30, 2002 was $80 million. Intercompany interest income was
      $1 million for the three months ended June 30, 2002 and 2001, and was $5
      million for the six months ended June 30, 2002 and 2001.
Derivative Instruments and Hedging Activities
(PPL, PPL Energy Supply and PPL Montana)
Fair Value Hedges
PPL Energy Supply and PPL Montana enter into financial
      or physical contracts to hedge a portion of the fair value of firm commitments
      of forward electricity sales. These contracts range in maturity through
      2007. Additionally, PPL and PPL Energy Supply enter into financial contracts
      to hedge fluctuations in the market value of existing debt issuances. For
      the three and six months ended June 30, 2002, PPL and PPL Energy Supply
      recognized an immaterial amount from the ineffective portion of fair value
      hedges and did not recognize any gains or losses from firm commitments that
      no longer qualified as fair value hedges. For these same periods PPL Montana
      did not recognize any gains or losses from the ineffective portion of fair
      value hedges or from firm commitments that no longer qualified as fair value
      hedges. For the three and six months ended June 30, 2001, PPL, PPL Energy
      Supply and PPL Montana did not recognize any gains or losses from the ineffective
      portion of fair value hedges or from firm commitments that no longer qualified
      as fair value hedges.
Cash Flow Hedges
PPL Energy Supply and PPL Montana enter into financial
      and physical contracts, including forwards, futures and swaps, to hedge
      the price risk associated with electric, gas and oil commodities. Additionally,
      PPL enters into financial interest rate swap contracts to hedge interest
      expense associated with both existing and anticipated debt issuances. These
      contracts and swaps, excluding those forecasted transactions related to
      the payment of variable interest on existing financial instruments, range
      in maturity through 2022. PPL also enters into foreign currency forward
      contracts to hedge exchange rates associated with firm commitments denominated
      in foreign currencies and to hedge the net investment of foreign operations.
      These forward contracts range in maturity through 2003.
The after-tax impact on the financial statements of PPL
      and PPL Energy Supply resulting from cash flow hedge ineffectiveness was
      insignificant for the three and six months ended June 30, 2002, and was
      an after-tax gain of $3 million for the three and six months ended June
      30, 2001.
Cash flow hedges may be discontinued because it is probable
      that the original forecasted transaction will not occur by the end of the
      originally specified time period. Reclassifications for the three and six
      months ended June 30, 2002 were insignificant. As a result of an unplanned
      outage in 2001 and changes in economic conditions, PPL Energy Supply and
      PPL Montana discontinued certain cash flow hedges, resulting in the following
      gain/(loss) reclassifications (millions of dollars):
Three Months
Ended June 30,
2001
Six Months
Ended June 30,
2001
PPL
$
7
$
(10
)
PPL Energy Supply
7
(10
)
PPL Montana
7
7
As of June 30, 2002, the deferred net gain, after-tax,
      on derivative instruments in accumulated other comprehensive income expected
      to be reclassified into earnings during the next twelve months (excluding
      derivative activities of equity investments) was $5 million, $7 million,
      and $6 million for PPL, PPL Energy Supply and PPL Montana, respectively.
The following table shows the change in accumulated unrealized
      gains or losses on derivatives in other comprehensive income for the following
      periods (millions of dollars):
Three Months
Ended June 30,
2002
Six Months
Ended June 30,
2002
PPL
Beginning accumulated
derivative gain
$
12
$
23
Net change associated with
current period hedging
activities and other
(8
)
Net change associated with C15
accounting change (a)
(3
)
(6
)
Net change from reclassification
into earnings
3
3
Ending accumulated derivative
gain
$
12
$
12
PPL Energy Supply
Beginning accumulated
derivative gain
$
34
$
47
Net change associated with
current period hedging
activities and other
(2
)
(11
)
Net change associated with C15
accounting change (a)
(3
)
(6
)
Net change from reclassification
into earnings
4
3
Ending accumulated derivative
gain
$
33
$
33
PPL Montana
Beginning accumulated
derivative gain
$
19
$
33
Net change associated with
current period hedging
activities and other
(2
)
(13
)
Net change from reclassification
into earnings
3
Ending accumulated derivative
gain
$
20
$
20
(a)
On June 27, 2001, the FASB cleared
          DIG Issue C15, "Scope Exceptions: Normal Purchases and Normal Sales
          Exception for Option-Type Contracts and Forward Contracts in Electricity,"
          which extends the normal purchases and normal sales exception to electricity
          purchase and sale agreements meeting certain criteria. The mark-to-market
          value recorded in accumulated other comprehensive income as of June
          30, 2001 is being amortized through the original delivery term of the
          contracts.
Implementation Issues
In December 2001, the FASB revised guidance on DIG Issue
      C16, "Scope Exceptions: Applying the Normal Purchases and Normal Sales
      Exception to Contracts that Combine a Forward Contract and a Purchased Option
      Contract." Issue C16 provides additional guidance on the classification
      and application of SFAS 133 relating to purchases and sales of electricity
      utilizing forward contracts and options, as well as the eligibility of fuel
      contracts for the normal purchases and normal sales exception. The revised
      guidance was effective April 1, 2002. PPL had no financial statement impact
      from the revised guidance on fuel contracts classified as normal.
EITF 02-3, Accounting for Contracts Involved in Trading
      and Risk Management Activities
In June 2002, the FASB's EITF adopted the position that
      revenues from energy trading contracts must be reported "net"
      in financial statements for periods ending after June 30, 2002. The EITF
      requires that all comparative financial statements for interim periods or
      years should be restated (reclassified) to conform to this consensus. Although
      this new accounting guidance will require changes to certain line items
      in the financial statements, it will not impact PPL's overall financial
      position or earnings. Rather, the portion of PPL's revenues from wholesale
      energy marketing and trading will be netted against expenses from energy
      purchases that represent energy trading activities. PPL has not yet quantified
      the financial statement impact from this revised guidance.
Credit Concentration
PPL, PPL Energy Supply and PPL Montana enter into contracts
      with many entities for the purchase and sale of energy. Most of these contracts
      are considered a normal part of doing business and, as such, the mark-to-market
      value of these contracts is not reflected in the financial statements. However,
      the mark-to-market value of these contracts is considered when committing
      to a new business from a credit perspective.
PPL, PPL Energy Supply and PPL Montana have credit exposures
      to energy trading partners. The majority of these exposures were the mark-to-market
      value of multi-year contracts for energy sales. Therefore, if these counterparties
      fail to perform their obligations under such contracts, the companies would
      not experience an immediate financial loss, but would experience lower revenues
      in future years to the extent that replacement sales could not be made at
      the same prices as sales under the defaulted contracts.
At June 30, 2002, PPL had a credit exposure of $332 million
      to energy trading partners. Four counterparties accounted for 63% of this
      exposure. No other individual counterparty accounted for more than 2% of
      the exposure. Each of the four primary counterparties has an investment
      grade credit rating from Standard & Poor's.
At June 30, 2002, PPL Energy Supply had a credit exposure
      of $550 million to energy trading partners. Five counterparties accounted
      for 78% of this exposure. No other individual counterparty accounted for
      more than 1% of the exposure. The largest exposure, $218 million, was to
      PPL Electric, under the long-term contract to provide PPL Electric's PLR
      load. PPL Electric has posted collateral in an amount of $68 million related
      to this exposure in accordance with its contract with PPL Energy Supply.
      The other four counterparties have an investment grade credit rating from
      Standard & Poor's.
At June 30, 2002, PPL Montana had a credit exposure of
      $164 million to energy trading partners. Three counterparties accounted
      for 95% of this exposure. No other individual counterparty accounted for
      more than 2% of the exposure. Each of the three primary counterparties has
      an investment grade credit rating from Standard & Poor's.
With the exception of one counterparty, a government agency,
      PPL, PPL Energy Supply and PPL Montana have the right to request collateral
      from each of these counterparties in the event their credit rating falls
      below investment grade. It is also the policy of PPL, PPL Energy Supply
      and PPL Montana to enter into netting agreements with all of its counterparties
      to minimize credit exposure.
Other Income - Net
(PPL)
The breakdown of PPL's Other Income was as follows (millions
      of dollars):
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Other Income
Interest income
$
4
$
2
$
9
$
6
Equity earnings
1
(1
)
Misc. other income
4
8
8
17
Total
8
10
18
22
Other Deductions
Misc. other deductions
2
4
7
10
Other Income - net
$
6
$
6
$
11
$
12
(PPL Energy Supply)
The breakdown of PPL Energy Supply's Other Income was as
      follows (millions of dollars):
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Other Income
Affiliated interest income
$
6
$
11
$
11
$
19
Interest income
3
1
5
3
Equity earnings
1
1
2
2
Misc. other income
4
7
6
14
Total
14
20
24
38
Other Deductions
Misc. other deductions
2
2
3
6
Other Income - net
$
12
$
18
$
21
$
32
(PPL Electric)
The breakdown of PPL Electric's Other Income was as follows
      (millions of dollars):
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Other Income
Affiliated interest income
$
1
$
1
$
5
$
5
Interest income
1
1
2
2
Misc. other income
1
Total
2
2
8
7
Other Deductions
Misc. other deductions
1
1
2
Other Income - net
$
2
$
1
$
7
$
5
Goodwill and Other Intangible Assets
In June 2001, the FASB issued SFAS 142, "Goodwill
      and Other Intangible Assets," which eliminates the amortization of
      goodwill and other acquired intangible assets with indefinite economic useful
      lives. SFAS 142 requires an annual impairment test of goodwill at the reporting
      unit level. A reporting unit is a segment or one level below a segment (referred
      to as a component). Intangible assets other than goodwill that are not subject
      to amortization are also required to undergo an annual impairment test.
      PPL and its subsidiaries adopted SFAS 142 on January 1, 2002. Previously
      reported information has been restated to conform to the current presentation.
      The following information is disclosed in accordance with SFAS 142.
Acquired Intangible Assets
(PPL)
The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):
June 30, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Emission allowances
$
50
$
36
Land and
transmission rights
241
$
88
247
$
86
Licenses and other
32
4
31
4
$
323
$
92
$
314
$
90
Current intangible assets are included in "Current
      Assets - Other," and long-term intangible assets are included in "Regulatory
      and Other Noncurrent Assets - Other" on the Balance Sheet.
Amortization expense was approximately $1 million and $2
      million for the three and six months ended June 30, 2002. Estimated amortization
      expense for the years 2003 through 2007 is $5 million per year.
(PPL Energy Supply)
The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):
June 30, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Emission allowances
$
50
$
36
Land and
transmission rights
49
$
14
49
$
13
Licenses and other
32
4
31
4
$
131
$
18
$
116
$
17
Current intangible assets are included in "Current
      Assets - Other," and long-term intangible assets are included in "Other
      Noncurrent Assets" on the Balance Sheet.
Amortization expense was approximately $1 million for the
      three and six months ended June 30, 2002. Estimated amortization expense
      for the years 2003 through 2007 is $2 million per year.
(PPL Electric)
The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):
June 30, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Land and
transmission rights
$
191
$
73
$
197
$
72
Intangible assets are included in "Regulatory and
      Other Noncurrent Assets - Other" on the Balance Sheet.
Amortization expense was approximately $1 million for the
      three and six months ended June 30, 2002. Estimated amortization expense
      for the years 2003 through 2007 is $2 million per year.
(PPL Montana)
The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):
June 30, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Emission allowances
$
19
$
19
Licenses and other
15
15
$
34
$
34
Current intangible assets are included in "Prepayments
      and other," and long-term intangible assets are included in "Noncurrent
      Assets - Other" on the Balance Sheet.
Amortization expense was immaterial for the three and six
      months ended June 30, 2002. Estimated amortization expense is immaterial
      for each of the years 2003 through 2007.
Goodwill
(PPL and PPL Energy Supply)
The changes in the carrying amounts of goodwill by segment
      were as follows (millions of dollars):
PPL Energy Supply
PPL
Supply
International
Total
Delivery(a)
Total
Balance as of
January 1, 2002
$
72
$
257
$
329
$
55
$
384
Goodwill acquired
12
5
17
17
Effect of foreign
exchange rates
7
7
7
Impairment losses
(150
)
(150
)
(150
)
Balance as of
June 30, 2002
$
84
$
119
$
203
$
55
$
258
(a)
The Delivery segment is not
          part of PPL Energy Supply.
Goodwill is included in other noncurrent assets on the
      Balance Sheet.
The reporting units of the Supply, Delivery and International
      segments completed the transition impairment test in the first quarter of
      2002. A transition goodwill impairment loss of $150 million was recognized
      in the Latin American reporting unit within the International segment, and
      is reported as a "Cumulative Effect of a Change in Accounting Principle"
      on the Statement of Income. The fair value of the reporting unit was estimated
      using the expected present value of future cash flows.
The following table reconciles reported earnings from prior
      periods to earnings adjusted to exclude the amortization expense related
      to goodwill and equity method goodwill that will no longer be recorded in
      accordance with SFAS 142.
