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<TITLE>PPL Form 10-Q 1st Quarter 2002</TITLE>
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<p align="center"><b>UNITED STATES</B><BR>
  <B>SECURITIES AND EXCHANGE COMMISSION</B><BR>
  <B>Washington, DC 20549</b></p>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Form 10-Q</P>
<P ALIGN="CENTER"></P>
<P ALIGN="CENTER">
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
    <TR>
      <TD WIDTH="6%" VALIGN="TOP" HEIGHT=22>
        <P>[X]
      </TD>
      <TD WIDTH="94%" VALIGN="TOP" HEIGHT=22>
        <P>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 for the period ended <U>March 31, 2002</U>
      </TD>
    </TR>
    <TR>
      <TD WIDTH="6%" VALIGN="TOP" HEIGHT=22>&nbsp;</TD>
      <TD WIDTH="94%" VALIGN="TOP" HEIGHT=22 align="center">OR</TD>
    </TR>
  </TABLE>

    <CENTER>
      <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
        <TR>
          <TD WIDTH="6%" VALIGN="TOP" HEIGHT=22> [ &nbsp;]</TD>
          <TD WIDTH="94%" VALIGN="TOP" HEIGHT=22> 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>
    </CENTER>
    <p></P>
    <P ALIGN="CENTER"></P>
    <P ALIGN="CENTER">
    <TABLE CELLSPACING=0 BORDER=0 cellpadding=0 WIDTH=100%>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=22> Commission File<BR>
            <U>Number</U></TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=22> Registrant; State of Incorporation;
            <BR>
            <U>Address and Telephone Number</U></TD>
          <TD WIDTH="24%" VALIGN="TOP" HEIGHT=22> IRS Employer<BR>
            <U>Identification No.</U></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=22> 1-11459</TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=22> <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=22> 23-2758192</TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=6></TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=6></TD>
          <TD WIDTH="24%" VALIGN="TOP" HEIGHT=6></TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=6> 333-74794</TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=6> <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=6> 23-3074920</TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=6></TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=6></TD>
          <TD WIDTH="24%" VALIGN="TOP" HEIGHT=6></TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=22> 1-905</TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=22> <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=22> 23-0959590</TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=22></TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=22></TD>
          <TD WIDTH="24%" VALIGN="TOP" HEIGHT=22></TD>
        </TR>
        <TR>
          <TD WIDTH="21%" VALIGN="TOP" HEIGHT=22> 333-50350</TD>
          <TD WIDTH="55%" VALIGN="TOP" HEIGHT=22> <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=22> 54-1928759</TD>
        </TR>
      </TABLE>
      <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>
      <TABLE CELLSPACING=0 BORDER=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>

      <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>
      <P ALIGN="CENTER">
        <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
          <TR>
            <TD WIDTH="52%" VALIGN="TOP"> PPL Corporation</TD>
            <TD WIDTH="48%" VALIGN="TOP"> Common stock, $.01 par value, 147,142,007
              <BR>
              shares outstanding at April 30, 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 April 30, 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>
        <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>
       <br><hr noshade><br>
        <P ALIGN="CENTER">(THIS PAGE LEFT BLANK INTENTIONALLY.)</P>
       <br><hr noshade>
<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 MARCH 31, 2002<BR>
  <BR>
  <U>Table of Contents</u></p>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
  <TR>
    <TD WIDTH="95%" VALIGN="TOP" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2 HEIGHT=17>
      <div align="right"><U>Page</u></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> <a href="#GLOSSARY">GLOSSARY
      OF TERMS AND ABBREVIATIONS</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> <a href="#FORWARD">FORWARD-LOOKING
      INFORMATION</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">1</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> PART I. FINANCIAL INFORMATION</TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17> Item 1. Financial Statements</TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <B>PPL Corporation and Subsidiaries</B></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#CORPINCOMESTATEMENT">Condensed
      Consolidated Statement of Income</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">2</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#CORPCASHFLOWS">Condensed
      Consolidated Statement of Cash Flows</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">3</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#CORPBALANCESHEET">Condensed
      Consolidated Balance Sheet</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">4</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#CORPSHAREOWNERS">Condensed
      Consolidated Statement of Shareowners' Common Equity and <BR>
      &nbsp;&nbsp;&nbsp;Comprehensive Income</a></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">6</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>