(PPL)
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of Dollars, except per share
          data)
Reported net income (loss)
$
(27
)
$
117
$
(30
)
$
339
Add back: Goodwill amortization
3
7
Add back: Equity method
goodwill amortization
1
2
Adjusted net income (loss)
$
(27
)
$
121
$
(30
)
$
348
Basic EPS:
Reported net income (loss)
$
(0.18
)
$
0.80
$
(0.20
)
$
2.33
Goodwill amortization
0.02
0.05
Equity method goodwill
amortization
0.01
0.01
Adjusted net income (loss)
$
(0.18
)
$
0.83
$
(0.20
)
$
2.39
Diluted EPS:
Reported net income (loss)
$
(0.18
)
$
0.80
$
(0.20
)
$
2.31
Goodwill amortization
0.02
0.05
Equity method goodwill
amortization
0.01
0.01
Adjusted net income (loss)
$
(0.18
)
$
0.83
$
(0.20
)
$
2.37
(PPL Energy Supply)
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of Dollars)
Reported net income
$
9
$
124
$
4
$
325
Add back: Goodwill amortization
3
6
Add back: Equity method
goodwill amortization
1
2
Adjusted net income
$
9
$
128
$
4
$
333
(PPL Electric and PPL Montana)
PPL Electric and PPL Montana had no goodwill at June 30,
      2002 and December 31, 2001. The adoption of SFAS 142 would not have affected
      prior period earnings of PPL Electric and PPL Montana.
Reconciliation of Prior Annual Periods to Exclude Amortization
(PPL and PPL Energy Supply)
The following table reconciles reported earnings from prior
      annual periods to earnings adjusted to exclude the amortization expense
      related to goodwill and equity method goodwill that will no longer be recorded
      in accordance with SFAS 142. PPL and PPL Energy Supply were not affected
      by changes in amortization periods for other intangible assets.
PPL
For the Years Ended
December 31,
2001
2000
1999
Reported net income before
extraordinary items and cumulative
effect of a change in accounting
principle
$
169
$
487
$
478
Add back: Goodwill amortization
13
11
8
Add back: Equity method goodwill
amortization
3
3
5
Adjusted net income before
extraordinary items and cumulative
effect of a change in accounting
principle
$
185
$
501
$
491
Reported net income
$
179
$
498
$
432
Add back: Goodwill amortization
13
11
8
Add back: Equity method goodwill
amortization
3
3
5
Adjusted net income
$
195
$
512
$
445
PPL
For the Years Ended
December 31,
2001
2000
1999
Basic EPS:
Reported net income before
extraordinary items and cumulative
effect of a change in accounting
principle
$
1.16
$
3.38
$
3.14
Goodwill amortization
0.09
0.07
0.06
Equity method goodwill amortization
0.02
0.02
0.03
Adjusted net income before
extraordinary items and cumulative
effect of a change in accounting
principle
$
1.27
$
3.47
$
3.23
Reported net income
$
1.23
$
3.45
$
2.84
Goodwill amortization
0.09
0.07
0.06
Equity method goodwill amortization
0.02
0.02
0.03
Adjusted net income
$
1.34
$
3.54
$
2.93
Diluted EPS:
Reported net income before
extraordinary items and cumulative
effect of a change in accounting
principle
$
1.15
$
3.37
$
3.14
Goodwill amortization
0.09
0.07
0.06
Equity method goodwill amortization
0.02
0.02
0.03
Adjusted net income before
extraordinary items and cumulative   effect of
          a change in accounting
principle
$
1.26
$
3.46
$
3.23
Reported net income
$
1.22
$
3.44
$
2.84
Goodwill amortization
0.09
0.07
0.06
Equity method goodwill amortization
0.02
0.02
0.03
Adjusted net income
$
1.33
$
3.53
$
2.93
PPL Energy Supply
For the Years Ended
December 31,
2001
2000
1999
Reported net income (loss)
          before
extraordinary items and cumulative
effect of a change in accounting
principle
$
171
$
242
$
(35
)
Add back: Goodwill amortization
12
9
7
Add back: Equity method goodwill
amortization
3
3
5
Adjusted net income (loss)
          before
extraordinary items and cumulative
effect of a change in accounting
principle
$
186
$
254
$
(23
)
Reported net income (loss)
$
174
$
242
$
(35
)
Add back: Goodwill amortization
12
9
7
Add back: Equity method goodwill
amortization
3
3
5
Adjusted net income (loss)
$
189
$
254
$
(23
)
(PPL Electric and PPL Montana)
PPL Electric and PPL Montana had no goodwill at December
      31, 2001, 2000 and 1999. The adoption of SFAS 142 would not have affected
      prior period earnings of PPL Electric and PPL Montana.
New Accounting Standards
(PPL, PPL Energy Supply, PPL Electric and PPL Montana
)
SFAS 143
In June 2001, the FASB issued SFAS 143, "Accounting
      for Asset Retirement Obligations," on the accounting for obligations
      associated with the retirement of long-lived assets. SFAS 143 requires a
      liability to be recognized in the financial statements for retirement obligations
      meeting specific criteria. Measurement of the initial obligation is to approximate
      fair value, with an equivalent amount recorded as an increase in the value
      of the capitalized asset. The asset will be depreciated in accordance with
      normal depreciation policy and the liability will be increased, with a charge
      to the income statement, until the obligation is settled. SFAS 143 is effective
      for fiscal years beginning after June 15, 2002. PPL and its subsidiaries
      are currently in the process of identifying asset retirement obligations.
      The potential impact of adopting SFAS 143 is not yet determinable, but may
      be material.
SFAS 144
In August 2001, the FASB issued SFAS 144, "Accounting
      for the Impairment or Disposal of Long-Lived Assets," that replaces
      SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
      Long-Lived Assets to Be Disposed Of." For long-lived assets to be held
      and used, SFAS 144 retains the requirements of SFAS 121 to (a) recognize
      an impairment loss only if the carrying amount is not recoverable from undiscounted
      cash flows and (b) measure an impairment loss as the difference between
      the carrying amount and fair value of the asset. For long-lived assets to
      be disposed of, SFAS 144 establishes a single accounting model based on
      the framework established in SFAS 121. The accounting model for long-lived
      assets to be disposed of by sale applies to all long-lived assets, including
      discontinued operations, and replaces the provisions of APB Opinion No.
      30, "Reporting the Results of Operations - Reporting the Effects of
      Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
      Occurring Events and Transactions," for the disposal of segments of
      a business. SFAS 144 also broadens the reporting of discontinued operations.
      PPL and its subsidiaries adopted SFAS 144 on January 1, 2002, with no material
      impact on the financial statements.
SFAS 145
In April 2002, the FASB issued SFAS 145, "Rescission
      of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13,
      and Technical Corrections." The most relevant provision of SFAS 145
      is the rescission of SFAS 4, "Reporting Gains and Losses from Extinguishment
      of Debt - An Amendment of APB Opinion No. 30," which required all gains
      and losses from extinguishment of debt to be aggregated and, if material,
      classified as an extraordinary item, net of related income tax effect. As
      a result of the rescission, the criteria in APB Opinion No. 30 will now
      be used to classify those gains and losses. The provisions of SFAS 145 related
      to the rescission of SFAS 4 shall be applied in fiscal years beginning after
      May 15, 2002, with early application encouraged. The adoption of SFAS 145
      will not have a material impact on PPL or its subsidiaries.
SFAS 146
In June 2002, the FASB issued SFAS 146, "Accounting
      for Costs Associated with Exit or Disposal Activities." SFAS 146 addresses
      financial accounting and reporting for costs associated with exit or disposal
      activities and replaces EITF 94-3, "Liability Recognition for Certain
      Employee Termination Benefits and Other Costs to Exit an Activity (including
      Certain Costs Incurred in a Restructuring)." SFAS 146 requires the
      recognition of costs associated with exit or disposal activities when they
      are incurred rather than at the date of a commitment to an exit or disposal
      plan. The provisions of SFAS 146 are effective for exit or disposal activities
      initiated after December 31, 2002, with earlier application encouraged.
      The adoption of SFAS 146 will not have a material impact on PPL or its subsidiaries,
      but may impact future disposal or exit activities.
EITF 02-3
See Note 10 for a discussion of EITF 02-3 and the potential
      impact of adoption.
Write-down of International Energy Projects
(PPL and PPL Energy Supply)
At December 31, 2001, PPL Global estimated that the long-term
      viability of its CEMAR investment was jeopardized and that there was minimal
      probability of positive future cash flows. See PPL's Note 22 and PPL Energy
      Supply's Note 21 to the Financial Statements included in each company's
      Annual Report to the SEC on Form 10-K for the year ended December 31, 2001
      for additional information. At that time, PPL Global recorded an impairment
      loss in the carrying value of its net assets in CEMAR, an increase in its
      valuation allowance in deferred tax assets, and a credit to "Minority
      Interest" on the Statement of Income. The net result of these transactions
      was a $217 million charge to earnings.
At March 31, 2002, PPL Global recorded a further impairment
      loss in the carrying value of its net assets in CEMAR of approximately $4
      million, after-tax. The pre-tax charge was $6 million, and was recorded
      as a charge to "Write-down of international energy projects" on
      the Statement of Income.
PPL had been working with governmental authorities in Brazil
      and CEMAR's creditors on a plan to return the company to financial stability.
      That plan included CEMAR's request for a rate-increase review, which Brazilian
      regulators denied in June 2002. PPL viewed the rate-increase review as a
      critical step in restoring CEMAR to financial stability. While CEMAR has
      the capability to appeal the regulator's denial, PPL puts a low probability
      on the chances of any appeal succeeding. Given the regulator's denial of
      the rate-increase review and the current financial condition of CEMAR, PPL
      has made a decision to exit the investment. PPL Global's remaining portion
      of its CEMAR investment, primarily related to its foreign currency translation
      adjustments balance, was written-off as of June 30, 2002. The $94 million
      charge was recorded in "Write-down of international energy projects"
      on the Statement of Income.
In July 2002, PPL announced a proposal to sell all of its
      90% equity interest in CEMAR to Franklin Park Energy, LLC. The sale is subject
      to regulatory approval of Brazil's National Electric Energy Agency and other
      customary conditions. The purchase and sale agreement may be terminated
      by either party if closing on the sale does not occur by August 15, 2002.
      If the sale is not consummated, PPL expects that CEMAR would consider filing
      for bankruptcy under Brazilian law. PPL cannot predict what position the
      Brazilian regulator, CEMAR's creditors or others may take in connection
      with these matters or the ultimate outcome of these matters.
As a result of its financial difficulties, CEMAR has failed
      to pay certain of its creditors for obligations when due. In addition, CEMAR
      is not in compliance with the financial covenants in its 150 million Brazilian
      reals (approximately $56 million) debenture indenture for the year ended
      December 31, 2001, and for the quarter ended March 31, 2002. CEMAR has reached
      agreement with the required majority of debenture holders on a waiver for
      the failure to meet certain financial covenants through measurement periods
      ending September 30, 2002.
Workforce Reduction
(PPL, PPL Energy Supply and PPL Electric)
In an effort to improve operational efficiency and reduce costs,
  PPL announced a workforce reduction in June 2002 that eliminated 598 employees,
  or about 7% of PPL's U.S. workforce, at a cost of $74 million. The program was
  broad-based and impacted virtually all employee groups except certain positions
  that are key to providing high-quality service to PPL's electricity delivery
  customers. Linemen, electricians and line foremen, for example, were not affected
  by the reductions.
PPL recorded the cost of the program as a one-time charge of
  $74 million included in the Statement of Income as "Workforce reduction."
  This charge reduced net income by $43 million after taxes, or 29 cents per share
  of common stock. Annual savings in operating expenses associated with the workforce
  reduction are estimated to be approximately $50 million. The program provides
  for enhanced early retirement benefits and/or one-time special pension separation
  allowances based on an employee's age and years of service. These features of
  the program will be paid primarily from the PPL Retirement Plan pension trust
  and increased PPL's pension liability by $65 million. The remaining $9 million
  of costs relate primarily to severance payments and outplacement costs which
  will be paid by PPL, and are included on the Balance Sheet in "Current
  Liabilities."
PPL Energy Supply eliminated 195 employees and recorded a one-time
  charge of $40 million, which after taxes reduced net income by $23 million.
  Included in the charge was a $10 million allocation of the costs associated
  with the elimination of employees of PPL Services.
PPL Electric eliminated 260 employees and recorded a one-time
  charge of $33 million, which after taxes reduced net income by $19 million.
  Included in the charge was a $6 million allocation of the costs associated with
  the elimination of employees of PPL Services.
PPL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations
This discussion should be read in conjunction with the Financial
  Statements and Combined Notes to Condensed Consolidated Financial Statements
  included in Item 1 above, and with the section entitled "Review of the
  Financial Condition and Results of Operations" in PPL's Annual Report to
  the SEC on Form 10-K for the year ended December 31, 2001. Terms and abbreviations
  appearing in Management's Discussion and Analysis of Financial Condition and
  Results of Operations are explained in the glossary.
Results of Operations
The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001.
The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.
Earnings
Net income (loss) and the related EPS were as follows:
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
Net income (loss)
(millions of dollars)
$
(27
)
$
117
$
(30
)
$
339
EPS - basic
$
(0.18
)
$
0.80
$
(0.20
)
$
2.33
EPS - diluted
$
(0.18
)
$
0.80
$
(0.20
)
$
2.31
Net income in 2002 was impacted by three unusual items as shown
  below. Refer to specific notes to the Financial Statements for discussion of
  these items.
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of dollars)
Net income (loss) -
actual
$
(27
)
$
117
$
(30
)
$
339
Unusual items (net of
tax):
SFAS 142 goodwill
impairment (Note   12)
(150
)
Write-down of
investment in
CEMAR (Note 14)
(94
)
(98
)
Workforce reduction
(Note 15)
(43
)
(43
)
Net income from core
operations
$
110
$
117
$
261
$
339
Core earnings declined by $7 million and $78 million for the
  three and six months ended June 30, 2002, compared to the same periods in 2001.
  These decreases were primarily due to (after-tax earnings impacts noted in millions
  of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Lower wholesale energy margins
$
(26
)
$
(87
)
Lower unregulated retail energy
margins
(11
)
(33
)
Lower delivery revenues (net of
CTC/ITC amortization)
(2
)
(13
)
PPL Global earnings (a)
4
(5
)
Earnings from synfuel
projects (b)
(3
)
3
Higher regulated retail energy
margins
30
61
Other - net
1
(4
)
$
(7
)
$
(78
)
(a)
The increase for the three months
      ended was due to the discontinuance of goodwill amortization and lower development
      spending. The decrease for the six months ended was due to higher interest
      on Latin American debt and lower operating results at equity affiliates,
      offset by the discontinuance of goodwill amortization and a favorable termination
      settlement on a cancelled domestic development project.
(b)
The decrease for the three months
      ended was due to $4 million less in tax credits. (The second quarter of
      2001 included additional tax credits which had been deferred pending the
      receipt of a private letter ruling from the IRS.) The increase for the six
      months ended was due to higher sales volumes.
PPL expects that the current low level of wholesale energy
  prices will adversely impact margins for the remainder of this year, and could
  continue to do so beyond 2002. Based upon current energy price levels, there
  is a risk that PPL may be unable to recover its investment in new gas-fired
  generation facilities. Under generally accepted accounting principles, PPL does
  not believe that there is an impairment charge to be recorded at this time.
  PPL is unable to predict the ultimate earnings impact of this issue, based upon
  energy price levels, applicable accounting rules and other factors, but such
  impact may be material.
PPL also expects that it will incur quarterly operating losses
  from CEMAR until such time as it exits its investment in CEMAR. See Note 14
  to the Financial Statements for information on PPL Global's investment in CEMAR.
  See "Financial Condition - Liquidity" for a discussion of a possible charge
  related to PPL Capital Funding's 7.70% Reset Put Securities due 2007.
Domestic Energy Margins
The following tables provide summary data regarding changes
  in domestic gross margins of wholesale and retail energy for the three and six
  months ended June 30, 2002, compared with the same periods in 2001 (millions
  of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Utility revenues
$
47
$
25
Unregulated retail electric and
gas revenues
(62
)
(152
)
Wholesale energy marketing and
trading revenues
(79
)
(269
)
Other revenue adjustments (a)
(1
)
50
Total revenues
(95
)
(346
)
Fuel
1
(40
)
Purchased power
(84
)
(221
)
Other cost adjustments (a)
16
Total cost of sales
(83
)
(245
)
Domestic gross energy
margins
$
(12
)
$
(101
)
(a)
Adjusted to exclude the impact of
      any revenues and costs not associated with domestic energy margins, in particular,
      revenues and costs related to the international operations of PPL Global
      and the domestic delivery operations of PPL Electric and PPL Gas Utilities.
Changes in Gross Domestic Energy Margins By Customer:
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Wholesale - Eastern U.S.
$
(24
)
$
(44
)
Wholesale - Western U.S.
(20
)
(106
)
Unregulated retail
(19
)
(55
)
Regulated retail
51
104
Domestic gross energy margins
$
(12
)
$
(101
)
Gross margin calculations are dependent on the allocation of
  fuel and purchased power costs to the customer segments. That allocation is
  based on hourly MWh consumption levels compared to hourly MWh supply costs.
  Any costs specific to a customer segment are charged to that customer segment.
Wholesale - Eastern U.S.
East wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  lower wholesale prices. Average wholesale prices for the three months ended
  June 30, 2002 were $16/MWh lower than those realized in the same period in 2001.
  As a result, wholesale revenues were lower by $17 million, despite a 36% increase
  in wholesale sales. Because of the higher levels of sales, costs were $7 million
  higher. Average wholesale prices for the year-to-date June 30, 2002 were $12/MWh
  lower than those realized for the same period in 2001, thereby providing $106
  million less in revenues. Partially offsetting this decline were higher volumes
  of sales, which added $36 million to revenues and a buyout of a NUG contract,
  which reduced power purchases by $25 million.
Wholesale - Western U.S.
West wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  significantly lower wholesale prices. Average wholesale prices for the three
  and six months ended June 30, 2002, were $43/MWh and $85/MWh lower than those
  realized for the same periods in 2001. Lower wholesale prices for the three
  and six months ended June 30, 2002 account for $76 million and $248 million
  of margin reductions. These reductions were offset by higher volumes of $56
  million and $142 million, due in part to the commercial operations of Griffith
  Energy.
Unregulated Retail
Unregulated retail margins were lower for the three and six
  months ended June 30, 2002, compared to the same periods in 2001. These declines
  were primarily due to lower revenues resulting from the expiration of contracts
  which were not renewed in the East and to significantly lower retail prices
  in the West. However, the declines were partially offset by an increase in the
  number of customers. For the three and six months ended June 30, 2002, lower
  prices account for $18 million and $57 million of margin reductions.
Regulated Retail
Regulated retail margins in the East were higher for the three
  and six months ended June 30, 2002, compared to the same periods in 2001. For
  the three months ended June 30, 2002, increased sales volumes improved margins
  by $11 million. Higher average sales prices, caused by changes in usage among
  customer classes, improved margins by $13 million. Finally, lower supply costs
  in 2002, due to lower purchased power costs, lower fuel costs and increased
  generating unit availability, improved margins by $27 million. For the six months
  ended June 30, 2002, increased sales volumes improved margins by $25 million.
  Higher average prices, caused by changes in usage among customer classes, improved
  margins by $25 million. Finally, lower supply costs in 2002, due to lower purchased
  power costs, lower fuel costs and increased generating unit availability, improved
  margins by $52 million.
Operating Revenues
Utility
The increase (decrease) in utility revenues was attributable
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Electric Revenue
PPL Electric:
Electric delivery
$
4
$
(24
)
PLR electric generation supply
37
73
Other
(3
)
PPL Global:
Electric delivery
8
Other
(2
)
(5
)
47
41
Gas Revenue
PPL Gas Utilities
(16
)
$
47
$
25
The increase in utility operating revenues in both periods
  was primarily due to PPL Electric's higher revenues from providing electric
  generation supply as a PLR. During the past 12 months, about 80% to 90% of kWh
  in PPL Electric's service territory that had been served by alternate suppliers
  under the Customer Choice Act have returned to PPL Electric as the supplier.
  Because the bulk of the shoppers returned to PPL Electric as their supplier
  in July 2001, there should not be similar levels of increase for the remainder
  of the year.
The $8 million increase in PPL Global's revenue in the three
  months ended June 30, 2002, compared to the same period in 2001 was due to an
  increase in the volume of deliveries in Brazil, Chile and El Salvador.
Both PPL Gas Utilities' revenues and PPL Electric's delivery
  revenues were lower in the six months ended June 30, 2002, compared with the
  same period in 2001. The PPL Electric delivery revenue decrease was primarily
  due to lower sales volume of 3.3%, due to mild winter weather in the first quarter
  of 2002 and adverse economic conditions. The PPL Gas Utilities' decrease was
  primarily due to lower sales volumes of 1.3 million dekatherms, or 17%. This
  was also due to mild winter weather.
Unregulated Retail Electric and Gas
The decrease in revenues from unregulated retail electric and
  gas operations was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
PPL EnergyPlus:
Retail electric
$
(60
)
$
(146
)
Retail gas
(2
)
(6
)
$
(62
)
$
(152
)
The decrease in electric generation supply in both periods
  was primarily due to lower sales volumes, reflecting the expiration of certain
  PPL EnergyPlus contracts with existing customers and an increased emphasis on
  competing in wholesale markets.
Wholesale Energy Marketing and Trading
The increase (decrease) in revenues from wholesale energy marketing
  and trading activities was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Eastern U.S. markets
Bilateral/Spot market
$
(68
)
$
(107
)
Cost-based
(14
)
(31
)
Gas & oil
7
(45
)
(75
)
(183
)
Western U.S. markets
(4
)
(86
)
$
(79
)
$
(269
)
The decrease in eastern U.S. markets in both periods was attributable
  to lower bilateral/spot market revenues primarily due to lower prices, partially
  offset by higher volumes. A decline in prices adversely impacted revenues by
  $138 million and $167 million for the three and six months ended June 30, 2002,
  compared to the same periods in 2001. Partially offsetting the price decline
  were increased volumes which had a positive effect on revenues of $70 million
  and $60 million for the three and six months ended June 30, 2002, compared to
  the same periods in 2001. This was the result of PPL EnergyPlus' increasing
  emphasis on competing in the wholesale markets. Also, contributing to the decrease
  was the expiration of capacity and energy agreements (cost-based) with BG&E.
Gas and oil revenues decreased for the six months ended June
  30, 2002, compared to the same period in 2001. This decrease was primarily due
  to significantly lower prices in the first quarter of 2002, which impacted revenues
  by $28 million, and lower volumes with a revenue impact of $17 million.
The decrease in western U.S. markets in both periods was due
  to a decline in wholesale energy prices from the high prices experienced during
  the energy supply shortage in the western U.S. in the first half of 2001. In
  June 2001, the FERC instituted a series of price controls designed to mitigate
  (or cap) prices in the entire western U.S. as a result of the California energy
  crisis. These price controls have had the effect of significantly lowering spot
  and forward energy prices in the western U.S. See Note 8 to the Financial Statements
  for further discussion on the California situation.
Fuel
Fuel costs decreased by $40 million for the six months ended
  June 30, 2002, compared with the same period in 2001.
Electric fuel costs decreased by $24 million for the six months
  ended June 30, 2002, compared with the same period in 2001. After eliminating
  $3 million for PPL Wallingford, which began operations at the end of December
  2001 and $4 million for Griffith Energy, which began operations in January 2002,
  electric fuel costs decreased by $31 million in the first half of 2002. The
  decrease was attributed to $30 million in lower generation in the east's oil/gas
  fired stations due to reduced plant usage due to more favorable energy prices
  on the open market.
The cost of natural gas and propane decreased by $16 million
  for the six months ended June 30, 2002, compared with the same period in 2001.
  The decrease reflects $18 million in lower gas purchases due to milder weather
  and $8 million in lower off-system purchases due to a decrease in per unit gas
  prices, which was offset by $10 million in higher purchased gas costs.
PPL subsidiaries have entered into new coal supply agreements
  in 2002 that will provide a large percentage of coal requirements of their coal-fired
  generating plants. For PPL's eastern U.S. coal-fired generating plants, the
  new agreements, together with the existing agreements, secure 95%, 79%, 54%,
  34% and 20% of the expected coal requirements for 2002 through 2006. For PPL's
  western U.S. coal-fired generating plants, the new agreements, together with
  the existing agreements, secure 100% of the 2002 and 2003 requirements and 92%
  of the 2004 through 2006 expected coal requirements.
Energy Purchases
The increase (decrease) in energy purchases was attributable
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Domestic
Eastern U.S. markets
$
(87
)
$
(218
)
Western U.S. markets
1
(8
)
International
2
5
$
(84
)
$
(221
)
The decreases in the eastern U.S. markets were primarily due
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Gains on long-term forward
transactions
$
(60
)
$
(62
)
Lower wholesale electricity prices
(7
)
(47
)
Lower wholesale electricity
volumes
(19
)
(6
)
Gain on NUG contract buy-out
(25
)
Lower gas purchases for trading
(49
)
Lower gas purchases for retail
(16
)
Other - net
(1
)
(13
)
$
(87
)
$
(218
)
Other Operation Expenses
Other operation expenses decreased by $6 million for the three
  months ended June 30, 2002, compared to the same period in 2001. This decrease
  was primarily due to a $6 million delay in outage related activities at the
  Susquehanna generating station and $3 million of pension income in 2002 due
  to the adoption of double corridor accounting.
During the second quarter of 2002, the workforce reduction
  (see "Workforce Reduction" discussion below) and union-negotiated
  benefit enhancements had a significant impact on PPL's primary pension plan,
  increasing the benefit obligation by $140 million. As a result of these changes,
  PPL remeasured its net periodic pension cost for that plan, which included recognition
  of asset losses totaling $153 million as of June 30, 2002 due to weakened financial
  markets. These combined events decreased the funded status of PPL's pension
  plan by approximately $290 million.
Through June 30, 2002, PPL recorded approximately $20 million
  of pension income. As a result of the events and remeasurements previously discussed,
  PPL expects to record approximately $9 million of pension income in the second
  half of 2002 for a full year total of $29 million. PPL expects to continue to
  record pension income in 2003, but at lower levels due to the above events and
  continued weakness in the financial markets.
Maintenance
Maintenance expenses decreased by $12 million for the three
  months ended June 30, 2002, compared to the same period in 2001. This decrease
  was primarily due to $13 million of higher costs incurred in the second quarter
  of 2001 for the Susquehanna generating station refueling outage and additional
  overtime and contractor costs to improve plant equipment reliability.
Amortization of Recoverable Transition Costs
Amortization of recoverable transition costs decreased by $23
  million for the six months ended June 30, 2002, compared with the same period
  in 2001. This decrease was primarily due to $19 million of lower ITC amortization
  in 2002 as a result of lower billed ITC revenues. Billed ITC revenues were lower
  as a result of the decrease in electricity delivery sales and lower ITC rates.