    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <B>PPL Energy Supply, LLC
      and Subsidiaries</B></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ESINCOMESTATEMENT">Condensed
      Consolidated Statement of Income</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">8</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ESCASHFLOWS">Condensed
      Consolidated Statement of Cash Flows</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">9</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ESBALANCESHEET">Condensed
      Consolidated Balance Sheet</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">10</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ESMEMBERS">Condensed
      Consolidated Statement of Member's Equity and<br>&nbsp;&nbsp;&nbsp;Comprehensive Income</a></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">12</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <B>PPL Electric Utilities
      Corporation and Subsidiaries</B></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#EUINCOMESTATEMENT">Condensed
      Consolidated Statement of Income</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">14</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#EUCASHFLOWS">Condensed
      Consolidated Statement of Cash Flows</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">15</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#EUBALANCESHEET">Condensed
      Consolidated Balance Sheet</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">16</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#EUSHAREOWNERS">Condensed
      Consolidated Statement of Shareowner's Common Equity and <BR>
      &nbsp;&nbsp;&nbsp;Comprehensive Income</a></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">18</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <B>PPL Montana, LLC and
      Subsidiaries</B></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#MONTANAINCOMESTATEMENT">Condensed
      Consolidated Statement of Income</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">19</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#MONTANACASHFLOWS">Condensed
      Consolidated Statement of Cash Flows</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">20</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#MONTANABALANCESHEET">Condensed
      Consolidated Balance Sheet</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">21</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#MONTANAMEMBERS">Condensed
      Consolidated Statement of Member's Equity and<br>&nbsp;&nbsp;&nbsp;Comprehensive Income</a></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">22</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <a href="#NOTES">Combined
      Notes to Condensed Consolidated Financial Statements</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">23</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17> Item 2. Management's Discussion
      and Analysis of Financial Condition and Results of Operations</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM2CORP">PPL
      Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">37</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM2ES">PPL Energy
      Supply, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">42</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM2EU">PPL Electric
      Utilities Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">45</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM2MONTANA">PPL
      Montana, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">47</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17> Item 3. Quantitative and
      Qualitative Disclosures About Market Risk </TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM3CORP">PPL
      Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">48</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM3ES">PPL Energy
      Supply, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">50</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM3EU">PPL Electric
      Utilities Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">52</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="#ITEM3MONTANA">PPL
      Montana, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">52</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> PART II. OTHER INFORMATION</TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17> <a href="#ITEM1">Item 1.
      Legal Proceedings</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">53</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="94%" VALIGN="TOP" COLSPAN=4 HEIGHT=17> <a href="#ITEM6">Item 6.
      Exhibits and Reports on Form 8-K</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">53</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> <a href="#SIGNATURES">SIGNATURES</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">54</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="97%" VALIGN="TOP" COLSPAN=5 HEIGHT=17> COMPUTATION OF RATIO OF
      EARNINGS TO FIXED CHARGES</TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="ppl10q3-02_exhibit12a.htm">PPL
      Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">55</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="ppl10q3-02_exhibit12b.htm">PPL Energy
      Supply, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">56</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="ppl10q3-02_exhibit12c.htm">PPL Electric
      Utilities Corporation and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">57</div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="88%" VALIGN="TOP" COLSPAN=2 HEIGHT=17> <a href="ppl10q3-02_exhibit12d.htm">PPL
      Montana, LLC and Subsidiaries</a></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17>
      <div align="right">58</div>
    </TD>
  </TR>
</TABLE>
   <br><hr noshade>
   <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</i></b> <B><I>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"> <i><b>APB</b></i> - Accounting Principles Board.</P>
<p align="justify"></P>
<p align="justify"> <i><b>CEMAR</b></i> - 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"> <i><b>CTC</b></i> - 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">It requires no initial net investment or an initial net
      investment that is smaller than would be required for other types of contracts
      that would be expected to have a similar response to changes in market factors.</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>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"> <i><b>ISO</b></i> - Independent System Operator.</P>
<p align="justify"></P>
<p align="justify"> <i><b>ITC</b></i> - 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"> <i><b>kWh</b></i> - kilowatthours.</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"> <i><b>Mirant</b></i> - 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"> <i><b>MPSC</b></i> - Montana Public Service Commission.</P>
<p align="justify"></P>
<p align="justify"> <i><b>MW</b></i> - megawatts.</P>
<p align="justify"></P>
<b><i>NorthWestern Energy</i></b> - NorthWestern Energy, LLC, 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 ALIGN="JUSTIFY"></P>
<p align="justify"><b><i>NO<SUB>x</sub></i></b> - nitrogen oxide.</P>
<p align="justify"></P>
<p align="justify"> <i><b>NPDES</b></i> - 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"> <i><b>PEPS Units</b></i> (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 Corporation 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"> <i><b>PPL Energy Funding</b></i> - PPL Energy Funding Corporation,
  which is a subsidiary of PPL and the parent company of PPL Energy Supply.</P>
<P ALIGN="JUSTIFY"></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, effective July 1, 2000, owns and operates U.S. generating
  facilities through various subsidiaries.</P>
<p align="justify"></P>
<p align="justify"> <i><b>PPL Global</b></i> - PPL Global, LLC, a subsidiary of
  PPL Energy Supply, which invests in and develops domestic and international
  power projects, and owns and operates international power projects.</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 Montour</i></b> - PPL Montour, LLC, a fossil generating
  subsidiary of PPL Generation.</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"> <i><b>PPL Susquehanna</b></i> - 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>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"> <i><b>RMC</b></i> - 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"> <i><b>SNCR</b></i> - selective non-catalytic reduction, a
  pollution control process.</P>
<p align="justify"></P>
<p align="justify"> <i><b>SO<SUB>2</sub></b></i> - 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 acts.</P>
<p align="justify"></P>
<p align="justify"> <i><b>Synfuel projects</b></i> - 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
  ("toll") fuel provided by a third party into electric energy for delivery back
  to the third party.</P>
<p align="justify"></P>
<p align="justify"> <i><b>WPD (South Wales)</b></i> - 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">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 have been 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<B> </B>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<B> </B>of necessary governmental permits and<B>
  </B>approvals; capital market conditions and decisions regarding capital structure;
  stock price performance; credit ratings; foreign exchange rates; state and federal
  regulatory developments; 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 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.</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="CENTER"></P>
<BR><HR NOSHADE><BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
  <tr>
    <td valign="BOTTOM" colspan=11><A NAME="CORPINCOMESTATEMENT"></A>
             <b><u>PPL CORPORATION AND SUBSIDIARIES</u></b></td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11> <B><U>PART I. FINANCIAL INFORMATION</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11> <B><U>Item 1. Financial Statements</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11> 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 March 31, 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
      March 31, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=10></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=10></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11> <B>CONDENSED CONSOLIDATED STATEMENT OF INCOME</B></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>PPL Corporation and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=12> <font size="2">(Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=12></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6 ROWSPAN=2 HEIGHT=12>
      <div align="center"><B><font size="2">Three Months Ended</font></b><font size="2"><BR>
        <B> March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=12></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=12> <I><font size="2">(Millions
      of Dollars, except per share data)</font></I></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=12></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=12></TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="4%" HEIGHT=13></TD>
    <TD WIDTH="4%" HEIGHT=13></TD>
    <TD WIDTH="63%" HEIGHT=13></TD>
    <TD WIDTH="2%" HEIGHT=13></TD>
    <TD COLSPAN=6 HEIGHT=13>
      <hr noshade>
    </TD>
    <TD WIDTH="2%" HEIGHT=13></TD>
  </TR>
  <tr>
    <td width="4%" valign="BOTTOM" height=13></td>
    <td width="4%" valign="BOTTOM" height=13></td>
    <td width="63%" valign="BOTTOM" height=13></td>
    <td width="2%" valign="BOTTOM" height=13></td>
    <td width="11%" valign="BOTTOM" colspan=2 height=13>
      <div align="center"><b>2002</b></div>
    </td>
    <td width="2%" valign="BOTTOM" height=13></td>
    <td width="2%" valign="BOTTOM" height=13></td>
    <td width="2%" valign="BOTTOM" height=13></td>
    <td width="9%" valign="BOTTOM" height=13>
      <div align="center"><b>2001</b></div>
    </td>
    <td width="2%" valign="BOTTOM" height=13></td>
  </tr>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Revenues</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Retail electric and gas</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>847</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="9%" VALIGN="BOTTOM">
      <div align="right">956</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Wholesale energy marketing and
      trading</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>275</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="9%" VALIGN="BOTTOM">
      <div align="right">468</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">142</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,275</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="9%" VALIGN="BOTTOM">
      <div align="right">1,566</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Expenses</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Operation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>146</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="9%" VALIGN="BOTTOM">
      <div align="right">187</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Energy purchases</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>259</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="9%" VALIGN="BOTTOM">
      <div align="right">396</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>191</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="9%" VALIGN="BOTTOM">
      <div align="right">184</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"> Amortization of recoverable transition costs</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>53</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="9%" VALIGN="BOTTOM">
      <div align="right">71</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Maintenance</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>62</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="9%" VALIGN="BOTTOM">
      <div align="right">54</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Depreciation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>62</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="9%" VALIGN="BOTTOM">
      <div align="right">66</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Taxes, other than income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">41</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>126</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="9%" VALIGN="BOTTOM">
      <div align="right">113</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Write-down of international energy
      projects</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>956</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="9%" VALIGN="BOTTOM">
      <div align="right">1,112</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Operating Income</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>319</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="9%" VALIGN="BOTTOM">
      <div align="right">454</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Other Income - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8> </TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Interest Expense</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>97</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="9%" VALIGN="BOTTOM">
      <div align="right">104</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Income Before Income Taxes and
      Minority Interest</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>227</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="9%" VALIGN="BOTTOM">
      <div align="right">356</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Income Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>62</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="9%" VALIGN="BOTTOM">
      <div align="right">126</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Minority Interest</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</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="9%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Income Before Cumulative Effect
      of a Change in Accounting Principle</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>164</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="9%" VALIGN="BOTTOM">
      <div align="right">228</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Cumulative Effect of a Change in
      Accounting Principle</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(150</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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Income Before Dividends on Preferred
      Securities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">228</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> Dividends - Preferred Securities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade>
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Net Income (Loss)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(3</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" height=13></td>
    <td width="4%" height=13></td>
    <td width="63%" height=13></td>
    <td width="2%" height=13></td>
    <td width="11%" colspan=2 height=13>
      <hr noshade size="5">
    </td>
    <td width="2%" height=13></td>
    <td width="2%" height=13></td>
    <td colspan="2" height=13>
      <hr noshade size="5">
    </td>
    <td width="2%" height=13></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Earnings (Loss) Per Share of
      Common Stock</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Basic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(0.02</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1.53</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2> Diluted</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(0.02</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1.52</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=8></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=8></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3> <B>Dividends Declared per Share
      of Common Stock</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>0.36</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="9%" VALIGN="BOTTOM">
      <div align="right">0.265</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=16></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=16></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11>
      <div align="center"><I><font size="2">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=11 HEIGHT=17> <B><A NAME="CORPCASHFLOWS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS</B></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <B>PPL Corporation and
      Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <font size="2"><I>(Millions
      of Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD colspan="6" VALIGN="BOTTOM" rowspan="2">
      <div align="center"><B><font size="2">Three Months Ended</font></b><font size="2"><BR>
        <B> March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="6">
      <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="63%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td colspan="2" valign="BOTTOM">
      <div align="center"><b>2002</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td colspan="2" valign="BOTTOM">
      <div align="center"><b>2001</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <TR valign="top">
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="63%">&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="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <B>Net Cash Provided
      by (Used in) Operating Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">181</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <B>Cash Flows From Investing
      Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Expenditures for property,
      plant and equipment</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(107</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(108</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Investment in generating
      assets and electric energy projects</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(179</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(163</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Other investing activities
      - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(17</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(9</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17> Net cash used in investing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(303</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(280</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <B>Cash Flows From Financing
      Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Issuance of common stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>19</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Deposit of funds for
      the retirement of long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(11</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Retirement of long-term
      debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(78</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(65</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Payment of common and
      preferred dividends</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(57</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(44</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Net decrease in short-term
      debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(21</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(22</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17> Net cash used in financing activities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(148</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(112</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> <B>Net Decrease In Cash
      and Cash Equivalents</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>(464</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">(211</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> )</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Cash and Cash Equivalents
      at Beginning of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>950</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">480</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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="70%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Cash and Cash Equivalents
      at End of Period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>486</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">269</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="63%">&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 WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11 HEIGHT=17>
      <div align="center"><I><font size="2">The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</font></i></div>
    </TD>
  </TR>
</TABLE>
&nbsp;
<br><hr noshade><br>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=100%>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B><A NAME="CORPBALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>PPL Corporation and
      Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <font size="2"><I>(Millions
      of Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
      <div align="center"><font size="2"><B>March 31,</b><BR>
        <B>2002</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>Current Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Cash and cash equivalents</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>486</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">950</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Accounts receivable (less
      reserve: 2002, $122; 2001, $121)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>609</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">535</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Unbilled revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>199</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">248</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Fuel, materials and supplies
      - at average cost</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>243</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">251</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Prepayments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>197</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>85</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">77</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Price risk management
      assets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>138</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">124</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>117</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">102</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>2,074</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">2,338</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>Investments</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Investment in unconsolidated
      affiliates - at equity</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>586</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">586</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Investment in unconsolidated
      affiliates - at cost</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>117</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">114</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Nuclear plant decommissioning
      trust fund</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>289</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">276</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>49</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>1,041</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">1,031</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>Property, Plant and
      Equipment - net</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Electric plant in service</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Transmission and distribution</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>2,633</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">2,565</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Generation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>2,466</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">2,464</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> General</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>312</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">310</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>5,411</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">5,339</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Construction work in
      progress</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>262</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">181</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Nuclear fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>116</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">127</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Electric plant</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>5,789</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">5,647</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Gas and oil plant</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>199</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">197</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Other property</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>104</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">103</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>6,092</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">5,947</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=5 HEIGHT=17> <B>Regulatory and Other
      Noncurrent Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Recoverable transition
      costs</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>2,119</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">2,172</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>1,042</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">1,086</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>3,161</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">3,258</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>12,368</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">12,574</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=5 height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade size="5">
    </td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="2%" height=17>&nbsp;</td>
    <td width="11%" colspan=2 height=17>
      <hr noshade size="5">
    </td>
    <td width="2%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=13 HEIGHT=17>
      <div align="center"><I><font size="2">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 WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Corporation and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="10%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2><font size="2"></font></TD>
    <TD WIDTH="4%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="63%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div></td>

  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" 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="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="10%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Short-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>112</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="9%" VALIGN="BOTTOM">
      <div align="right">118</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>579</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="9%" VALIGN="BOTTOM">
      <div align="right">498</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>76</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="9%" VALIGN="BOTTOM">
      <div align="right">87</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Accounts payable </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>484</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="9%" VALIGN="BOTTOM">
      <div align="right">558</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>168</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="9%" VALIGN="BOTTOM">
      <div align="right">146</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Interest</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>67</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="9%" VALIGN="BOTTOM">
      <div align="right">61</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Dividends </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>64</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="9%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Price risk management liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>135</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="9%" VALIGN="BOTTOM">
      <div align="right">106</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>194</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="9%" VALIGN="BOTTOM">
      <div align="right">213</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,879</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="9%" VALIGN="BOTTOM">
      <div align="right">1,838</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>4,940</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="9%" VALIGN="BOTTOM">
      <div align="right">5,081</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,504</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="9%" VALIGN="BOTTOM">
      <div align="right">1,449</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>409</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="9%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>