Taxes, Other Than Income
Taxes, other than income, increased by $8 million and $18 million
  during the three and six months ended June 30, 2002, compared with the same
  periods in 2001. These changes were primarily due to an increase in the revenue-neutral
  reconciliation (RNR) tax component of the effective Pennsylvania gross receipts
  tax rate in January 2002. The RNR, which adjusts the base gross receipts tax
  rate of 4.4%, was enacted as part of the Customer Choice Act as a tax revenue
  replacement component to recoup losses to the Commonwealth of Pennsylvania that
  may result from the restructuring of the electric industry. Changes in gross
  receipts tax do not significantly affect earnings as they are substantially
  recovered through customer rate revenues.
Write-down of International Energy Projects
See Note 14 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 and a $94 million
  charge in the three months ended June 30, 2002 to reflect additional write-downs
  of PPL Global's investment in CEMAR.
Workforce Reduction
See Note 15 to the Financial Statements for information regarding
  the $74 million charge recorded in June 2002.
Financing Costs
Interest expense increased by $12 million for the three months
  ended June 30, 2002, compared with the same period in 2001. This increase was
  primarily the net effect of an $18 million increase in interest on long-term
  debt, partially offset by a $7 million decrease in interest on short-term debt.
  The increase in interest on long-term debt reflects the issuance of $800 million
  of senior secured bonds by PPL Electric, $500 million of senior unsecured notes
  by PPL Energy Supply and debt issued by PPL Global's consolidated affiliates.
  A portion of these proceeds was used to pay down commercial paper balances,
  which decreased short-term interest expense.
Dividends and distributions on preferred securities increased
  by $13 million for the six months ended June 30, 2002, compared with the same
  period in 2001. This increase was due to a $15 million increase in distributions
  on the PEPS Units, issued in the second quarter of 2001, offset by a $2 million
  decrease in preferred stock dividends due to redemptions and retirements of
  preferred stock and preferred securities.
Income Taxes
Income taxes decreased by $31 million for the three months
  ended June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $70 million reduction in income
  taxes. This decrease was offset by $33 million of deferred income tax valuation
  allowances recorded on PPL's investment in CEMAR and a $4 million reduction
  in the amount of federal synfuel tax credits recognized.
Income taxes decreased by $95 million for the six months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $126 million reduction in income
  taxes, offset by $33 million of deferred income tax valuation allowances recorded
  on PPL's investment in CEMAR.
Change in Accounting Principle
PPL adopted SFAS 142, "Goodwill and Other Intangible Assets,"
  on January 1, 2002. SFAS 142 requires an annual impairment test of goodwill
  and other intangible assets that are not subject to amortization. PPL conducted
  a transition impairment analysis in the first quarter of 2002 and recorded a
  transition goodwill impairment charge of $150 million, which was reported as
  a "Cumulative Effect of a Change in Accounting Principle" on the Statement
  of Income. See Note 12 to the Financial Statements for additional information
  on the adoption of SFAS 142.
Financial Condition
Liquidity
At June 30, 2002, PPL had $193 million in cash and cash equivalents
  and $281 million of short-term debt. At December 31, 2001, PPL had $933 million
  in cash and cash equivalents and $118 million of short-term debt. The decrease
  in net cash position from December resulted from less cash provided from operating
  activities due primarily to the effect of $150 million of turbine cancellation
  payments, a $50 million payment to terminate the outstanding liability under
  an energy purchase contract with a NUG, mild weather and seasonal cash outflows
  that normally occur in the first half of each year (such as the prepayment of
  the Pennsylvania gross receipts tax). In addition, PPL incurred one-time acquisition
  costs of approximately $105 million for certain generation equipment it purchased
  from two lessor trusts in the first half of 2002, and $151 million of additional
  project development costs. PPL and its subsidiaries also retired $291 million
  of securities in the first half of 2002.
In the second quarter of 2002, PPL filed a universal shelf
  registration statement with the SEC for the issuance of up to $950 million in
  various securities. Subject to market conditions, PPL currently plans to issue
  approximately $200 million of common stock and a lesser amount of equity-linked
  securities during the third quarter of 2002 under this registration statement.
  PPL expects to use the proceeds of these issuances to retire other securities,
  for general corporate purposes, including the repayment of short-term debt,
  and to provide liquidity.
PPL Capital Funding currently has outstanding 7.70% Reset Put
  Securities due 2007 in the aggregate principal amount of $200 million, which
  are subject to remarketing in the fourth quarter of 2002. If the securities
  are remarketed, their term would be extended for an additional five years to
  the final maturity date in 2007, and the interest rate on the securities would
  be reset at a rate equal to 6.115% plus a credit spread based on PPL Capital
  Funding's credit profile at the time of remarketing. To the extent that the
  actual five-year U.S. Treasury rate (the "Treasury Rate"), at the
  time of remarketing is less than 6.115%, PPL Capital Funding would incur an
  effective incremental cost of funds over the subsequent five-year period approximately
  equal to the difference between 6.115% and the actual Treasury Rate. On August
  6, 2002, the Treasury Rate was 3.26%. If the remarketing fails, which could
  occur due to a number of reasons beyond PPL Capital Funding's control, or if
  PPL Capital Funding elects not to remarket these securities, PPL would incur
  a pre-tax charge to earnings during the third or fourth quarter of 2002. Based
  on the Treasury Rate on August 6, 2002, the amount of this pre-tax charge would
  be approximately $25 million. However, at this time, PPL cannot predict whether
  it will incur a charge in 2002, or if it does incur a charge, the amount of
  such charge.
For additional information on PPL's liquidity, see Item 7,
  "Review of the Financial Condition and Results of Operations," in
  PPL's Annual Report to the SEC on Form 10-K for the year ended December 31,
  2001.
Energy Marketing and Trading Activities
Through PPL EnergyPlus, PPL sells and purchases, and PPL Montana
  sells, physical energy at the wholesale level under FERC market-based tariffs
  throughout the U.S. Because of the generating assets PPL owns or controls, the
  majority of PPL's energy transactions qualify for accrual or hedge accounting.
  In addition, PPL enters into financial contracts to hedge the price risk associated
  with its electricity, gas and oil positions. At June 30, 2002, PPL had net assets
  of $20 million related to its energy hedging activities.
Certain transactions, however, meet the definition of trading
  activities as defined by EITF 98-10, "Accounting for Contracts Involved
  in Energy Trading and Risk Management Activities." These trading activities
  include physical and financial energy contracts, such as forwards, futures,
  options, and swaps that do not qualify for hedge accounting or were entered
  into to profit from market fluctuations. Trading activities also include certain
  transactions for capacity and ancillary products, such as transmission congestion
  credits (TCCs) and fixed transmission rights (FTRs).
In June 2002, the FASB's EITF adopted the position in EITF
  02-3, which addresses accounting for contracts involved in trading and risk
  management activities, that revenues from energy trading contracts must be reported
  "net" in financial statements for periods ending after June 30, 2002.
  The EITF requires that all comparative financial statements should be restated
  (reclassified) to conform to this consensus. Although this new accounting guidance
  will require changes to certain line items in the financial statements, it will
  not impact PPL's overall financial position or earnings. Rather, the portion
  of PPL's revenues from wholesale energy marketing and trading will be netted
  against expenses from energy purchases that represent energy trading activities.
  PPL has not yet quantified the financial statement impact from this revised
  guidance.
PPL's trading contracts mature at various times through 2006.
  The following chart sets forth the gains/(losses) in the net fair market value
  of PPL's trading contracts for the following periods (millions of dollars):
June 30, 2002
Three
Months
Ended
Six
Months
Ended
Fair value of contracts outstanding
      at the
beginning of the period
$
7
Contracts realized or otherwise
      settled
during the period
2
$
(1
)
Fair value of new contracts when
      entered
into during the period
(5
)
(7
)
Other changes in fair values
(3
)
9
Fair value of contracts outstanding
      at the
end of the period
$
1
$
1
During the six months ended June 30, 2002, PPL reversed net
  gains of approximately $1 million related to contracts entered into prior to
  January 1, 2002. This amount does not reflect intra-year contracts that were
  entered into and settled during the period.
As of June 30, 2002, the net loss on PPL's trading activities
  expected to be recognized in earnings during the next three months is approximately
  $3 million.
The following chart segregates estimated fair values of PPL's
  trading portfolio at June 30, 2002 based on whether the fair values are determined
  by quoted market prices or other more subjective means (millions of dollars):
Fair Value of Contracts at June 30, 2002
Gains/(Losses)
Maturity
less than
1 year
Maturity
1-3 years
Maturity
4-5 years
Maturity
in excess
of 5 years
Total fair
value
Source of Fair Value
Prices actively
quoted
Prices provided by
other external
sources
$
4
$
3
$
7
Prices based on
models and
other valuation
methods
(6
)
(6
)
Fair value of
contracts
outstanding at
the end of the
period
$
(2
)
$
3
$
1
For additional information on PPL's Energy Marketing and Trading
  Activities, see Item 7, "Review of the Financial Condition and Results
  of Operations," in PPL's Annual Report to the SEC on Form 10-K for the
  year ended December 31, 2001.
Related Party Transactions
PPL is not aware of any material ownership interests or operating
  responsibility by senior management of PPL or its subsidiaries in outside partnerships,
  including leasing transactions with special-purpose entities, or other entities
  doing business with PPL.
Acquisitions and Development
From time-to-time, PPL and its subsidiaries are involved in
  negotiations with third parties regarding acquisitions, joint ventures and other
  arrangements which may or may not result in definitive agreements. See Note
  7 to the Financial Statements for information regarding recent acquisitions
  and development activities.
At June 30, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. Subsequently, the Sundance, University Park, Edgewood
  and Shoreham projects began commercial operation, which added 1,150 MW to PPL's
  generation capacity.
PPL Global is continuously reexamining development projects
  based on market conditions and other factors to determine whether to proceed
  with these projects, sell them, cancel them, expand them, execute tolling agreements
  or pursue other opportunities.
Financing Activities
See Note 6 to the Financial Statements for a discussion of
  financing activities.
Cash Flow
Cash and cash equivalents decreased by $422 million more during
  the six months ended June 30, 2002, compared with the same period in 2001. The
  reasons for this change were:
a $178 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayment of Pennsylvania
      gross receipts tax, $150 million of turbine cancellation payments, and a
      $50 million payment to terminate an energy purchase contract with a NUG;
a $333 million increase in cash used in investing activities,
      in part due to an increase of $107 million in capital expenditures. Also,
      there were no repayments of loans by affiliated companies in 2002; and
an $89 million decrease in cash used in financing activities
      primarily due to a $59 million reduction in retirements of long-term debt
      and preferred securities.
Environmental Matters
See Note 8 to the Financial Statements for a discussion of
  environmental matters.
Critical Accounting Policies
PPL's financial condition and results of operations are necessarily
  impacted by the methods, assumptions and estimates used in the application of
  critical accounting policies. The following accounting policies are particularly
  important to the financial condition or results of operations of PPL and require
  estimates or other judgments of matters inherently uncertain: price risk management,
  pension and other postretirement benefits, asset impairment, leasing and contingencies.
  See Item 7, "Review of the Financial Condition and Results of Operations,"
  in PPL's Annual Report to the SEC on Form 10-K for the year ended December 31,
  2001 for a discussion of each critical accounting policy. For an additional
  discussion of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements and "Other Operation
  Expenses" in Results of Operations. For an additional discussion of the
  impact of the CEMAR write-down on asset impairment, see Note 14 to the Financial
  Statements.
PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations
The following analysis of the financial condition and results
  of operations of PPL Energy Supply is abbreviated, as PPL Energy Supply meets
  the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q.
  This discussion should be read in conjunction with the Financial Statements
  and Combined Notes to Condensed Consolidated Financial Statements included in
  Item 1 above, and with the section entitled "Review of the Financial Condition
  and Results of Operations" in PPL Energy Supply's Annual Report to the
  SEC on Form 10-K for the year ended December 31, 2001. Terms and abbreviations
  appearing in Management's Discussion and Analysis of Financial Condition and
  Results of Operations are explained in the glossary.
Results of Operations
The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001.
The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.
Earnings
Net income in 2002 was impacted by three unusual items as shown
  below. Refer to specific Notes to the Financial Statements for discussion of
  these items.
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of dollars)
Net income - actual
$
9
$
124
$
4
$
325
Unusual items (net of
tax):
SFAS 142 goodwill
impairment
(Note 12)
(150
)
Write-down of
investment in
CEMAR (Note 14)
(94
)
(98
)
Workforce reduction
(Note 15)
(23
)
(23
)
Net income from core
operations
$
126
$
124
$
275
$
325
Core earnings increased by $2 million for the three months
  ended June 30, 2002, compared to the same period in 2001. Core earnings decreased
  by $50 million for the six months ended June 30, 2002, compared to the same
  period in 2001. These changes in core earnings were primarily due to (after-tax
  earnings impacts noted in millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Lower wholesale energy margins
$
(26
)
$
(87
)
Lower unregulated retail energy
margins
(11
)
(33
)
PPL Global earnings (a)
4
(5
)
Earnings from synfuel
projects (b)
(3
)
3
Higher regulated retail energy
margins
30
61
Lower transmission and
depreciation expenses
6
17
Other - net
2
(6
)
$
2
$
(50
)
(a)
The increase for the three months
      ended was due to the discontinuance of goodwill amortization and lower development
      spending. The decrease for the six months ended was due to higher interest
      on Latin American debt and lower operating results at equity affiliates,
      offset by the discontinuance of goodwill amortization and a favorable termination
      settlement on a cancelled domestic development project.
(b)
The decrease for the three months
      ended was due to $4 million less in tax credits. (The second quarter of
      2001 included additional tax credits which had been deferred pending the
      receipt of a private letter ruling from the IRS.) The increase for the six
      months ended was due to higher sales volumes.
PPL Energy Supply expects that the current low level of wholesale
  energy prices will adversely impact margins for the remainder of this year,
  and could continue to do so beyond 2002. Based upon current energy price levels,
  there is a risk that PPL Energy Supply may be unable to recover its investment
  in new gas-fired generation facilities. Under generally accepted accounting
  principles, PPL Energy Supply does not believe that there is an impairment charge
  to be recorded at this time. PPL Energy Supply is unable to predict the ultimate
  earnings impact of this issue, based upon energy price levels, applicable accounting
  rules and other factors, but such impact may be material.
PPL Energy Supply also expects that it will incur quarterly
  operating losses from CEMAR until such time as it exits its investment in CEMAR.
  See Note 14 to the Financial Statements for information on PPL Global's investment
  in CEMAR.
Domestic Energy Margins
The following tables provide summary data regarding changes
  in domestic gross margins of wholesale and retail energy for the three and six
  months ended June 30, 2002, compared with the same periods in 2001 (millions
  of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Wholesale energy marketing and
trading revenues
$
(47
)
$
(200
)
Unregulated retail electric and
gas revenues
(61
)
(152
)
Total revenues
(108
)
(352
)
Fuel
3
(24
)
Purchased power
(97
)
(228
)
Other cost adjustments (a)
(2
)
1
Total cost of sales
(96
)
(251
)
Domestic gross energy
margins
$
(12
)
$
(101
)
(a)
Adjusted to exclude the impact of
      any costs not associated with domestic energy margins, in particular, costs
      related to the international operations of PPL Global.
Changes in Gross Domestic Energy Margins By Customer:
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Wholesale - Eastern U.S.
$
(24
)
$
(44
)
Wholesale - Western U.S.
(20
)
(106
)
Unregulated retail
(19
)
(55
)
Regulated retail
51
104
Domestic gross energy margins
$
(12
)
$
(101
)
Gross margin calculations are dependent on the allocation of
  fuel and purchased power costs to the customer segments. That allocation is
  based on hourly MWh consumption levels compared to hourly MWh supply costs.
  Any costs specific to a customer segment are charged to that customer segment.
Wholesale - Eastern U.S.
East wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  lower wholesale prices. Average wholesale prices for the second quarter 2002
  were $16/MWh lower than those realized in the same period in 2001. As a result,
  wholesale revenues were lower by $17 million, despite a 36% increase in wholesale
  sales. Because of the higher levels of sales, costs were $7 million higher.
  Average wholesale prices for the year-to-date June 30, 2002 were $12/MWh lower
  than those realized for the same period in 2001, thereby providing $106 million
  less in revenues. Partially offsetting this decline were higher volumes of sales,
  which added $36 million to revenues and a buyout of a NUG contract, which reduced
  power purchases by $25 million.
Wholesale - Western U.S.
West wholesale margins were lower for the three and six months
  ended June 30, 2002, compared to the same periods in 2001, primarily due to
  significantly lower wholesale prices. Average wholesale prices for the three
  and six months ended June 30, 2002, were $43/MWh and $85/MWh lower than those
  realized for the same periods in 2001. Lower wholesale prices for the three
  and six months ended June 30, 2002 account for about $76 million and $248 million
  of margin reductions. These reductions were offset by higher volumes of $56
  million and $142 million, due in part to the commercial operations of Griffith
  Energy.
Unregulated Retail
Unregulated retail margins were lower for the three and six
  months ended June 30, 2002, compared to the same periods in 2001. These declines
  were primarily due to lower revenues resulting from the expiration of contracts
  which were not renewed in the East and to significantly lower retail prices
  in the West. However, the declines were partially offset by an increase in the
  number of customers. For the three and six months ended June 30, 2002, lower
  prices account for $18 million and $57 million of margin reductions.
Regulated Retail
Regulated retail margins in the East were higher for the three
  and six months ended June 30, 2002, compared to the same periods in 2001. For
  the three months ended June 30, 2002, increased sales volumes improved margins
  by $11 million. Higher average sales prices, caused by changes in usage among
  customer classes, improved margins by $13 million. Finally, lower supply costs
  in 2002, due to lower purchased power costs, lower fuel costs and increased
  generating unit availability, improved margins by $27 million. For the six months
  ended June 30, 2002, increased sales volumes improved margins by $25 million.
  Higher average prices, caused by changes in usage among customer classes, improved
  margins by $25 million. Finally, lower supply costs in 2002, due to lower purchased
  power costs, lower fuel costs and increased generating unit availability, improved
  margins by $52 million.
Operating Revenues
Wholesale Energy Marketing and Trading
The decrease in revenues from wholesale energy marketing and
  trading activities was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Eastern U.S. markets
Bilateral/Spot market
$
(68
)
$
(107
)
Cost-based
(14
)
(31
)
Gas & oil
7
(45
)
(75
)
(183
)
Western U.S. markets
(6
)
(86
)
$
(81
)
$
(269
)
The decrease in eastern U.S. markets in both periods was attributable
  to lower bilateral/spot market revenues primarily due to lower prices, partially
  offset by higher volumes. A decline in prices adversely impacted revenues by
  $138 million and $167 million for the three and six months ended June 30, 2002,
  compared to the same periods in 2001. Partially offsetting the price decline
  were increased volumes which had a positive effect on revenues of $70 million
  and $60 million for the three and six months ended June 30, 2002, compared to
  the same periods in 2001. This was the result of PPL EnergyPlus' increasing
  emphasis on competing in the wholesale markets. Also, contributing to the decrease
  was the expiration of capacity and energy agreements (cost-based) with BG&E.
Gas and oil revenues in eastern U.S. markets decreased for
  the six months ended June 30, 2002, compared to the same period in 2001. This
  decrease was primarily due to significantly lower prices in the first quarter
  of 2002, which impacted revenues by $28 million, and lower volumes with a revenue
  impact of $17 million.
The decrease in western U.S. markets in both periods was due
  to a decline in wholesale energy prices from the high prices experienced during
  the energy supply shortage in the western U.S. in the first half of 2001. In
  June 2001, the FERC instituted a series of price controls designed to mitigate
  (or cap) prices in the entire western U.S. as a result of the California energy
  crisis. These price controls have had the effect of significantly lowering spot
  and forward energy prices in the western U.S. See Note 8 to the Financial Statements
  for further discussion on the California situation.
Wholesale Energy Marketing to Affiliates
The increase (decrease) in revenues from wholesale energy marketing
  activities to affiliates was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Sales to PPL Electric (PLR)
$
39
$
74
Sales to PPL Gas Utilities
(5
)
(5
)
$
34
$
69
PPL EnergyPlus has a power sales agreement to supply PPL Electric's
  entire PLR load, so PPL Energy Supply's wholesale electric sales to affiliate
  are a direct reflection of PPL Electric's success as a PLR. During the past
  12 months, about 80% to 90% of kWh in PPL Electric's service territory that
  had been served by alternate suppliers under the Customer Choice Act have returned
  to PPL Electric as the supplier. Therefore, there was a corresponding increase
  in PPL Energy Supply's wholesale sales to PPL Electric. Because the bulk of
  the shoppers returned to PPL Electric as their supplier in July 2001, there
  should not be similar levels of increase for the remainder of the year.
Utility
PPL Energy Supply's utility operations consist of the delivery
  of electricity by PPL Global subsidiaries. The $8 million increase in utility
  revenue in the three months ended June 30, 2002, compared to the same period
  in 2001 was due to an increase in the volume of deliveries in Brazil, Chile
  and El Salvador.
Unregulated Retail Electric and Gas
The decrease in revenues from unregulated retail electric and
  gas operations was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Retail Electric
$
(60
)
$
(146
)
Retail Gas
(1
)
(6
)
$
(61
)
$
(152
)
The decrease in operating revenues from unregulated retail
  electric operations was primarily due to the expiration of certain PPL EnergyPlus
  contracts with existing customers and increased emphasis on competing in wholesale
  markets.
PPL EnergyPlus experienced lower retail gas revenues in the
  six months ended June 30, 2002, compared with the same period in 2001, primarily
  due to milder weather.
Fuel
Fuel costs decreased by $24 million in the six months ended
  June 30, 2002, compared with the same period in 2001. After eliminating $3 million
  for PPL Wallingford, which began operations at the end of December 2001, and
  $4 million for Griffith Energy, which began operations in January 2002, fuel
  costs decreased by $31 million in the first half of 2002. The decrease was attributed
  to $30 million in lower generation in the east's oil/gas fired stations due
  to reduced plant usage due to more favorable energy prices on the open market.
PPL Energy Supply subsidiaries have entered into new coal supply
  agreements in 2002 that will provide a large percentage of coal requirements
  of their coal-fired generating plants. For PPL Energy Supply's eastern U.S.
  coal-fired generating plants, the new agreements, together with the existing
  agreements, secure 95%, 79%, 54%, 34% and 20% of the expected coal requirements
  for 2002 through 2006. For PPL Energy Supply's western U.S. coal-fired generating
  plants, the new agreements, together with the existing agreements, secure 100%
  of the 2002 and 2003 requirements and 92% of the 2004 through 2006 expected
  coal requirements.
Energy Purchases
The increase (decrease) in energy purchases was attributed
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Domestic
Eastern U.S. markets
$
(87
)
$
(214
)
Western U.S. markets
1
(7
)
International
2
5
$
(84
)
$
(216
)
The decreases in the eastern U.S. markets were primarily due
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Gains on long-term forward
transactions
$
(60
)
$
(62
)
Lower wholesale electricity prices
(7
)
(47
)
Lower wholesale electricity
volumes
(28
)
(6
)
Gain on NUG contract buy-out
(25
)
Lower gas purchases for trading
(49
)
Lower gas purchases for retail
(16
)
Other - net
8
(9
)
$
(87
)
$
(214
)
Energy Purchases from Affiliates
The decrease in energy purchases from affiliates was attributable
  to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Purchases of gas
$
(9
)
$
(6
)
Purchases of NUG electricity
(4
)
(6
)
$
(13
)
$
(12
)
The decrease in gas purchases from PPL Gas Utilities was due
  to a decrease in gas trading activities by PPL EnergyPlus. Purchases of NUG
  energy are the result of PPL EnergyPlus' contract to buy from PPL Electric the
  electricity that PPL Electric purchases under contracts with NUGs. (See Note
  9 to the Financial Statements for a discussion of the NUG purchase contract.)
  With the termination in February 2002 of its NUG contract with Foster Wheeler,
  PPL Electric purchased less NUG energy, and therefore had less electricity to
  sell to PPL EnergyPlus.
Other Operation and Maintenance
Other operation and maintenance expenses decreased by $18 million
  for the three months ended June 30, 2002, compared to the same period in 2001.
  The decrease was primarily due to $22 million of lower costs at the Susquehanna
  generating station. Of this, $13 million were higher costs incurred in the second
  quarter of 2001 for the refueling outage and additional overtime and contractor
  costs to improve plant equipment reliability and $6 million resulted from a
  delay in outage related activities.
During the second quarter of 2002, the workforce reduction,
  (see "Workforce Reduction" discussion below) and union negotiated
  benefit enhancements had a significant impact on PPL's primary pension plan,
  increasing the benefit obligation by $140 million. As a result of these changes,
  PPL remeasured its net periodic pension cost for that plan, which included recognition
  of asset losses totaling $153 million as of June 30, 2002 due to weakened financial
  markets. These combined events decreased the funded status of PPL's pension
  plan by approximately $290 million. PPL Energy Supply participates in that plan
  and is allocated approximately 35% of the obligations of that plan.
Through June 30, 2002, PPL Energy Supply was allocated approximately
  $7 million of pension income. As a result of the events and remeasurements previously
  discussed, PPL Energy Supply will be allocated approximately $3 million of pension
  income in the second half of 2002 for a full year total of $10 million. PPL
  expects to continue to record pension income in 2003, but at lower levels due
  to the above events and continued weakness in the financial markets.
Transmission
Transmission expense decreased by $9 million for the three
  months ended June 30, 2002, compared with the same period in 2001. The decrease
  was attributed to $5 million in lower wholesale energy purchases needed to meet
  wholesale trading activity and $3 million in lower energy purchases due to a
  decrease in retail sales by PPL EnergyPlus.
Transmission expense decreased by $21 million for the six months
  ended June 30, 2002, compared with the same period in 2001. The decrease was
  attributed to $11 million in lower wholesale energy purchases needed to meet
  wholesale trading activity and $8 million in lower energy purchases due to a
  decrease in retail sales by PPL EnergyPlus.
Depreciation
Depreciation decreased by $9 million for the six months ended
  June 30, 2002, compared to the same period in 2001. This decrease was primarily
  the result of:
$8 million due to the extension of the depreciable life
      of the Susquehanna station by 20 years;
$4 million due to PPL Global's write-down of CEMAR assets
      in 2001, resulting in no depreciation on these assets in 2002; and
$5 million due to a decrease in PPL Global's goodwill amortization,
      which is no longer being recorded effective January 1, 2002.