  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>876</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="9%" VALIGN="BOTTOM">
      <div align="right">911</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,789</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="9%" VALIGN="BOTTOM">
      <div align="right">2,853</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Minority Interest</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>39</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="9%" VALIGN="BOTTOM">
      <div align="right">38</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Company-obligated Mandatorily
      Redeemable Preferred Securities</B><BR>
      <B>&nbsp;&nbsp;of Subsidiary Trusts Holding Solely Company Debentures</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>825</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="9%" VALIGN="BOTTOM">
      <div align="right">825</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">31</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">82</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Shareowners' Common Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Common stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Capital in excess of par value</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,975</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="9%" VALIGN="BOTTOM">
      <div align="right">1,956</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Treasury stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(836</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="9%" VALIGN="BOTTOM">
      <div align="right">(836</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Earnings reinvested</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>967</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="9%" VALIGN="BOTTOM">
      <div align="right">1,023</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Accumulated other comprehensive
      loss</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(255</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="9%" VALIGN="BOTTOM">
      <div align="right">(251</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(39</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="9%" VALIGN="BOTTOM">
      <div align="right">(37</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,814</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="9%" VALIGN="BOTTOM">
      <div align="right">1,857</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="4%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>12,368</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="9%" VALIGN="BOTTOM">
      <div align="right">12,574</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="4%" colspan=2><font size="2"></font></td>
    <td width="4%"><font size="2"></font></td>
    <td width="63%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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=11> <B><A NAME="CORPSHAREOWNERS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF SHAREOWNERS' COMMON EQUITY</B><BR>
      <B>AND COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> <B>PPL Corporation and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="68%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>For the Three Months</b><BR>
        <B>Ended March 31,</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="10%" 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="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Common stock at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="8%" 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"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Common stock at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Capital in excess of par value
      at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,956</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="8%" VALIGN="BOTTOM">
      <div align="right">1,895</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Common stock issued (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>19</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="8%" VALIGN="BOTTOM">
      <div align="right">24</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Capital in excess of par value
      at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,975</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="8%" VALIGN="BOTTOM">
      <div align="right">1,919</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Treasury stock at beginning of
      period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(836</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="8%" VALIGN="BOTTOM">
      <div align="right">(836</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Treasury stock at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(836</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="8%" VALIGN="BOTTOM">
      <div align="right">(836</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Earnings reinvested at beginning
      of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,023</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="8%" VALIGN="BOTTOM">
      <div align="right">999</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Net income (loss) (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(3</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="8%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Cash dividends declared on common
      stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(53</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="8%" VALIGN="BOTTOM">
      <div align="right">(39</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Earnings reinvested at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>967</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="8%" VALIGN="BOTTOM">
      <div align="right">1,182</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Accumulated other comprehensive
      loss at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(251</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="8%" VALIGN="BOTTOM">
      <div align="right">(36</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Foreign currency translation adjustments
      (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on available-for-sale
      securities (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(1</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="8%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives
      (b) (c)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(11</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="8%" VALIGN="BOTTOM">
      <div align="right">(190</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Accumulated other comprehensive
      loss at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(255</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="8%" VALIGN="BOTTOM">
      <div align="right">(253</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Capital stock expense and other
      at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(37</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="8%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(2</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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Capital stock expense and other
      at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(39</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="8%" VALIGN="BOTTOM">
      <div align="right">(12</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Total Shareowners' Common Equity</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>1,814</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="8%" VALIGN="BOTTOM">
      <div align="right">2,002</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Common stock shares at beginning
      of period (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>146,580</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="8%" VALIGN="BOTTOM">
      <div align="right">145,041</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Common stock issued through the
      ESOP, DRIP, ICP, ICPKE and structured equity program</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>542</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="8%" VALIGN="BOTTOM">
      <div align="right">582</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="73%" VALIGN="BOTTOM" COLSPAN=3> Common stock shares at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>147,122</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="8%" VALIGN="BOTTOM">
      <div align="right">145,623</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="top"> (a)</TD>
    <TD WIDTH="70%" VALIGN="top" COLSPAN=2> In thousands. $.01 par value, 390
      million shares authorized. Each share entitles the holder to one vote on any question
      presented to any shareowners' meeting.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
   <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM"> (b)</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Statement of Comprehensive Income:
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Net income (loss)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(3</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Other comprehensive income (loss):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM"> Foreign currency translation adjustments,
      net of tax (benefit) of $(6), $(11)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM"> Unrealized loss on available-for-sale securities,
      net of tax (benefit) of $0, $(2)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(1</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="8%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM"> Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(7), $(126)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(11</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="8%" VALIGN="BOTTOM">
      <div align="right">(190</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&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="70%" VALIGN="BOTTOM" COLSPAN=2> Total other comprehensive loss<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">
      <div align="right">(217</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&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="70%" VALIGN="BOTTOM" COLSPAN=2> Comprehensive Income (Loss)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right"><B>(7</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="8%" VALIGN="BOTTOM">
      <div align="right">5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="3%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="68%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP"> (c)</TD>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=2> Includes a $(182) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001.</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="8%" 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="8%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=11>
      <div align="center"><I><font size="2">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=12> <B><U><A NAME="ESINCOMESTATEMENT"></A>PPL
      ENERGY SUPPLY, LLC AND SUBSIDIARIES</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B><U>PART I. FINANCIAL INFORMATION</u></b></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B><U>Item 1. Financial Statements</u></b></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> 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 March 31, 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
      March 31, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>CONDENSED CONSOLIDATED STATEMENT
      OF INCOME</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6 ROWSPAN=2>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B> March 31,</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR valign="top">
    <TD WIDTH="70%" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%">&nbsp;</TD>
    <TD COLSPAN=6>
      <hr noshade>
    </TD>
    <TD WIDTH="2%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="70%" valign="BOTTOM" colspan=4>&nbsp;</td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="13%" valign="BOTTOM" colspan=3>
      <div align="center"><b>2002</b></div>
    </td>
    <td width="2%" valign="BOTTOM">&nbsp;</td>
    <td width="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Revenues </B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Wholesale energy marketing and
      trading</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>637</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="9%" VALIGN="BOTTOM">
      <div align="right">790</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Retail electric and gas</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>152</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="9%" VALIGN="BOTTOM">
      <div align="right">251</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>151</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="9%" VALIGN="BOTTOM">
      <div align="right">136</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>940</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="9%" VALIGN="BOTTOM">
      <div align="right">1,177</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Expenses</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Operation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>112</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="9%" VALIGN="BOTTOM">
      <div align="right">139</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="66%" VALIGN="BOTTOM" COLSPAN=2> Energy purchases</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>244</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="9%" VALIGN="BOTTOM">
      <div align="right">375</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="66%" VALIGN="BOTTOM" COLSPAN=2> Other operation and maintenance</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>190</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="9%" VALIGN="BOTTOM">
      <div align="right">173</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="66%" VALIGN="BOTTOM" COLSPAN=2> Transmission</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Depreciation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">43</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Taxes, other than income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>9</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>115</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="9%" VALIGN="BOTTOM">
      <div align="right">94</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Write-down of international energy
      projects</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>720</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="9%" VALIGN="BOTTOM">
      <div align="right">855</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Income </B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>220</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="9%" VALIGN="BOTTOM">
      <div align="right">322</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Other Income - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>9</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="9%" VALIGN="BOTTOM">
      <div align="right">14</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Interest Expense</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">23</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Before Income Taxes and
      Minority Interest</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>211</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="9%" VALIGN="BOTTOM">
      <div align="right">313</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Income Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>65</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="9%" VALIGN="BOTTOM">
      <div align="right">110</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Minority Interest</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</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="9%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Before Cumulative Effect
      of a Change in Accounting Principle</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>145</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="9%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Cumulative Effect of a Change in
      Accounting Principle</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(150</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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Income (Loss)</B> </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=13></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=13></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><font size="2"><I>The accompanying Notes to Condensed
        Consolidated Financial Statements are an integral part of the financial
        statements.</i></font></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="ESCASHFLOWS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF CASH FLOWS</B></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" 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> March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>105</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="9%" VALIGN="BOTTOM">
      <div align="right">401</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(70</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="9%" VALIGN="BOTTOM">
      <div align="right">(77</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Investment in generating assets
      and electric energy projects</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(179</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="9%" VALIGN="BOTTOM">
      <div align="right">(163</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Net (increase) decrease in notes
      receivable from affiliates</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(144</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="9%" VALIGN="BOTTOM">
      <div align="right">669</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(18</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="9%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(411</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="9%" VALIGN="BOTTOM">
      <div align="right">426</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Contributions from Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Distributions to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(221</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="9%" VALIGN="BOTTOM">
      <div align="right">(193</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(21</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="9%" VALIGN="BOTTOM">
      <div align="right">(115</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Net decrease in short-term debt
      payable to affiliates</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(513</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(241</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="9%" VALIGN="BOTTOM">
      <div align="right">(821</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(547</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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>832</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="9%" VALIGN="BOTTOM">
      <div align="right">130</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>285</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="9%" VALIGN="BOTTOM">
      <div align="right">136</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Non-Cash Contributions from
      Member</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Intercompany notes and accounts
      receivable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">920</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B><A NAME="ESBALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>

  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>285</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="9%" VALIGN="BOTTOM">
      <div align="right">832</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Accounts receivable (less reserve:
      2002, $102; 2001, $100)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>355</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="9%" VALIGN="BOTTOM">
      <div align="right">341</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Unbilled revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>91</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Accounts receivable from affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Notes receivable from affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>449</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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>209</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Prepayments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>62</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="9%" VALIGN="BOTTOM">
      <div align="right">39</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>134</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>21</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="9%" VALIGN="BOTTOM">
      <div align="right">17</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>49</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="9%" VALIGN="BOTTOM">
      <div align="right">37</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,758</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="9%" VALIGN="BOTTOM">
      <div align="right">2,130</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>Investments</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>586</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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>117</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Note receivable from affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>289</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,087</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="9%" VALIGN="BOTTOM">
      <div align="right">1,073</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" 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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Transmission and distribution</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Generation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,466</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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> General</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">122</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,107</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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>228</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Nuclear fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">127</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Electric plant</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,451</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="9%" 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="69%" 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="9%" 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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Other property</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>71</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="9%" VALIGN="BOTTOM">
      <div align="right">71</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,546</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="9%" VALIGN="BOTTOM">
      <div align="right">3,419</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>503</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="9%" VALIGN="BOTTOM">
      <div align="right">547</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>6,894</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="9%" VALIGN="BOTTOM">
      <div align="right">7,169</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>CONDENSED CONSOLIDATED BALANCE
      SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>