These decreases were partially offset by an increase of $7
  million due to depreciation of the PPL Wallingford facility, which began in
  January 2002, and higher depreciation at several facilities due to plant upgrades
  and installation of SCR technology.
Write-down of International Energy Projects
See Note 14 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 and a $94 million
  charge in the three months ended June 30, 2002 to reflect additional write-downs
  of PPL Global's investment in CEMAR.
Workforce Reduction
See Note 15 to the Financial Statements for information regarding
  the $40 million charge recorded in June 2002.
Other Income - net
Other income decreased by $11 million for the six months ended
  June 30, 2002, compared with the same period in 2001. The primary reasons for
  this decrease were an $8 million decrease in affiliated interest income, which
  was a result of less intercompany loans to affiliates in 2002, and a decrease
  of $5 million in miscellaneous other income due to lower miscellaneous income
  from PPL Global affiliates.
Interest Expense
Total interest expense increased by $14 million and $9 million
  for the three and six months ended June 30, 2002, compared with the same periods
  in 2001. The source of borrowing has changed between the two years. In 2001,
  the interest was on short-term borrowings, primarily with affiliated companies.
  Interest expense in 2002 reflects long-term debt issuances. PPL Energy Supply
  issued $500 million of senior unsecured notes in October 2001 and PPL Global
  subsidiaries issued long-term debt in 2001.
Income Taxes
Income taxes decreased by $9 million for the three months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $48 million reduction in income
  taxes. This decrease was offset by $33 million of deferred income tax valuation
  allowances recorded on the PPL Energy Supply's investment in CEMAR and a $4
  million reduction in the amount of federal synfuel tax credits recognized.
Income taxes decreased by $54 million for the six months ended
  June 30, 2002, compared to the same period in 2001. The change was primarily
  due to lower pre-tax book income, resulting in a $91 million reduction in income
  taxes, offset by $33 million of deferred income tax valuation allowances recorded
  on PPL Energy Supply's investment in CEMAR.
Change in Accounting Principle
PPL Energy Supply adopted SFAS 142, "Goodwill and Other
  Intangible Assets," on January 1, 2002. SFAS 142 requires an annual impairment
  test of goodwill and other intangible assets that are not subject to amortization.
  PPL Energy Supply conducted a transition impairment analysis in the first quarter
  of 2002 and recorded a transition goodwill impairment charge of $150 million,
  which was reported as a "Cumulative Effect of a Change in Accounting Principle"
  on the Statement of Income. See Note 12 to the Financial Statements for additional
  information on the adoption of SFAS 142.
Acquisitions and Development
From time-to-time, PPL Energy Supply and its subsidiaries are
  involved in negotiations with third parties regarding acquisitions, joint ventures
  and other arrangements which may or may not result in definitive agreements.
  See Note 7 to the Financial Statements for information regarding recent acquisitions
  and development activities.
At June 30, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. Subsequently, the Sundance, University Park, Edgewood
  and Shoreham projects began commercial operation, which added 1,150 MW to PPL's
  generation capacity.
PPL Global is continuously reexamining development projects
  based on market conditions and other factors to determine whether to proceed
  with these projects, sell them, cancel them, expand them, execute tolling agreements
  or pursue other opportunities.
Critical Accounting Policies
PPL Energy Supply's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. The following accounting policies
  are particularly important to the financial condition or results of operations
  of PPL Energy Supply, and require estimates or other judgments of matters inherently
  uncertain: price risk management, pension and other postretirement benefits,
  asset impairment, leasing and contingencies. See Item 7, "Review of the
  Financial Condition and Results of Operations," in PPL Energy Supply's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy. For an additional discussion
  of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements and "Other Operation
  and Maintenance" in Results of Operations. For an additional discussion
  of the impact of the CEMAR write-down on asset impairment, see Note 14 to the
  Financial Statements.
PPL ELECTRIC UTILITIES CORPORATION
  AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations
This discussion should be read in conjunction with the Financial
  Statements and Combined Notes to Condensed Consolidated Financial Statements
  included in Item 1 above, and with the section entitled "Review of the
  Financial Condition and Results of Operations" in PPL Electric's Annual
  Report to the SEC on Form 10-K for the year ended December 31, 2001. Terms and
  abbreviations appearing in Management's Discussion and Analysis of Financial
  Condition and Results of Operations are explained in the glossary.
Results of Operations
The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the three and six months ended June
  30, 2002, to the comparable periods in 2001.
The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.
Earnings
Net income in 2002 was impacted by the workforce reduction
  charge, as described in Note 15 to the Financial Statements.
Three Months
Ended June 30,
Six Months
Ended June 30,
2002
2001
2002
2001
(Millions of dollars)
Net income (loss) -
actual
$
(8
)
$
21
$
12
$
55
Unusual item (net of tax):
Workforce reduction
(Note 15)
(19
)
(19
)
Net income from core
operations
$
11
$
21
$
31
$
55
The decline in core earnings of $10 million and $24 million
  for the three and six months ended June 30, 2002, compared to the same periods
  in 2001, was primarily due to (after-tax earnings impacts noted in millions
  of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Higher energy purchase costs
including amortization of
up-front payment on PLR
contract
$
(2
)
$
(3
)
PJM ancillary service expense
(6
)
(13
)
Lower delivery revenues (net of
CTC/ITC amortization)
(2
)
(13
)
Lower other operating costs
3
1
Other - net
(3
)
4
$
(10
)
$
(24
)
Operating Revenues
Retail Electric
The increase (decrease) in revenues from retail electric operations
  was attributable to the following (millions of dollars):
June 30, 2002 vs. June 30, 2001
Three Months
Ended
Six Months
Ended
Electric delivery
$
4
$
(25
)
PLR electric generation supply
37
73
Other
(4
)
(4
)
$
37
$
44
The increase in operating revenues from retail electric operations
  in both periods was primarily due to higher revenues from providing electric
  generation supply as a PLR. During the past 12 months, about 80% to 90% of kWh
  in PPL Electric's service territory that had been served by alternate suppliers
  under the Customer Choice Act have returned to PPL Electric as the supplier.
  Because the bulk of the shoppers returned to PPL Electric as their supplier
  in July of 2001, there should not be similar levels of increase for the remainder
  of the year.
Revenues from delivery of electricity decreased for the six
  months ended June 30, 2002, compared to the same period in 2001. This reflected
  a 3.3% decrease in deliveries of electricity, primarily due to milder winter
  weather in the first quarter of 2002 and adverse economic conditions.
Wholesale Electric to Affiliate
PPL Electric has a contract to sell to PPL EnergyPlus the electricity
  that PPL Electric purchases under contracts with NUGs. With the termination
  in February 2002 of its NUG contract with Foster Wheeler, PPL Electric purchased
  less NUG energy, and therefore had less electricity to sell to PPL EnergyPlus.
Energy Purchases
Energy purchases increased by $7 million for the three months
  ended June 30, 2002, compared with the same period in 2001. This increase includes
  $10 million in service costs from PJM needed to support the increase in return
  of customers to PPL Electric as their PLR. Effective January 1, 2002, PPL Electric
  began incurring the cost of certain ancillary services in connection with its
  power supply contract with PPL EnergyPlus. (See Note 9 to the Financial Statements
  for a discussion of the power supply contract.) These costs were offset by a
  $4 million decrease in NUG purchases due to the termination of an energy purchase
  contract with a NUG in February 2002.
Energy purchases increased by $16 million for the six months
  ended June 30, 2002, compared with the same period in 2001. This increase includes
  $22 million in service costs from PJM needed to support the increase in return
  of customers to PPL Electric as their PLR. These costs were offset by a $6 million
  decrease in NUG purchases due to the termination of an energy purchase contract
  with a NUG in February 2002.
Energy Purchases from Affiliate
Energy purchases from affiliate increased by $39 million and
  $74 million for the three and six months ended June 30, 2002, compared with
  the same periods in 2001. These increases reflect higher purchases under the
  power supply contract with PPL EnergyPlus needed to support a higher PLR load,
  due to the return of customers to PPL Electric as their PLR. See Note 9 to the
  Financial Statements for a discussion of the power supply contract.
Amortization of Recoverable Transition Costs
Amortization of recoverable transition costs decreased by $23
  million for the six months ended June 30, 2002, compared with the same period
  in 2001. This decrease was primarily due to $19 million of lower ITC amortization
  in 2002 as a result of lower billed ITC revenues. Billed ITC revenues were lower
  as a result of the decrease in electricity delivery sales and lower ITC rates.
Taxes, Other Than Income
Taxes other than income increased by $11 million and $24 million
  during the three and six months ended June 30, 2002, compared to the same periods
  in 2001. These changes were primarily due to an increase in the revenue-neutral
  reconciliation (RNR) tax component of the effective Pennsylvania gross receipts
  tax rate in January 2002. The RNR, which adjusts the base gross receipts tax
  rate of 4.4%, was enacted as part of the Customer Choice Act as a tax revenue
  replacement component to recoup losses to the Commonwealth of Pennsylvania that
  may result from the restructuring of the electric industry. Changes in gross
  receipts tax do not significantly affect earnings, as they are substantially
  recovered through customer rate revenues.
Workforce Reduction
See Note 15 to the Financial Statements for information regarding
  the $33 million charge recorded in June 2002.
Income Taxes
Income taxes decreased by $22 and $33 million for the three
  and six months ended June 30, 2002, compared to the same periods in 2001, as
  a result of lower pre-tax book income.
Financial Condition
Liquidity
At June 30, 2002, PPL Electric had $35 million of cash and
  cash equivalents and no short-term debt. At December 31, 2001, PPL Electric
  had $79 million of cash and cash equivalents and no short-term debt. The decrease
  in cash position from December resulted from the retirement of $271 million
  of long-term debt and capital expenditures of $86 million, partially offset
  by a $270 million repayment of a notes receivable from an affiliate and cash
  provided from operating activities.
For additional information on PPL Electric's liquidity, see
  Item 7, "Review of the Financial Condition and Results of Operations,"
  in PPL Electric's Annual Report to the SEC on Form 10-K for the year ended December
  31, 2001.
Related Party Transactions
PPL Electric is not aware of any material ownership interests
  or operating responsibility by senior management of PPL Electric or its subsidiaries
  in outside partnerships or other entities doing business with PPL Electric.
For additional information on related party transactions, see
  Note 9 to the Financial Statements.
Cash Flow
Cash and cash equivalents decreased by $218 million less during
  the six months ended June 30, 2002, compared with the same period in 2001. The
  reasons for this change were:
a $73 million decrease in cash provided by operating activities,
      primarily due to lower net income, and payment of collateral to PPL EnergyPlus
      under the power supply contract;
a $192 million increase in cash provided by investing activities,
      primarily due to the repayment of notes receivable from parent and affiliates
      which was $200 million greater during the six months ended June 30, 2002;
      and
a $99 million decrease in cash used in financing activities,
      primarily due to a $198 million reduction in retirements of long-term and
      short-term debt. These decreases were offset by the retirement of $100 million
      of preferred securities.
Environmental Matters
See Note 8 to the Financial Statements for a discussion of
  environmental matters.
Critical Accounting Policies
PPL Electric's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. Accounting policies for pensions
  and other postretirement benefits and for contingencies are particularly important
  to the financial condition or results of operations of PPL Electric, and require
  estimates or other judgments of matters inherently uncertain. See Item 7, "Review
  of the Financial Condition and Results of Operations," in PPL Electric's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy. For an additional discussion
  of the impact of the workforce reduction on pension and other postretirement
  benefits, see Note 15 to the Financial Statements.
PPL MONTANA, LLC AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations
The following analysis of the results of operations and financial
  condition of PPL Montana is abbreviated as PPL Montana meets the conditions
  set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q. This discussion
  should be read in conjunction with the Financial Statements and Combined Notes
  to Condensed Consolidated Financial Statements included in Item 1 above, and
  with the section entitled "Review of the Financial Condition and Results
  of Operations" in PPL Montana's Annual Report to the SEC on Form 10-K for
  the year ended December 31, 2001. Terms and abbreviations appearing in Management's
  Discussion and Analysis of Financial Condition and Results of Operations are
  explained in the glossary.
Results of Operations
The following discussion explains significant changes in principal
  items on the Statement of Income, comparing the six months ended June 30, 2002,
  to the comparable period in 2001.
The Statement of Income reflects the results of past operations
  and is not intended as any indication of future operating results. Future operating
  results will necessarily be affected by various and diverse factors and developments.
  Furthermore, because results for interim periods can be disproportionately influenced
  by various factors and developments and by seasonal variations, the results
  of operations for interim periods are not necessarily indicative of results
  or trends for the year.
Earnings
Net income decreased by $83 million for the six months ended
  June 30, 2002, compared with the same period in 2001. The decrease was primarily
  due to lower wholesale prices in the western U.S.
Operating Revenues
Operating revenues decreased by $146 million for the six months
  ended June 30, 2002, compared with the same period in 2001. The decrease was
  primarily due to a decline in wholesale energy prices from the high prices experienced
  in the first half of 2001, resulting from an energy supply shortage in the western
  U.S. The decrease in power prices resulted in a decrease in revenues of $190
  million, while an increase in volume sold resulted in an increase in revenues
  of $44 million.
In June 2001, the FERC instituted a series of price controls
  designed to mitigate (or cap) prices in the entire western U.S. as a result
  of the California energy crisis. These price controls have had the effect of
  significantly lowering spot and forward energy prices in the western U.S. See
  Note 8 to the Financial Statements for further discussion on the California
  situation.