  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Short-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>112</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="9%" VALIGN="BOTTOM">
      <div align="right">118</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Long-term debt</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Accounts payable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>422</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="9%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Accounts payable to affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">47</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>76</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="9%" VALIGN="BOTTOM">
      <div align="right">87</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>89</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="9%" VALIGN="BOTTOM">
      <div align="right">102</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Collateral on PLR energy supply
      to affiliate</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>56</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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Deferred revenue on PLR energy
      supply to affiliate</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Price risk management liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>129</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="9%" VALIGN="BOTTOM">
      <div align="right">97</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>147</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="9%" VALIGN="BOTTOM">
      <div align="right">152</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,097</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="9%" VALIGN="BOTTOM">
      <div align="right">1,144</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>755</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="9%" VALIGN="BOTTOM">
      <div align="right">737</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>130</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="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Above market NUG contracts</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>409</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="9%" VALIGN="BOTTOM">
      <div align="right">493</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Nuclear plant decommissioning</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>299</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="9%" VALIGN="BOTTOM">
      <div align="right">294</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Deferred revenue on PLR energy
      supply to affiliate</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>78</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>282</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="9%" VALIGN="BOTTOM">
      <div align="right">292</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1,261</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="9%" VALIGN="BOTTOM">
      <div align="right">1,278</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Minority Interest</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>39</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="9%" VALIGN="BOTTOM">
      <div align="right">38</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Member's Equity</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,742</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="9%" VALIGN="BOTTOM">
      <div align="right">3,972</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>6,894</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="9%" VALIGN="BOTTOM">
      <div align="right">7,169</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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="ESMEMBERS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF MEMBER'S EQUITY AND</B><BR>
      <B>COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Energy Supply, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>For the Three Months Ended</b><BR>
        <B>March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at beginning of
      period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,972</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="9%" VALIGN="BOTTOM">
      <div align="right">2,577</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Member contributions</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>1</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="9%" VALIGN="BOTTOM">
      <div align="right">920</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss) (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(5</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="9%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive income (loss),
      net of tax:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> Foreign currency translation adjustments
      (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives
      (a) (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(186</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Distributions to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(221</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="9%" VALIGN="BOTTOM">
      <div align="right">(232</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,742</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">3,255</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> (a) Statement of Comprehensive
      Income:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive income (loss):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> Foreign currency translation adjustments,
      net of tax (benefit) of $(6), $(11)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(25</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(9), $(124)<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(186</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Total other comprehensive loss<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(211</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Comprehensive Loss<B></B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(10</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(10</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP"> (b)</TD>
    <TD WIDTH="67%" VALIGN="top" COLSPAN=12> 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 WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="98%" VALIGN="BOTTOM" COLSPAN=11> <B><U><A NAME="EUINCOMESTATEMENT"></A>PPL
      ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES</u></b></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B><U>PART I. FINANCIAL INFORMATION</u></b></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B><U>Item 1. Financial Statements</u></b></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> 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 March 31, 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 March 31, 2002 and 2001.</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>CONDENSED CONSOLIDATED STATEMENT
      OF INCOME</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Electric Utilities Corporation
      and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" 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> March 31,</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <div align="center">
        <hr noshade>
        <font size="2"></font></div>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Revenues</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Retail electric</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">639</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Wholesale electric</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>49</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="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>697</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="9%" VALIGN="BOTTOM">
      <div align="right">700</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Expenses</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Operation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Energy purchases</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>423</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="9%" VALIGN="BOTTOM">
      <div align="right">379</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="66%" VALIGN="BOTTOM" COLSPAN=2> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">59</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="66%" VALIGN="BOTTOM" COLSPAN=2> Amortization of recoverable transition
      costs</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>53</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="9%" VALIGN="BOTTOM">
      <div align="right">71</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Maintenance</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>11</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="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Depreciation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Taxes, other than income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>41</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="9%" VALIGN="BOTTOM">
      <div align="right">28</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Energy related businesses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>608</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="9%" VALIGN="BOTTOM">
      <div align="right">579</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Operating Income </B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>89</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="9%" VALIGN="BOTTOM">
      <div align="right">121</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Other Income - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Interest Expense</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>56</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="9%" VALIGN="BOTTOM">
      <div align="right">62</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Before Income Taxes</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>38</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="9%" VALIGN="BOTTOM">
      <div align="right">63</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Income Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">23</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Income Before Dividends on Preferred
      Securities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>26</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="9%" VALIGN="BOTTOM">
      <div align="right">40</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Dividends - Preferred Securities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">6</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Income</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">34</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="13%" colspan=3>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="98%" VALIGN="BOTTOM" COLSPAN=11> <B><A NAME="EUCASHFLOWS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Electric Utilities Corporation
      and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" 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> March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Net Cash Provided by (Used in)
      Operating Activities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(106</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(35</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="9%" VALIGN="BOTTOM">
      <div align="right">(26</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Net (increase) decrease in notes
      receivable from affiliates</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>275</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="9%" VALIGN="BOTTOM">
      <div align="right">(80</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(10</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>243</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="9%" VALIGN="BOTTOM">
      <div align="right">(116</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(68</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="9%" 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="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(11</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="9%" 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="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(25</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="9%" VALIGN="BOTTOM">
      <div align="right">(22</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(104</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="9%" VALIGN="BOTTOM">
      <div align="right">(96</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>33</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="9%" VALIGN="BOTTOM">
      <div align="right">(176</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">267</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>112</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="9%" VALIGN="BOTTOM">
      <div align="right">91</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B><A NAME="EUBALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Electric Utilities Corporation
      and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <font size="2">(Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>

  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>112</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Accounts receivable (less reserve:
      2002, $19; 2001, $19)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>210</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="9%" VALIGN="BOTTOM">
      <div align="right">178</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Unbilled revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>105</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Accounts receivable from affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Notes receivable from affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Income tax receivable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" 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="9%" 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">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">27</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Prepayments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" 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="9%" 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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>41</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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>56</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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">8</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>854</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="9%" VALIGN="BOTTOM">
      <div align="right">883</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>Investments</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">35</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" 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="9%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Transmission and distribution</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,112</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="9%" VALIGN="BOTTOM">
      <div align="right">2,100</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="66%" VALIGN="BOTTOM" COLSPAN=2> General</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>186</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="9%" VALIGN="BOTTOM">
      <div align="right">182</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,298</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="9%" VALIGN="BOTTOM">
      <div align="right">2,282</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">32</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" VALIGN="BOTTOM" COLSPAN=2> Electric plant</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,330</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="9%" VALIGN="BOTTOM">
      <div align="right">2,314</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Other property</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,334</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="9%" VALIGN="BOTTOM">
      <div align="right">2,318</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Recoverable transition costs</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,119</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="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>78</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="9%" 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="69%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">434</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>2,630</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="9%" VALIGN="BOTTOM">
      <div align="right">2,685</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>5,850</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="9%" VALIGN="BOTTOM">
      <div align="right">5,921</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>CONDENSED CONSOLIDATED BALANCE
      SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Electric Utilities Corporation
      and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>

  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>294</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Accounts payable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>30</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Accounts payable to affiliated
      companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>124</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>101</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Interest</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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">&nbsp;</TD>
    <TD WIDTH="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Dividends</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">40</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>615</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="9%" VALIGN="BOTTOM">
      <div align="right">584</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>3,097</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="9%" VALIGN="BOTTOM">
      <div align="right">3,185</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>759</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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>115</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="9%" VALIGN="BOTTOM">
      <div align="right">132</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>874</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="9%" VALIGN="BOTTOM">
      <div align="right">889</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>Company-obligated Mandatorily
      Redeemable Preferred Securities</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> <B>of Subsidiary Trusts Holding Solely
      Company Debentures</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>250</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="9%" VALIGN="BOTTOM">
      <div align="right">250</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" 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="9%" 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="9%" 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="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">51</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">82</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Common stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" 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="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Treasury stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="68%" VALIGN="BOTTOM" COLSPAN=3> Earnings reinvested</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>333</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="9%" 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="68%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>932</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="9%" VALIGN="BOTTOM">
      <div align="right">931</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>5,850</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="9%" VALIGN="BOTTOM">
      <div align="right">5,921</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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="EUSHAREOWNERS"></A>CONDENSED CONSOLIDATED
      STATEMENT OF SHAREOWNER'S COMMON EQUITY</B><BR>
      <B>AND COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Electric Utilities Corporation
      and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>For the Three Months Ended</b><BR>
        <B>March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Common stock at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Common stock at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">1,476</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Additional paid-in capital at beginning
      of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Additional paid-in capital at end
      of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">55</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Treasury stock at beginning of
      period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Treasury stock at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(632</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Earnings reinvested at beginning
      of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>332</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="9%" VALIGN="BOTTOM">
      <div align="right">277</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=3> Net income (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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">&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="67%" VALIGN="BOTTOM" COLSPAN=3> Cash dividends declared on common
      stock</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(19</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="9%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Earnings reinvested at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>333</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="9%" VALIGN="BOTTOM">
      <div align="right">304</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Capital stock expense and other
      at beginning of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Capital stock expense and other
      at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Total Shareowner's Common Equity</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>932</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="9%" VALIGN="BOTTOM">
      <div align="right">1,187</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Common stock shares at beginning
      of period (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</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="9%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="70%" VALIGN="BOTTOM" COLSPAN=4> Common stock shares at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>78,030</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="9%" VALIGN="BOTTOM">
      <div align="right">102,230</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="70%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR valign="top">
    <TD WIDTH="3%"> (a)</TD>
    <TD WIDTH="97%" COLSPAN=11> 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="3%"> (b)</TD>
    <TD WIDTH="97%" COLSPAN=11> Statement of Comprehensive Income. PPL Electric's
      net income approximates comprehensive income.</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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><U><A NAME="MONTANAINCOMESTATEMENT"></A>PPL
      MONTANA, LLC AND SUBSIDIARIES</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B><U>PART I. FINANCIAL INFORMATION</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> <B><U>Item 1. Financial Statements</u></b></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12> 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 March 31, 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 March 31, 2002 and
      2001.</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>CONDENSED CONSOLIDATED
      STATEMENT OF INCOME</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>PPL Montana, LLC and
      Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <font size="2"><I>(Millions
      of Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6 HEIGHT=17>
      <div align="center"><font size="2"><B>Three Months Ended</b><BR>
        <B> March 31,</B></font></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17><font size="2"></font></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="65%" height=17><font size="2"></font></td>
    <td width="2%" height=17><font size="2"></font></td>
    <td width="26%" colspan=6 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17>&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17>
      <div align="center"><B>2001</b></div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>Operating Revenues
      </B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Wholesale energy marketing
      and trading</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>66</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">182</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>67</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">183</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>Operating Expenses</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Operation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Fuel</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>8</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">9</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Energy purchases</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>5</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">17</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Other operation and maintenance</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>23</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">20</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="67%" VALIGN="BOTTOM" COLSPAN=2 HEIGHT=17> Transmission</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>2</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">3</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Depreciation</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>3</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">3</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Taxes, other than income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>4</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">3</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3 HEIGHT=17> Total</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>45</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">55</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>Operating Income </B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>22</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">128</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Other Income - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">1</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Interest Expense</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>1</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">2</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>Income Before Income
      Taxes</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>21</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">127</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> Income Taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>8</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">50</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade>
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4 HEIGHT=17> <B>Net Income</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right"><B>13</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17>
      <div align="right">77</div>
    </TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <tr valign="top">
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="65%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade size="5">
    </td>
    <td width="2%" height=17></td>
    <td width="2%" height=17></td>
    <td width="11%" colspan=2 height=17>
      <hr noshade size="5">
    </td>
    <td width="1%" height=17></td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="65%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM" HEIGHT=17></TD>
    <TD WIDTH="1%" VALIGN="BOTTOM" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12 HEIGHT=13>
      <div align="center"><I><font size="2">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 WIDTH="98%" VALIGN="BOTTOM" COLSPAN=11> <B><A NAME="MONTANACASHFLOWS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF CASH FLOWS</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Montana, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="64%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" 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> March 31, </B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <tr valign="top">
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="64%"><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>11</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="9%" VALIGN="BOTTOM">
      <div align="right">117</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="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(7</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM" COLSPAN=3> Distribution to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(100</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" 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="66%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(100</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>(7</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="9%" VALIGN="BOTTOM">
      <div align="right">10</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">79</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">89</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="64%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 CELLPADDING=0 CELLSPACING=0 WIDTH=100%>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2> <B><A NAME="MONTANABALANCESHEET"></A>CONDENSED
      CONSOLIDATED BALANCE SHEET</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2> <B>PPL Montana, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><font size="2"><B>March 31,</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="11%" VALIGN="BOTTOM" COLSPAN=3>
      <div align="center"><font size="2"><B>December 31,</b><BR>
        <B>2001</B></font></div>
    </TD>

  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=3>
      <hr noshade>
    </td>

  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2> <B>Assets</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM"> Cash and cash equivalents</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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"> $</TD>
    <TD WIDTH="9%" 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="69%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>26</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="9%" 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="69%" VALIGN="BOTTOM"> Accounts receivable from joint owners</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Accounts receivable from affiliated companies</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" 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="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Price risk management assets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Prepayments and other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">84</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM"> Property, plant and equipment - net</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>426</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="9%" 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="69%" VALIGN="BOTTOM"> Deferred income taxes</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>108</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="9%" VALIGN="BOTTOM">
      <div align="right">122</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>551</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="9%" VALIGN="BOTTOM">
      <div align="right">567</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>631</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="9%" VALIGN="BOTTOM">
      <div align="right">651</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM"> Accounts payable</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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"> $</TD>
    <TD WIDTH="9%" 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="69%" VALIGN="BOTTOM"> Accounts payable to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>16</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="9%" 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="69%" VALIGN="BOTTOM"> Revolving line of credit</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>30</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="9%" 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="69%" VALIGN="BOTTOM"> Accrued expenses</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>15</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="9%" 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="69%" VALIGN="BOTTOM"> Price risk management liabilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">13</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">122</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM"> Employee benefit obligations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Wholesale energy commitments</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" 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="69%" VALIGN="BOTTOM"> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>28</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="9%" VALIGN="BOTTOM">
      <div align="right">27</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="69%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>108</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="9%" VALIGN="BOTTOM">
      <div align="right">108</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" 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="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" 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="9%" VALIGN="BOTTOM">
      <div align="right"><B>420</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="9%" VALIGN="BOTTOM">
      <div align="right">421</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>631</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="9%" VALIGN="BOTTOM">
      <div align="right">651</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10>&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=10>
      <div align="center"><I><font size="2">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="MONTANAMEMBERS"></A>CONDENSED
      CONSOLIDATED STATEMENT OF MEMBER'S EQUITY AND COMPREHENSIVE INCOME</B></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <B>PPL Montana, LLC and Subsidiaries</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"> (Unaudited)</font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> <font size="2"><I>(Millions of
      Dollars)</I></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4><font size="2"></font></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
    <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=6>
      <div align="center"><font size="2"><B>For the Three Months Ended</b><BR>
        <B>March 31,</B></font></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"><font size="2"></font></TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4><font size="2"></font></td>
    <td width="2%"><font size="2"></font></td>
    <td width="26%" colspan=6>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B>2002</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" 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="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at beginning of
      period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>421</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="9%" VALIGN="BOTTOM">
      <div align="right">453</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Net income (a)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">77</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Distribution to Member</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(100</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive loss, net of
      tax</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="66%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives
      (a) (b)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">
      <div align="right">(182</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> Member's Equity at end of period</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>420</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">248</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=4> (a) Statement of Comprehensive
      Income:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Net income</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" 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"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">77</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Other comprehensive loss:</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="66%" VALIGN="BOTTOM" COLSPAN=2> Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(9), $(119)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(14</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(182</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Total other comprehensive loss</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(14</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(182</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=3> Comprehensive Loss</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>$</B></TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right"><B>(1</b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> <B>)</B></TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(105</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=4>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td width="11%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP"> (b)</TD>
    <TD WIDTH="68%" VALIGN="BOTTOM" COLSPAN=12> Includes a $(156) million cumulative
      effect of a change in accounting principle from the adoption of SFAS 133
      on January 1, 2001. </TD>

  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="64%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" 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="9%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD VALIGN="BOTTOM" COLSPAN=12>
      <div align="center"><I><font size="2">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 March 31, 2001 and December 31,
      2001 financial statements have been reclassified to conform to the presentation
      in the March 31, 2002 financial statements.</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, El Salvador and
      Brazil.</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 be
      consistent 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 8 for a discussion of the PLR contract 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>
    <TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=97%>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>PPL</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>PPL Energy Supply</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="25%" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="34%" COLSPAN=5>
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
        <TD WIDTH="35%" COLSPAN=8>
          <hr noshade>
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <tr>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="25%" valign="BOTTOM" colspan=3>&nbsp;</td>
        <td width="34%" valign="BOTTOM" colspan=5>
          <div align="center"><b>Three Months </b></div>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="35%" valign="BOTTOM" colspan=8>
          <div align="center"><b>Three Months</b></div>
        </td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B><U>Ended March 31,</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B><U>Ended March 31,</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&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="14%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD VALIGN="BOTTOM" COLSPAN=10> <B>Income Statement Data</B></TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=9>&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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD VALIGN="BOTTOM" COLSPAN=12> Revenues from external customers</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">429</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">632</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">799</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1,014</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> International </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">141</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">163</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">141</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">163</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Delivery (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">705</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">771</div>
        </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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=3>
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">1,275</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1,566</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">940</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1,177</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=4> Net Income (Loss)</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="14%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">116</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">161</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">140</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">181</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> International (b)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">(145</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(145</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Delivery (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">26</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">41</div>
        </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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=3>
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="4%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="23%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">222</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2> )</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">201</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="25%" valign="BOTTOM" colspan=3>&nbsp;</td>
        <td width="34%" valign="BOTTOM" colspan=5>&nbsp;</td>
        <td width="2%" valign="BOTTOM">&nbsp;</td>
        <td width="33%" valign="BOTTOM" colspan=7>&nbsp;</td>
        <td width="3%" valign="BOTTOM" colspan=2>&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=5>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=7>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>PPL</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=7>
          <div align="center"><B>PPL Energy Supply</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>&nbsp;</td>
        <td colspan=5>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan=9>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>March 31,</b></div>
        </TD>
        <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>December 31,</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>March 31,</b></div>
        </TD>
        <TD WIDTH="22%" VALIGN="BOTTOM" COLSPAN=7>
          <div align="center"><B>December 31,</b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&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="14%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD VALIGN="BOTTOM" COLSPAN=9> <B>Balance Sheet Data</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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=4>&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="14%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=4> Total assets</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="14%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Supply</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">4,852</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">5,038</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">5,398</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">5,730</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> International </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">1,496</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1,439</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">1,496</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1,439</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3> Delivery (a)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">6,020</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">6,097</div>
        </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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=3>
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="25%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">12,368</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">12,574</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">6,894</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">7,169</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="2%">&nbsp;</td>
        <td width="25%" colspan=3>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=3>
          <hr noshade size="5">
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
      </tr>
      <tr valign="top">
        <td width="2%">(a)</td>
        <td colspan=18>The Delivery segment is not a component of PPL Energy Supply.</td>
      </tr>
      <tr valign="top">
        <td width="2%">(b)</td>
        <td colspan=18>The International segment includes the "Cumulative Effect
          of a Change in Accounting Principle" recorded in March 2002. See Note
          10 for additional information.</td>
      </tr>
    </TABLE>
    <p></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 PPL and PPL Energy Supply were $586 million at
      both March 31, 2002 and December 31, 2001. The most significant investment
      was PPL Global's investment in WPDH Limited, which was $345 million at March
      31, 2002 and $328 million at December 31, 2001. At March 31, 2002, PPL Global
      had a 51% equity ownership interest in WPDH Limited, but shared joint control
      with Mirant. 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 and PPL Energy Supply's consolidated financial
      statements (millions of dollars):</P>
    <p align="justify"><b></b></p>
    <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=72%>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="34%" VALIGN="TOP" COLSPAN=5>
          <div align="center"><B>Three Months</b><BR>
            <B><U>Ended March 31,</U> </B></div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP"> <B>Income Statement Data</B></TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP"> Revenues</TD>
        <TD WIDTH="4%" VALIGN="TOP"> $</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">178</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP"> $</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">176</div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP"> Operating Income</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">97</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">87</div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP"> Net Income</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">29</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">79</div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="60%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
      </TR>
    </TABLE>
    <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=75%>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="TOP" COLSPAN=3>
          <div align="center"><B>March 31,</b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="23%" VALIGN="TOP" COLSPAN=4> <B>December 31,</B></TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> <B>Balance Sheet Data</B></TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> Current Assets</TD>
        <TD WIDTH="3%" VALIGN="TOP"> $</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">1,224</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP"> $</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">612</div>
        </TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> Noncurrent Assets</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">4,656</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">5,517</div>
        </TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> Current Liabilities</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">448</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">502</div>
        </TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> Noncurrent Liabilities</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">3,885</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="TOP">
          <div align="right">3,955</div>
        </TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
  <li>
    <p align="justify"><B>Earnings Per Share</B></p>