Operating Expense
Operating expenses decreased by $9 million during the six months
  ended June 30, 2002, compared with the same period in 2001. Operating expenses
  consist mainly of expenses for fuel, energy purchases, transmission tariffs,
  plant operations and maintenance, lease rental payments, and general and administrative
  expenses. The decrease was primarily due to a $12 million decrease in energy
  purchases, related to the decreased power costs in the western U.S. during the
  first half of 2002. The decrease in power prices resulted in a $33 million decrease
  in energy purchases, while an increase in volumes purchased resulted in an increase
  in energy purchases of $21 million.
Generation increased by 211 million kWh during the six months
  ended June 30, 2002, compared with the same period in 2001. This increase was
  primarily the result of higher hydroelectric generation caused by improved water
  flows in the first half of 2002.
Critical Accounting Policies
PPL Montana's financial condition and results of operations
  are necessarily impacted by the methods, assumptions and estimates used in the
  application of critical accounting policies. The following accounting policies
  are particularly important to the financial condition or results of operations
  of PPL Montana, and require estimates or other judgments of matters inherently
  uncertain: price risk management, leasing and contingencies. See Item 7, "Review
  of the Financial Condition and the Results of Operations," in PPL Montana's
  Annual Report to the SEC on Form 10-K for the year ended December 31, 2001,
  for a discussion of each critical accounting policy.
PPL CORPORATION AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About
  Market Risk
Market Risk-Sensitive Instruments
PPL actively manages the market risk inherent in its commodity,
  debt, and foreign currency and equity positions, as detailed in Note 10 to the
  Financial Statements. PPL has a comprehensive risk management policy to manage
  the risk exposures related to counterparty credit, energy prices, interest rates
  and foreign currency exchange rates. An RMC comprised of senior officers oversees
  the risk management function. Nonetheless, adverse changes in commodity prices,
  interest rates, foreign currency exchange rates and equity prices may result
  in losses in earnings, cash flows and/or fair values. The forward-looking information
  presented below provides estimates of what may occur in the future, assuming
  certain adverse market conditions, due to reliance on model assumptions. Actual
  future results may differ materially from those presented. These disclosures
  are not precise indicators of expected future losses, but only indicators of
  reasonably possible losses.
Commodity Price Risk
PPL uses various methodologies to simulate forward price curves
  in the energy markets to estimate the size and probability of changes in market
  value resulting from commodity price movements. The methodologies require several
  key assumptions, including selection of confidence levels, the holding period
  of the commodity positions and the depth and applicability to future periods
  of historical commodity price information.
As of June 30, 2002, PPL estimated that a 10% adverse movement
  in market prices across all geographic areas and time periods would have decreased
  the value of its non-hedge portfolio by $5 million. A similar adverse movement
  in market prices would have decreased the value of its hedge portfolio by approximately
  $126 million at June 30, 2002. However, the change in the value of the hedge
  portfolio would have been substantially offset by an increase in the value of
  the underlying commodity, the electricity generated, because these contracts
  serve to reduce the market risk inherent in the generation of electricity. In
  addition to commodity price risk associated with PPL's trading portfolio and
  any unhedged positions in its non-trading portfolio, PPL's commodity positions
  are also subject to operational and event risks including, among others, increases
  in load demand, decreases in hydro availability and forced outages at power
  plants.
PPL's risk management program is designed to manage the risks
  associated with market fluctuations in the price of electricity, fuel and fuel-related
  costs. PPL's risk management policy and programs include risk identification
  and risk limits management, with measurement and controls for daily monitoring.
  PPL has entered into forward, option and tolling contracts that require physical
  delivery of the commodity, as well as futures, exchange-for-physical transactions
  and other financial contracts (such as swap agreements where settlement is generally
  based on the difference between a fixed-price and an index-based price for the
  underlying commodity). PPL expects to continue to use these contracts.
PPL enters into contracts to hedge the impact of market fluctuations
  on PPL's energy-related assets, liabilities and other contractual arrangements.
  PPL also executes these contracts to take advantage of market opportunities.
  As a result, PPL may at times create a net open position in its portfolio that
  could result in significant losses if prices do not move in the manner or direction
  anticipated.
Interest Rate Risk
PPL and its subsidiaries have issued debt to finance their
  operations. PPL utilizes various financial derivative products to adjust the
  mix of fixed and floating-rate interest rates in its debt portfolios, adjusting
  the duration of its debt portfolios and locking in U.S. Treasury rates (and
  interest rate spreads over treasuries) in anticipation of future financing,
  when appropriate. Risk limits under the risk management program are designed
  to balance risk exposure to volatility in interest expense and losses in the
  fair value of PPL's debt portfolio due to changes in the absolute level of interest
  rates.
At June 30, 2002, PPL's potential annual exposure to increased
  interest expense, based on a 10% increase in interest rates, was estimated at
  $3 million.
PPL is also exposed to changes in the fair value of its debt
  portfolio. At June 30, 2002, PPL estimated that its potential exposure to a
  change in the fair value of its debt portfolio, through a 10% adverse movement
  in interest rates, was $126 million.
PPL utilizes various risk management instruments to reduce
  its exposure to adverse interest rate movements for future anticipated financings.
  While PPL is exposed to changes in the fair value of these instruments, they
  are designed such that an economic loss in value should generally be offset
  by interest rate savings at the time the future anticipated financing is completed.
  At June 30, 2002, PPL estimated that its potential exposure to a change in the
  fair value of these instruments, through a 10% adverse movement in interest
  rates, was approximately $11 million. See Note 10 to the Financial Statements
  for a discussion of financial derivative instruments outstanding at June 30,
  2002.
Foreign Currency Risk
PPL is exposed to foreign currency risk, primarily through
  investments in affiliates in Latin America and Europe. In addition, PPL may
  make purchases of equipment in currencies other than U.S. dollars.
PPL has adopted a foreign currency risk management program
  designed to hedge certain foreign currency exposures, including firm commitments,
  recognized assets or liabilities and net investments.
During the first quarter of 2001, PPL entered into contracts
  for the forward purchase of 51 million euros to pay for certain equipment in
  2002 and 2003. The estimated value of these forward purchases as of June 30,
  2002, being the amount PPL would receive to terminate them, was $2 million.
During the second quarter of 2002, PPL executed three forward
  sale transactions, maturing in December 2002, for 12 million British pounds
  sterling to hedge the net investment in WPDH Limited. The estimated value of
  these agreements as of June 30, 2002, being the amount PPL would have to pay
  to terminate them, was insignificant.
Nuclear Decommissioning Fund - Securities Price Risk
In connection with certain NRC requirements, PPL Susquehanna
  maintains trust funds to fund certain costs of decommissioning the Susquehanna
  station. As of June 30, 2002, these funds were invested primarily in domestic
  equity securities and fixed-rate, fixed-income securities and are reflected
  at fair value on PPL's Balance Sheet. The mix of securities is designed to provide
  returns to be used to fund Susquehanna's decommissioning and to compensate for
  inflationary increases in decommissioning costs. However, the equity securities
  included in the trusts are exposed to price fluctuation in equity markets, and
  the values of fixed-rate, fixed-income securities are exposed to changes in
  interest rates. PPL Susquehanna actively monitors the investment performance
  and periodically reviews asset allocation in accordance with its nuclear decommissioning
  trust policy statement. At June 30, 2002, a hypothetical 10% increase in interest
  rates and a 10% decrease in equity prices would have resulted in an estimated
  $17 million reduction in the fair value of the trust assets.
PPL Electric's 1998 restructuring settlement agreement provides
  for the collection of authorized nuclear decommissioning costs through the CTC.
  Additionally, PPL Electric is permitted to seek recovery from customers of up
  to 96% of certain increases in these costs. Under the power supply agreements
  between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL
  EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under
  a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues
  are used to fund the trusts.
PPL ENERGY SUPPLY, LLC AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About
  Market Risk
Market Risk Sensitive Instruments
PPL Energy Supply actively manages the market risk inherent
  in its commodity, debt, and foreign currency and equity positions as detailed
  in Note 10 to the Financial Statements. PPL Energy Supply has a comprehensive
  risk management policy to manage the risk exposures related to counterparty
  credit, energy prices, interest rates and foreign currency exchange rates. An
  RMC comprised of senior officers of PPL oversees the risk management function.
  Nonetheless, adverse changes in commodity prices, interest rates, foreign currency
  exchange rates and equity prices may result in losses in earnings, cash flows
  and/or fair values. The forward-looking information presented below provides
  estimates of what may occur in the future, assuming certain adverse market conditions,
  due to reliance on model assumptions. Actual future results may differ materially
  from those presented. These disclosures are not precise indicators of expected
  future losses, but only indicators of reasonably possible losses.
Commodity Price Risk
PPL Energy Supply uses various methodologies to simulate forward
  price curves in the energy markets to estimate the size and probability of changes
  in market value resulting from commodity price movements. The methodologies
  require several key assumptions, including selection of confidence levels, the
  holding period of the commodity positions, and the depth and applicability to
  future periods of historical commodity price information.
As of June 30, 2002, PPL Energy Supply estimated that a 10%
  adverse movement in market prices across all geographic areas and time periods
  would have decreased the value of its non-hedge portfolio by $5 million. A similar
  adverse movement in market prices would have decreased the value of its hedge
  portfolio by approximately $126 million. However, the change in the value of
  the hedge portfolio would have been substantially offset by an increase in the
  value of the underlying commodity, the electricity generated, because these
  contracts serve to reduce the market risk inherent in the generation of electricity.
  In addition to commodity price risk associated with PPL Energy Supply's trading
  portfolio and any unhedged positions in its non-trading portfolio, PPL Energy
  Supply's commodity positions are also subject to operational and event risks
  including, among others, increases in load demand, decreases in hydro availability
  and forced outages at power plants.
PPL Energy Supply's risk management program is designed to
  manage the risks associated with market fluctuations in the price of electricity,
  fuel and fuel-related costs. PPL Energy Supply's risk management policy and
  programs include risk identification and risk limits management, with measurement
  and controls for daily monitoring. PPL Energy Supply has entered into forward,
  option, and tolling contracts that require physical delivery of the commodity,
  as well as futures, exchange-for-physical transactions and other financial contracts
  (such as swap agreements where settlement is generally based on the difference
  between a fixed price and an index-based price for the underlying commodity).
  PPL Energy Supply expects the use of these contracts to be ongoing.
PPL Energy Supply enters into contracts to hedge the impact
  of market fluctuations on PPL Energy Supply's energy-related assets, liabilities
  and other contractual obligations. PPL Energy Supply also executes these contracts
  to take advantage of market opportunities. As a result, PPL Energy Supply may
  at times create a net open position in its portfolio that could result in significant
  losses if prices do not move in the manner or direction anticipated.
Commodity Price Risk - PLR Contracts
PPL Electric and PPL EnergyPlus have power supply agreements
  under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing
  arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through
  2009. As a result, PPL Electric has shifted any electric price risk relating
  to its PLR obligation to PPL EnergyPlus for 2002 through 2009.
Interest Rate Risk
PPL Energy Supply and its subsidiaries have issued debt to
  finance their operations. PPL manages interest rate risk for PPL Energy Supply
  by using financial derivative products to adjust the mix of fixed and floating-rate
  interest rates in its debt portfolios, adjusting the duration of its debt portfolios
  and locking in U.S. treasury rates (and interest rate spreads over treasuries)
  in anticipation of future financing, when appropriate. Risk limits under the
  risk management program are designed to balance risk exposure to volatility
  in interest expense and losses in the fair value of PPL Energy Supply's debt
  portfolio due to changes in the absolute level of interest rates.
At June 30, 2002, PPL Energy Supply's potential annual exposure
  to increased interest expense, based on a 10% increase in interest rates, was
  estimated at $3 million.
PPL Energy Supply is also exposed to changes in the fair value
  of its debt portfolio. At June 30, 2002, PPL Energy Supply estimated that its
  potential exposure to a change in the fair value of its debt portfolio, through
  a 10% adverse movement in interest rates, was $22 million.
PPL utilizes various risk management instruments to reduce
  PPL Energy Supply's exposure to adverse interest rate movements for future anticipated
  financings. While PPL Energy Supply is exposed to changes in the fair value
  of these instruments, they are designed such that any economic loss in value
  should be offset by interest rate savings at the time the future anticipated
  financing is completed. At June 30, 2002, PPL Energy Supply had not entered
  into any such instruments.
See Note 10 to the Financial Statements for a discussion of
  financial derivative instruments outstanding at June 30, 2002.
Foreign Currency Risk
PPL Energy Supply is exposed to foreign currency risk, primarily
  through investments in affiliates in Latin America and Europe. In addition,
  PPL Energy Supply may make purchases of equipment in currencies other than U.S.
  dollars.
PPL has adopted a foreign currency risk management program
  designed to hedge certain foreign currency exposures, including firm commitments,
  recognized assets or liabilities and net investments.
During the first quarter of 2001, PPL entered into contracts
  for the forward purchase of 51 million euros to pay for certain equipment in
  2002 and 2003. The estimated value of these forward purchases as of June 30,
  2002, being the amount PPL would receive to terminate them, was $2 million.
During the second quarter of 2002, PPL executed three forward
  sale transactions, maturing in December 2002, for 12 million British pounds
  sterling to hedge the net investment in WPDH Limited. The estimated value of
  these agreements as of June 30, 2002, being the amount PPL would have to pay
  to terminate them, was insignificant.
Nuclear Decommissioning Fund - Securities Price Risk
In connection with certain NRC requirements, PPL Susquehanna
  maintains trust funds to fund certain costs of decommissioning the Susquehanna
  station. As of June 30, 2002, these funds were invested primarily in domestic
  equity securities and fixed-rate, fixed-income securities and are reflected
  at fair value on PPL Energy Supply's Balance Sheet. The mix of securities is
  designed to provide returns to be used to fund Susquehanna's decommissioning
  and to compensate for inflationary increases in decommissioning costs. However,
  the equity securities included in the trusts are exposed to price fluctuation
  in equity markets, and the values of fixed-rate, fixed-income securities are
  exposed to changes in interest rates. PPL Susquehanna actively monitors the
  investment performance and periodically reviews asset allocation in accordance
  with its nuclear decommissioning trust policy statement. At June 30, 2002, a
  hypothetical 10% increase in interest rates and a 10% decrease in equity prices
  would have resulted in an estimated $17 million reduction in the fair value
  of the trust assets.
PPL Electric's 1998 restructuring settlement agreement provides
  for the collection of authorized nuclear decommissioning costs through the CTC.
  Additionally, PPL Electric is permitted to seek recovery from customers of up
  to 96% of certain increases in these costs. Under the power supply agreements
  between PPL Electric and PPL EnergyPlus, these revenues are passed on to PPL
  EnergyPlus. Similarly, these revenues are passed on to PPL Susquehanna under
  a power supply agreement between PPL EnergyPlus and PPL Susquehanna. These revenues
  are used to fund the trusts.
PPL ELECTRIC UTILITIES CORPORATION
  AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About
  Market Risk
Market Risk Sensitive Instruments
Commodity Price Risk
PPL Electric and PPL EnergyPlus have power supply agreements
  under which PPL EnergyPlus sells to PPL Electric (under a predetermined pricing
  arrangement) energy and capacity to fulfill PPL Electric's PLR obligation through
  2009. As a result, PPL Electric has shifted any electric price risk relating
  to its PLR obligation to PPL EnergyPlus for 2002 through 2009.
Interest Rate Risk
PPL Electric has issued debt to finance its operations, which
  increases its interest rate risk. PPL Electric's potential annual exposure to
  increased interest expense, based on a 10% increase in interest rates, was an
  insignificant amount at June 30, 2002.
PPL Electric is also exposed to changes in the fair value of
  its debt portfolio. At June 30, 2002 PPL Electric estimated that its potential
  exposure to a change in the fair value of its debt portfolio, through a 10%
  adverse movement in interest rates, was approximately $56 million.
PPL MONTANA, LLC AND SUBSIDIARIES
Item 3. Quantitative and Qualitative Disclosures About Market
  Risk
Market Risk Sensitive Instruments
PPL Montana actively manages the market risk inherent in its
  business. PPL Montana has adopted a comprehensive risk management policy to
  manage risk exposures related to energy prices, and through PPL, interest rates
  and counterparty credit. An RMC comprised of senior officers of PPL oversees
  the risk management function. Nonetheless, adverse changes in commodity prices
  and interest rates may result in losses in earnings, cash flows and/or fair
  values. The forward-looking information presented below provides estimates of
  what may occur in the future, assuming certain adverse market conditions, due
  to reliance on model assumptions. As a result, actual future results may differ
  materially from those presented. These disclosures are not precise indicators
  of expected future losses, but only indicators of reasonably possible losses.
Commodity Price Risk
PPL Montana uses various methodologies to simulate forward
  price curves in the energy markets to estimate the size and probability of changes
  in market value resulting from commodity price movements. The methodologies
  require several key assumptions, including selection of confidence levels, the
  holding period of the commodity positions and the depth and applicability to
  future periods of historical commodity price information.
PPL Montana estimated that a 10% adverse movement in market
  prices across the markets PPL Montana operates in, and across all time periods,
  would have decreased the value of the hedge portfolio by approximately $66 million
  at June 30, 2002. A similar adverse movement in market prices would have decreased
  the value of the non-hedge portfolio by an insignificant amount at June 30,
  2002. However, the change in the value of the hedge portfolio would have been
  substantially offset by an increase in the value of the underlying commodity,
  the electricity generated, because these contracts serve to reduce the market
  risk inherent in the generation of electricity. In addition to commodity price
  risk associated with PPL Montana's trading portfolio and any unhedged positions
  in its non-trading portfolio, PPL Montana's commodity positions are also subject
  to operational and event risks including, among others, increases in load demand,
  decreases in hydro availability and forced outages at generating plants.
PPL Montana's risk management program is designed to manage
  the risks associated with market fluctuations in the price of electricity. PPL
  Montana's risk management policy and programs include risk identification and
  risk limits management, with measurement and controls for daily risk monitoring.
  PPL Montana has entered into forward contracts that require physical delivery
  of electricity and derivative financial instruments, consisting mainly of financial
  swaps where settlement is generally based on the difference between a fixed-price
  and an index-based price for the underlying commodity.
Interest Rate Risk
PPL Montana may use borrowings to provide funds for its operations.
  PPL Montana may utilize various financial derivative products and risk management
  techniques to adjust the mix of fixed and floating-rate interest rates in its
  debt portfolio and thereby reduce its exposure to adverse interest rate movements.
  PPL Montana had $40 million in borrowings outstanding as of June 30, 2002, and
  its interest rate risk was not significant.
PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION
PPL MONTANA, LLC AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
General
See Item 3 "Legal Proceedings" in PPL's, PPL Energy
  Supply's, PPL Electric's and PPL Montana's Annual Report to the SEC on Form
  10-K for the year ended December 31, 2001 and Note 8 of the companies' "Combined
  Notes to Condensed Consolidated Financial Statements" in Part I of this
  report for additional information regarding various pending administrative and
  judicial proceedings involving regulatory, environmental and other matters,
  which information is incorporated by reference into this Part II.
Tax Assessment Appeals
Pursuant to changes in PURTA, enacted in 1999, PPL subsidiaries
  have filed a number of tax assessment appeals in various Pennsylvania counties
  where PPL facilities are located. These appeals challenge existing local tax
  assessments, which now comprise the basis for payment of the PURTA tax on PPL's
  properties. Also, as of January 1, 2000, generation facilities are no longer
  taxed under PURTA, and these local assessments will be used directly to determine
  local real estate tax liability for PPL's power plants. In July 1999, PPL filed
  retroactive appeals for tax years 1998 and 1999, as permitted by the new law,
  as well as prospective appeals for 2000, as permitted under normal assessment
  procedures. Additional prospective appeals were filed in 2000 for the 2001 tax
  year and in 2001 for the 2002 tax year. It is anticipated that assessment appeals
  will now be an annual occurrence.
Hearings on the pending appeals were held by the boards of
  assessment appeals in each county, and decisions have now been rendered by most
  counties. To the extent the appeals were denied or PPL was not otherwise satisfied
  with the results, PPL filed further appeals from the board decisions with the
  appropriate county Courts of Common Pleas.
Of all the pending proceedings, the most significant appeal
  concerns the assessed value of the Susquehanna nuclear station. The county assessment
  of the Susquehanna station indicated a market value of $3.9 billion. Based on
  this value, the annual local taxes for the Susquehanna station would have been
  about $70 million. However, PPL was able to reach a settlement with the local
  taxing authorities in December 2000, for tax years 2000 and 2001. This settlement
  will result in the payment of annual local taxes of about $3 million. PPL and
  the local taxing authorities also reached a settlement concerning the 1998 and
  1999 tax years which, if effectuated, would not result in any additional PURTA
  tax liability for PPL. This portion of the settlement with the local tax authorities
  is subject, however, to the outcome of claims asserted by certain intervenors
  which are described below.
In August 2000, over PPL's objections, the court permitted
  Philadelphia City and County, the Philadelphia School District and the Southeastern
  Pennsylvania Transportation Authority (SEPTA) (collectively, the "Philadelphia
  parties") to intervene in the case. The Philadelphia parties have intervened
  because they believe a change in the assessment of the plant will affect the
  amount they would collect under PURTA for the tax years 1998 and 1999. As part
  of the change in the law, the local real estate assessment determines what the
  1998 and 1999 PURTA payments by PPL will be. In November 2000, the Philadelphia
  parties submitted their own appraisal report, which indicates that the taxable
  fair market value of the Susquehanna station under PURTA for 1998 and 1999 is
  approximately $2.3 billion. Based on this appraisal, PPL would have to pay up
  to an extra $213 million in PURTA taxes for tax years 1998 and 1999.
PPL's appeal of the Susquehanna station assessment for 1998
  and 1999 was decided in PPL's favor by the Luzerne County Court of Common Pleas.
  The Philadelphia parties appealed this decision to the Commonwealth Court and
  PPL cross-appealed on the issue of the right of the Philadelphia parties to
  intervene. As a result of these proceedings and potential appeals, a final determination
  of market value and the associated tax liability for 1998 and 1999 may not occur
  for several years.
Item 4. Submission
      of Matters to a Vote of Security Holders
At PPL's Annual Meeting
      of Shareowners held on April 26, 2002, the shareowners:
(1)
Elected the two nominees for the
      office of director. The vote for all nominees was 114,994,066. The votes
      for individual nominees were as follows:
Number of Votes
For
Withhold Authority
Frederick
      M. Bernthal
114,994,066
2,390,719
John
      R. Biggar
115,493,150
1,891,635
The vote to withhold authority
      for all nominees was 1,461,310.
(2)
Ratified the appointment
      of PricewaterhouseCoopers LLP as independent auditors for the year ended
      December 31, 2002. The vote was 113,482,318 in favor and 2,741,632 against,
      with 1,160,835 abstaining.
At PPL Electric's Annual
      Meeting of Shareowners held on April 22, 2002, the shareowners:
(1)
Elected all nine nominees
      for the office of director. The vote for all nominees was 78,029,863. The
      votes for individual nominees were as follows:
Number of Votes for
John R. Biggar
78,029,863
Michael E. Bray
78,029,863
Paul T. Champagne
78,029,863
Dean A. Christiansen
78,029,863
Lawrence E. De Simone
78,029,863
Robert J. Grey
78,029,863
William F. Hecht
78,029,863
James H. Miller
78,029,863
Roger L. Petersen
78,029,863
The vote to withhold authority
      for all nominees was 0.
Item 6.
      Exhibits and Reports on Form 8-K
(a)
Exhibits
10(a)
- PPL Energy Supply
      $300 Million 364-Day Credit Agreement
10(b)
- PPL Energy Supply
      $300 Million Three-Year Credit Agreement
10(c)
- PPL Electric
      $400 Million 364-Day Credit Agreement
12(a)
- Computation of
      Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
12(b)
,
12(c)
and
12(d)
- Computation of Ratio of Earnings to Fixed Charges
99(a)
- Certificate of
      PPL's principal executive officer pursuant to Section 906 of the
Sarbanes-Oxley
      Act of 2002.
99(b)
- Certificate of
      PPL's principal financial officer pursuant to Section 906 of the
Sarbanes-Oxley
      Act of 2002.
99(c)
- Certificate of
      PPL Energy Supply's principal executive officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
99(d)
- Certificate of
      PPL Energy Supply's principal financial officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
99(e)
- Certificate of
      PPL Electric's principal executive officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
99(f)
- Certificate of
      PPL Electric's principal financial officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
99(g)
- Certificate of
      PPL Montana's principal executive officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
99(h)
- Certificate of
      PPL Montana's principal financial officer pursuant to
Section
      906 of the Sarbanes-Oxley Act of 2002.
(b)
Reports on Form 8-K
Report dated April
      24, 2002 - PPL
Item 5.
Other Events
Reported earnings for the first
      quarter of 2002 and confirmed earnings
forecast for 2002.
Item 7.
Financial Statements and Exhibits
Press release regarding PPL's results
      for the first quarter of 2002 and
earnings forecast for 2002.
Report dated June
      19, 2002 - PPL, PPL Energy Supply and PPL Electric
Item 5.
Other Events
Announced the costs of a productivity
      enhancement program associated with employee separations. PPL expects to
      record a consolidated non-cash charge against second quarter earnings of
      approximately $75 million. PPL Electric and PPL Energy Supply expect to
      record primarily non-cash charges against second quarter earnings of approximately
      $34 million and $40 million, respectively.
Item 7.
Financial Statements and Exhibits
Press release regarding PPL's productivity
      enhancement program.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrants have duly caused this report to be signed on their
  behalf by the undersigned thereunto duly authorized. The signature for each
  undersigned company shall be deemed to relate only to matters having reference
  to such company or its subsidiaries.
PPL Corporation
(Registrant)
PPL Energy Supply, LLC
(Registrant)
PPL Electric Utilities Corporation
(Registrant)
PPL Montana, LLC
(Registrant)
Date: August 13, 2002
/s/  John R. Biggar
John R. Biggar
Executive Vice President and
Chief Financial Officer
(PPL Corporation)
(principal financial officer)
/s/  James E. Abel
James E. Abel
Treasurer
(PPL Energy Supply, LLC)
(principal financial officer)
/s/  Joseph J. McCabe
Joseph J. McCabe
Vice President and Controller
(PPL Electric Utilities Corporation)
(principal accounting officer)
/s/  Craig D. Bartholomew
Craig D. Bartholomew
Controller
(PPL Montana, LLC)
(principal accounting officer)