    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL)</i></P>

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

    <P ALIGN="JUSTIFY">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.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">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.</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=1 cellpadding=0 WIDTH=75%>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>Three Months</b><BR>
            <B><U>Ended March 31,</U> </B></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="74%" VALIGN="BOTTOM" COLSPAN=4> (Millions of Dollars or<BR>
          &nbsp;&nbsp;Thousands of Shares)</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> <B>Income (Numerator)</B></TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income - before cumulative
          effect<BR>
          &nbsp;&nbsp;of a change in accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">147</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">222</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="50%" VALIGN="BOTTOM"> Cumulative effect of a change in <BR>
          &nbsp;&nbsp;accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(150</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="56%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">222</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> <B>Shares (Denominator)</B></TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Shares for Basic EPS</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">146,753</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">145,317</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Add: Incremental shares </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="50%" VALIGN="BOTTOM"> Stock options</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">259</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">858</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="50%" VALIGN="BOTTOM"> Stock units</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">79</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">69</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="56%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Shares for Diluted EPS</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">147,091</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">146,244</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income - before cumulative
          effect<BR>
          &nbsp;&nbsp;of a change in accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.00</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1.53</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="50%" VALIGN="BOTTOM"> Cumulative effect of a change in <BR>
          &nbsp;&nbsp;accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(1.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="56%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1.53</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income - before cumulative
          effect<BR>
          &nbsp;&nbsp;of a change in accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">1.00</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1.52</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="6%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="50%" VALIGN="BOTTOM"> Cumulative effect of a change in <BR>
          &nbsp;&nbsp;accounting principle</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(1.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="56%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2> Net Income (Loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">1.52</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" 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 months ended March 31, 2002.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Stock options to purchase 879,000 PPL common shares for
      the three months ended March 31, 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 and Financing Activities</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 2002 and PPL Energy
      Supply maintains two credit facilities: a $600 million 364-day credit facility
      maturing in June 2002 and a $500 million three-year credit facility maturing
      in June 2004. At March 31, 2002, no borrowings were outstanding under any
      of these facilities. PPL Electric and PPL Energy Supply have the ability
      to cause the lenders to issue letters of credit under these facilities.
      At March 31, 2002, $1 million of letters of credit were outstanding under
      PPL Electric's facility and $30 million of letters of credit were outstanding
      under PPL Energy Supply's $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. The maturity
      date of this facility may be extended with the consent of the lenders. At
      March 31, 2002, PPL Montana had outstanding borrowings of $30 million and
      had outstanding letters of credit of $35 million under this facility. PPL
      Montana's $150 million credit facility was terminated in April 2002.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL and PPL Electric also maintain letter of credit agreements
      for $4 million and $2 million, respectively, for the purpose of meeting
      minor letter of credit needs. At March 31, 2002, $2 million in letters of
      credit were outstanding for PPL and its subsidiaries. No letters of credit
      were outstanding for PPL Electric at March 31, 2002 under its agreement.</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, 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, 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"></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. As of March 31, 2002, PPL had issued $29 million of
      common stock under this program since its inception in December 2000.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In April 2002, PPL filed a universal shelf registration
      statement with the SEC for the issuance of up to $750 million in various
      securities. Subject to SEC registration of the securities and market conditions,
      PPL currently plans to issue approximately $200 million of PPL common stock
      during the second quarter of 2002 under this registration statement. PPL
      expects to use the proceeds of this issuance to retire other securities
      and to provide liquidity in support of its and its subsidiaries' general
      corporate activities.</P>
    <P ALIGN="JUSTIFY"></P>
     <p align="justify"><i>(PPL and PPL Energy Supply)</i></P>
     <p align=justify>At March 31, 2002 there was no commercial paper outstanding
     for PPL Energy Supply.  Some foreign subsidiaries of PPL Energy Supply had short-term,
     non-recourse borrowings from banks of $82 million as of March 31, 2002.</p>

    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL and PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In March 2002, PPL Electric deposited $11 million with
      its Mortgage Trustee for the purpose of retiring on May 1, 2002, all 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>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">During the first quarter of 2002, PPL Transition Bond Company
      made principal payments on bonds totaling $68 million.</P>
<P ALIGN="JUSTIFY">At March&nbsp;31,&nbsp;2002, there was no commercial paper
      or bank borrowings outstanding for PPL Electric.</P>
<P ALIGN="JUSTIFY"></P>

     <P ALIGN="JUSTIFY">In May 2002, pursuant to PPL Electric's instructions, the
      property trustee of PPL Capital Trust redeemed, at par value, all of the
      $100 million outstanding of the 8.20% Preferred Securities due 2027 that
      was previously issued by PPL Capital Trust.</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 Project</b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In February 2002, PPL reached an agreement in principle
      with the Village of Freeport, New York, pursuant to which they would together
      construct a two-unit 88 MW combustion turbine power facility on Freeport
      property, part of which property would be leased to PPL by Freeport. The
      facility is projected to begin commercial operation in the summer of 2003.
      PPL and Freeport would each own one unit. The cost of PPL's unit is estimated
      to be approximately $50-$55 million. PPL also reached an agreement in principle
      in April 2002 with the Long Island Power Authority (LIPA) regarding a joint
      energy sales arrangement associated with the PPL unit for the first seven
      years of operation. These transactions 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 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." Through April 30,
      2002, PPL Global made payments totaling $59 million related to the cancellation
      fees. PPL Global is currently in negotiations to reduce certain of the cancellation
      fees but cannot predict whether there will be any such reduction. Accordingly,
      at this time, PPL Global believes that the original estimate of the
      loss and the associated charges are still appropriate.</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. As a result of NorthWestern
      Energy's acquisition of Montana Power's electricity delivery business in
      the first quarter of 2002, the second agreement is now between PPL Montana
      and NorthWestern Energy. The second agreement requires PPL Montana to supply
      NorthWestern Energy's actual remaining customer load. This agreement will
      expire on the earlier of June 30, 2002 or when NorthWestern Energy's remaining
      customer load is zero. 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 March 31, 2002 was
      $70 million and is included on the Balance Sheet in "Deferred Credits and
      Other Noncurrent Liabilities - Other" for PPL and in &quot;Wholesale energy
      commitments&quot; for PPL Energy Supply and PPL Montana.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Beginning July 1, 2002, PPL EnergyPlus will sell 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, when its generation business
      was 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.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In the first quarter of 2002, PPL Energy Supply paid approximately
      $50 million to terminate 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;
      At March 31, 2002, the remaining liability associated with these above market
      NUG contracts was $485 million.</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 committed additional
      capital and extended loans to certain affiliates, joint ventures and partnerships
      in which they have an interest. At March 31, 2002, PPL Global and its subsidiaries
      had approximately $611 million of such commitments. The majority of these
      commitments were for the purchase of LM-6000 turbine generators from General
      Electric.</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, for which PPL has not yet been paid
      in full. 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 March 31, 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.</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 in the California markets, 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
      sales made in the Pacific Northwest, including sales made by PPL Montana.
      The FERC Administrative Law Judge assigned to this proceeding has recommended
      that no refunds be ordered for sales into the Pacific Northwest. The FERC
      presently is considering this recommendation. </P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">PPL cannot predict whether, or the extent to which, any
      of its subsidiaries will be the target of any governmental investigation
      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. </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 "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. PPL Montana
      cannot predict the outcome of this matter.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>&nbsp;</b></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. A trial has
      been scheduled for June 2002. At this time, PPL Montana cannot predict the
      ultimate outcome of this matter.</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 "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 January 2002, PPL
      filed comments as requested by the Investigation Order. The Order does not
      suggest what, if any, action the PUC may take as a result of the investigation,
      other than considering possible changes to its competitive safeguards. While
      PPL EnergyPlus and PPL Electric have filed comments with the PUC as part
      of the investigation, they have taken the position that the PUC does not
      have jurisdiction to regulate the PJM capacity markets as those markets
      are for wholesale electricity transactions and, accordingly, are within
      the exclusive jurisdiction of the FERC. In addition, PPL EnergyPlus and
      PPL Electric believe that PPL EnergyPlus' actions under review were at all
      times lawful and consistent with the rules of the market. At this time,
      neither PPL EnergyPlus nor PPL Electric can predict the ultimate outcome
      of the proceedings related to the Market Monitor report or what action the
      PUC or other agencies or courts may take in this regard.</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>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>Proposed Montana Hydroelectric Initiative </B><I>(PPL,
      PPL Energy Supply and PPL Montana)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">In January 2002, the Montana Secretary of State certified,
      in accordance with applicable statutes, that it had approved the form of
      a proposed Montana &quot;Hydroelectric Security Act&quot; initiative. The
      proposed initiative may be placed on the November 2002 statewide ballot
      if sufficient signatures are obtained prior to June 21, 2002. Among the
      stated purposes of the proposed 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 PPL Montana's hydroelectric dams either pursuant to a negotiated
      purchase or an acquisition at fair market value through the power of condemnation.
      At this time, PPL, PPL Energy Supply and PPL Montana cannot predict whether
      the proposed initiative will garner enough signatures for placement on the
      November 2002 statewide ballot, whether there will be a successful legal
      challenge to the initiative, 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. PPL Montana has declared its opposition to, and
      intends to vigorously oppose, the initiative.</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><b>Montana Hydroelectric License Contingencies </B><I>(PPL
      Energy Supply and 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.</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 possible use of SCR or SNCR 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. In this regard, the EPA is expected
      to develop 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 "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, and the Region VIII office has issued such a request
      to PPL Montana's Corette plant. PPL and its subsidiaries have responded
      to the 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 "New Source" performance standards
      and/or undergo "New Source" 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. In addition, in December 2001, a PPL Global subsidiary
      entered into a synthetic lease financing transaction for the development,
      construction and operation of its Lower Mt. Bethel combined cycle generating
      facility. 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. The PPL Global subsidiary has joined with the Pennsylvania DEP
      in opposing this appeal.</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 lowered 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. In connection with the July 1, 2000 corporate
      realignment, PPL Electric's generation facilities were transferred to subsidiaries
      of PPL Generation. As of March 31, 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 March 31, 2002.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At March 31, 2002, PPL Electric and PPL Gas Utilities had
      accrued approximately $5 million and $11 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 limitatons 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"></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 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"><I>(PPL, PPL Energy Supply 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 financing subsidiary, PPL Capital Funding,
      which at March 31, 2002, consisted of $1.3 billion of medium-term notes.
      At March 31, 2002, PPL has guaranteed certain obligations
      under power purchase and sales agreements of PPL EnergyPlus ($61 million)
      and certain obligations of other subsidiaries ($127 million). As of March
      31, 2002, PPL Energy Supply had guaranteed certain obligations under power
      purchase and sales agreements of PPL EnergyPlus ($2 million) and certain
      obligations of other subsidiaries ($671 million).</P>
    <P ALIGN="JUSTIFY"></P>
    <p align="justify"><i>(PPL Electric)</i></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At March 31, 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 Contract </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 months ended March 31, 2002, these purchases
      totaled $369 million, including nuclear decommissioning recovery and amortization
      of an up-front contract payment. For the three months ended March 31, 2001,
      these purchases totaled $334 million, including nuclear decommissioning
      recovery, under the previous PLR contract. These purchases are included
      in the Statement of Income as "Energy purchases" by PPL Electric and as
      "Wholesale energy marketing and trading" 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 market prices
      exceed the contract collateral threshold. In January 2002, PPL Electric
      was required to tender a $56 million performance assurance deposit to PPL
      EnergyPlus. This payment 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 Electric will earn interest
      equal to the three-month LIBOR plus 3% on this deposit.</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 March 31,
      2002 and 2001, these NUG purchases totaled $43 million and $45 million,
      and are included in the Statement of Income as "Wholesale electric" revenues
      by PPL Electric, and as "Energy purchases" by PPL Energy Supply.</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 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 March 31, 2002 and 2001.</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
      March 31, 2002 and 2001 were $10 million and $32 million and are included
      in &quot;Wholesale energy marketing and trading&quot; revenues 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. During the three months ended March 31, 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=1 cellpadding=0 WIDTH=92%>
      <TR>
        <TD WIDTH="18%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>PPL Energy</b><BR>
            <B>Supply</B></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>PPL Electric</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>PPL Montana</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="18%">&nbsp;</td>
        <td width="26%" colspan=5>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="26%" colspan=5>
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td width="26%" colspan=5>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="18%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2001</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2002</b></div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="center"><B>2001</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="18%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="18%" VALIGN="BOTTOM"> Direct expenses</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">20</div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">16</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">17</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="18%" VALIGN="BOTTOM"> Overhead costs</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">6</div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">8</div>
        </TD>
        <TD WIDTH="2%" 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">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">5</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">2</div>
        </TD>
        <TD WIDTH="1%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">1</div>
        </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 affiliated companies at March
      31, 2002 or December 31, 2001 and consequently had no intercompany interest
      in the first quarter of 2002. Intercompany interest, including capitalized
      interest, was $27 million for the three months ended March 31, 2001.</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
      $539 million and $395 million at March 31, 2002 and December 31, 2001. Interest
      earned on loans to affiliated companies was $5 million and $8 million for
      the three months ended March 31, 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 March 31, 2002 was $75 million. Intercompany interest income was
      $4 million for the three months ended March 31, 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. Additionally, PPL enters into financial contracts
      to hedge fluctuations in the market value of existing debt issuances. These
      contracts range in maturity through 2006. For the three months ended March
      31, 2002 and 2001, PPL did not recognize any gains or losses from the ineffective
      portion of fair value hedges. For the three months ended March 31, 2002,
      PPL Energy Supply recognized an immaterial amount 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 range in maturity through 2005. 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, excluding those
      forecasted transactions related to the payment of variable interest on existing
      financial instruments, range in maturity through 2003. </P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">At March 31, 2002, PPL's unrealized gain on qualifying
      derivatives included in accumulated other comprehensive income was $12 million,
      an $11 million decrease from the December 31, 2001 unrealized gain on qualifying
      derivatives of $23 million. Also, at March 31, 2002, PPL Energy Supply's
      unrealized gain on qualifying derivatives included in accumulated other
      comprehensive income was $33 million, a $13 million decrease from the December
      31, 2001 unrealized gain on qualifying derivatives of $46 million. Finally
      at March 31, 2002, PPL Montana's unrealized gain on qualifying derivatives
      included in accumulated other comprehensive income was $19 million, a $14
      million decrease from the December 31, 2001 unrealized gain on qualifying
      derivatives of $33 million.</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 for
      the three months ended March 31, 2002 was a loss of $2 million and was insignificant
      for the three months ended March 31, 2001.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">As a result of an unplanned outage in 2001 and changes
      in economic conditions, certain cash flow hedges were discontinued, resulting
      in the following financial statement impact (millions of dollars):</P>
    <P ALIGN="JUSTIFY"></P>
    <TABLE CELLSPACING=0 BORDER=0 cellpadding=0 WIDTH=50%>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="37%" VALIGN="TOP" COLSPAN=5>
          <div align="center"><B>Three Months</b><BR>
            <B><U>Ended March 31,</U> </B></div>
        </TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> PPL</TD>
        <TD WIDTH="2%" VALIGN="TOP"> $</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP"> $</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">(29</div>
        </TD>
        <TD WIDTH="4%" VALIGN="TOP"> )</TD>
      </TR>
      <TR>
        <TD WIDTH="57%" VALIGN="TOP"> PPL Energy Supply</TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">1</div>
        </TD>
        <TD WIDTH="2%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="TOP">
          <div align="right">(29</div>
        </TD>
        <TD WIDTH="4%" VALIGN="TOP"> )</TD>
      </TR>
    </TABLE>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">As of March 31, 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 $1 million, $4 million,
      and $4 million for PPL, PPL Energy Supply and PPL Montana, respectively.</P>
    <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: "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 is
      effective April 1, 2002. PPL has determined that there will be no financial
      statement impact of the revised guidance on fuel contracts classified as
      normal.</P>
    <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, "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. 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 cellpadding=0 CELLSPACING=0 WIDTH=97%>
      <TR>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM" COLSPAN=11>
          <div align="center"><B>March 31, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="29%" colspan=2>&nbsp;</td>
        <td width="36%" colspan=11>
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td width="33%" colspan=8>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="29%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="16%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Carrying </b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Carrying</b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=3> Emission allowances</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">48</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=4 align="left"> $ </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">36</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=3> Land and transmission<BR>
          &nbsp;&nbsp;&nbsp;rights</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">245</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">87</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">247</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" align="left"> $ </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">86</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=3> Licenses and other</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">32</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">31</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="31%" colspan=3>&nbsp;</td>
        <td colspan="3">
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=6>
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=3> Total</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">325</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="11%" VALIGN="BOTTOM">
          <div align="right">91</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=4 align="left"> $ </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">314</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" align="left"> $ </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">90</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="31%" colspan=3>&nbsp;</td>
        <td colspan="3">
          <hr noshade size="5">
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=6>
          <hr noshade size="5">
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</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 for the
      three months ended March 31, 2002. Estimated amortization expense for the
      years 2003 through 2007 is $4 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>
    <TABLE BORDER=0 cellpadding=0 CELLSPACING=0 WIDTH=97%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="37%" VALIGN="BOTTOM" COLSPAN=7>
          <div align="center"><B>March 31, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="35%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="26%" colspan=2>&nbsp;</td>
        <td width="37%" colspan=7>
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td width="35%" colspan=8>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="17%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying</b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="21%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Emission allowances</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">48</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="left">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">36</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Land and transmission <br>
          &nbsp;&nbsp;&nbsp; rights</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">44</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">44</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">10</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Licenses and other</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">32</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">31</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">4</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp; </td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=4>
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan="3">
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Total</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" align="left">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">124</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="left">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">111</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="14%" VALIGN="BOTTOM">
          <div align="right">14</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="26%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan=4>
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan="3">
          <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" on the Balance Sheet.</P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Amortization expense was approximately $1 million for the
      three months ended March 31, 2002. Estimated amortization expense for the
      years 2003 through 2007 is $2 million per year.</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>
    <TABLE BORDER=0 CELLSPACING=0 cellpadding=0 WIDTH=92%>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>March 31, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="26%" colspan=2>&nbsp;</td>
        <td width="38%" colspan=8>
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td width="33%" colspan=8>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Carrying</b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="26%" VALIGN="BOTTOM" COLSPAN=2> Land and<BR>
          &nbsp;&nbsp;transmission rights</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">200</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">
          <div align="right">76</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">202</div>
        </TD>
        <TD WIDTH="6%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="10%" VALIGN="BOTTOM">
          <div align="right">75</div>
        </TD>
        <TD WIDTH="4%" 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 months ended March 31, 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=92%>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="38%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>March 31, 2002</b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="33%" VALIGN="BOTTOM" COLSPAN=8>
          <div align="center"><B>December 31, 2001</b></div>
        </TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td width="38%" colspan=8>
          <hr noshade>
        </td>
        <td width="2%" colspan=3>&nbsp;</td>
        <td width="33%" colspan=8>
          <hr noshade>
        </td>
      </tr>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B>Carrying </b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="18%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="center"><B>Carrying</b><BR>
            <B><U>Amount</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="19%" VALIGN="BOTTOM" COLSPAN=4>
          <div align="center"><B>Accumulated</b><BR>
            <B><U>Amortization</u></b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Emission allowances</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">19</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="left">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">19</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Licenses and other</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">15</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">15</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%" colspan=3>&nbsp;</td>
        <td colspan=5>
          <hr noshade>
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="left">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">34</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=3>
          <div align="left">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">34</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="3%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="3%" colspan=3>&nbsp;</td>
        <td colspan=5>
          <hr noshade size="5">
        </td>
        <td width="2%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="2%">&nbsp;</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 months
      ended March 31, 2002. Estimated amortization expense is immaterial for each
      of the years 2003 through 2007. </P>
    <P ALIGN="JUSTIFY"></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:</P>
    <P ALIGN="JUSTIFY"></P>
    <table border=0 cellpadding=0 cellspacing=0 width=92%>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2>&nbsp;</td>
        <td width="44%" valign="BOTTOM" colspan=10>
          <div align="center"><b>PPL Energy Supply</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>PPL</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr valign="top">
        <td width="23%" colspan=2>&nbsp;</td>
        <td width="44%" colspan=10>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>&nbsp;</td>
        <td width="1%">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> (Millions of Dollars)</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>Supply</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>International</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>Total</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>Delivery(a)</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="13%" valign="BOTTOM" colspan=2>
          <div align="center"><b>Total</b></div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr valign="top">
        <td width="23%" colspan=2>&nbsp; </td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> Balance as of <br>
          &nbsp;&nbsp;January 1, 2002</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">72</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">257</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">329</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">55</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">384</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> Goodwill acquired</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">12</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">5</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">17</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">17</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> Effect of foreign <br>
          &nbsp;&nbsp;exchange rates</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">3</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">3</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">3</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> Impairment losses</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">(150</div>
        </td>
        <td width="1%" valign="BOTTOM"> )</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">(150</div>
        </td>
        <td width="1%" valign="BOTTOM"> )</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">(150</div>
        </td>
        <td width="1%" valign="BOTTOM"> )</td>
      </tr>
      <tr valign="top">
        <td width="23%" colspan=2>&nbsp; </td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade>
        </td>
        <td width="1%">&nbsp;</td>
      </tr>
      <tr>
        <td width="23%" valign="BOTTOM" colspan=2> Balance as of <br>
          &nbsp;&nbsp;March 31, 2002</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">84</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">115</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">199</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">55</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
        <td width="1%" valign="TOP">&nbsp;</td>
        <td width="1%" valign="BOTTOM"> $</td>
        <td width="12%" valign="BOTTOM">
          <div align="right">254</div>
        </td>
        <td width="1%" valign="BOTTOM">&nbsp;</td>
      </tr>
      <tr valign="top">
        <td width="23%" colspan=2>&nbsp; </td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
        <td width="1%">&nbsp;</td>
        <td width="13%" colspan=2>
          <hr noshade size="5">
        </td>
        <td width="1%">&nbsp;</td>
      </tr>
      <tr>
        <td width="5%" valign="BOTTOM"> (a)</td>
        <td width="95%" valign="BOTTOM" colspan=20> The Delivery segment is not
          part of PPL Energy Supply.</td>
      </tr>
    </table>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">Goodwill is included in &quot;Noncurrent Assets - Other&quot;
      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>
    <TABLE BORDER=0 cellpadding=0 CELLSPACING=0 WIDTH=80%>
      <TR valign="top">
        <TD WIDTH="27%" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="36%" COLSPAN=5>
          <div align="center"><B>PPL</b>
            <hr noshade>
          </div>
        </TD>
        <TD WIDTH="5%" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="31%" COLSPAN=6>
          <div align="center"><B>PPL Energy Supply</b>
            <hr noshade>
          </div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="36%" VALIGN="BOTTOM" COLSPAN=5>
          <div align="center"><B>Three Months </b><BR>
            <B><U>Ended March 31,</u></b></div>
        </TD>
        <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
        <TD WIDTH="31%" VALIGN="BOTTOM" COLSPAN=6>
          <div align="center"><B>Three Months </b><BR>
            <B><U>Ended March 31,</u></b></div>
        </TD>
      </TR>
      <TR>
        <TD WIDTH="30%" VALIGN="BOTTOM" COLSPAN=3> (Millions of Dollars, <BR>
          &nbsp;&nbsp;except per share data)</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="center"><B><U>2002</u></b></div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="center"><B><U>2001</u></b></div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Reported net income<BR>
          &nbsp;&nbsp;(loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">222</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">201</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Add back: Goodwill<BR>
          &nbsp;&nbsp;amortization</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" COLSPAN=2>
          <div align="right">3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">3</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Add back: Equity <BR>
          &nbsp;&nbsp;method goodwill<BR>
          &nbsp;&nbsp;amortization</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" COLSPAN=2>
          <div align="right">1</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</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="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="3">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan=3>
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income<BR>
          (loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(3</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">226</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">(5</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">
          <div align="right">205</div>
        </TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR valign="top">
        <TD WIDTH="27%" COLSPAN=2>&nbsp;</TD>
        <TD colspan="2">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="3%">&nbsp;</TD>
        <TD colspan="3">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="3%">&nbsp;</TD>
        <TD COLSPAN=3>
          <hr noshade size="5">
        </TD>
        <TD WIDTH="3%">&nbsp;</TD>
        <TD colspan="2">
          <hr noshade size="5">
        </TD>
        <TD WIDTH="2%">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> <B>Basic EPS:</B></TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="12%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Reported net income<BR>
          &nbsp;&nbsp;(loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">1.53</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</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" COLSPAN=2>
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Equity method <BR>
          &nbsp;&nbsp;goodwill <BR>
          &nbsp;&nbsp;amortization</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" COLSPAN=2>
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="3">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan=3>

        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="2">

        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income<BR>
          (loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">1.56</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="3">
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan=3>

        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="2">

        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="27%" 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" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Reported net income<BR>
          &nbsp;&nbsp;(loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">1.52</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Goodwill amortization</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" COLSPAN=2>
          <div align="right">0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Equity method <BR>
          &nbsp;&nbsp;goodwill <BR>
          &nbsp;&nbsp;amortization</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" COLSPAN=2>
          <div align="right">0.01</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="3">
          <hr noshade>
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan=3>

        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="2">

        </td>
        <td width="2%">&nbsp;</td>
      </tr>
      <TR>
        <TD WIDTH="27%" VALIGN="BOTTOM" COLSPAN=2> Adjusted net income<BR>
          &nbsp;&nbsp;(loss)</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="15%" VALIGN="BOTTOM">
          <div align="right">(0.02</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM"> )</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">
          <div align="right">$</div>
        </TD>
        <TD WIDTH="13%" VALIGN="BOTTOM" COLSPAN=2>
          <div align="right">1.55</div>
        </TD>
        <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
        <TD WIDTH="3%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
        <TD WIDTH="12%" 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="2%" VALIGN="BOTTOM">&nbsp;</TD>
      </TR>
      <tr valign="top">
        <td width="27%" colspan=2>&nbsp;</td>
        <td colspan="2">
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="3">
          <hr noshade size="5">
        </td>
        <td width="3%">&nbsp;</td>
        <td colspan=3>

        </td>
        <td width="3%">&nbsp;</td>
        <td colspan="2">

        </td>
        <td width="2%">&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 March 31,
      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>
</ol>
<OL start=11>

  <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 144 </b></p>
    <P ALIGN="JUSTIFY"></P>
    <P ALIGN="JUSTIFY">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,"<I> </I>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, "Rescission of
      FASB Statement 4, 44, and 64." The most relevant provision of SFAS 145 is
      the rescission of SFAS 4, 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>
  <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"></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 "Minority Interest" 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
  "Write-down of international energy projects" on the Statement of Income. PPL
  Global's remaining portion of its CEMAR investment, primarily related to its
  foreign currency translation adjustments (CTA) balance of $94 million, was not
  written-off as of March 31, 2002, because accounting guidance prohibits the
  inclusion of CTA in an impairment calculation where the assets are not held
  for disposal. PPL is working with CEMAR's creditors and governmental authorities
  in Brazil on a plan that could result in returning the company to financial
  stability. That plan includes a rate-increase request that is now being reviewed
  by regulators, and PPL expects that the process for the rate-increase request
  will reach conclusion in the third quarter of 2002. Because PPL has not exhausted
  all available avenues, including the pending rate request, to maximize the value
  of CEMAR, it has not yet made a decision to exit the investment. Should a decision
  be made to exit the investment, PPL would again assess impairment of the investment
  and would, most likely, record an additional impairment for the CTA balance,
  reduced by any operating losses recorded through the date of the impairment.
</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. Consequently, CEMAR has notified the indenture agent, and in accordance
  with the indenture, the agent is expected to call a meeting of the holders of
  the debentures to hold a vote regarding the acceleration of the debentures.
  Unless three-fourths of the holders vote against acceleration, the agent will
  be obligated under the indenture to accelerate the debentures. </P>
  </ol>
<br><hr noshade><br>
<P ALIGN="CENTER"><b><A NAME="ITEM2CORP"></A>PPL CORPORATION 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">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.</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 months ended March 31,
  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 (loss) and the related EPS were as follows:</P>
<P ALIGN="JUSTIFY"></P>
<TABLE CELLSPACING=0 BORDER=0 cellpadding=0 WIDTH=75%>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=9> <B><U>Three Months Ended March
      31,</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2002</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2001</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2> Net income (loss) (millions of
      <BR>
      &nbsp;&nbsp;dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2> EPS - basic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(.02</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">1.53</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=2> EPS - diluted</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(.02</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">1.52</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 two 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 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=9> <B><U>Three Months Ended March
      31,</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> (Millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2002</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2001</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss) - actual</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Unusual items (net of tax):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> SFAS 142 goodwill impairment<BR>
      &nbsp;&nbsp;(Note 10)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(150</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Write-down of investment in <BR>
      &nbsp;&nbsp;CEMAR (Note 12)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="5%" colspan=2>&nbsp;</td>
    <td width="47%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="7%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Net income from core operations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">151</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">222</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="5%" colspan=2>&nbsp;</td>
    <td width="47%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="7%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">&nbsp;</P>
<P ALIGN="JUSTIFY">The earnings decline was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">lower wholesale energy prices, particularly in the western
      U.S.;</P>
  <li>
    <p align="justify">lower earnings from international operations; and</P>
  <li>
    <p align="justify">lower electricity delivery sales, in part due to milder
      weather in the first quarter of 2002. </P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">These earnings declines were partially offset by increased
  volume of wholesale energy sales in the western U.S., and improved earnings
  contributions from synfuel projects and mechanical contractor and engineering
  subsidiaries. Earnings also benefited from the termination of an energy purchase
  contract with a NUG. See Note 7 to the Financial Statements for additional information.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL expects that lower wholesale energy prices will adversely
  impact core earnings for the remainder of 2002. In addition, PPL expects that
  it will continue to incur quarterly operating losses from CEMAR, as it continues
  to consider ways to maximize the value of CEMAR. See Note 12 to the Financial
  Statements for information on PPL Global's investment in CEMAR.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Operating Revenues</b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Retail Electric and Gas</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase (decrease) in retail revenues from 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=75%>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=5>
      <div align="center"><B>Three Months Ended</b><BR>
        <B><U>March 31, 2002 vs. March 31, 2001</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> Retail Electric Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> PPL Electric</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="8%" VALIGN="BOTTOM" COLSPAN=1>&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electric
      delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(28</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="8%" VALIGN="BOTTOM" COLSPAN=1>&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PLR
      electric generation supply</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">36</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> PPL EnergyPlus</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="8%" VALIGN="BOTTOM" COLSPAN=1>&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electric
      generation supply</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> PPL Global</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="8%" VALIGN="BOTTOM" COLSPAN=1>&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="BOTTOM" COLSPAN=3> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Electric
      delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(8</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> Other</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="59%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(89</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="59%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> Retail Gas Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> PPL Gas Utilities</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(16</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=3> PPL EnergyPlus</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="59%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(20</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="59%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=4> Retail Electric and Gas Revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(109</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="4%">&nbsp;</td>
    <td width="59%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in operating revenues from retail electric operations
  was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>

  <li>
    <p align="justify">lower net supply revenues (caused by the expiration of
      certain PPL EnergyPlus retail contracts, partially offset by increased revenues
      by PPL Electric as a PLR);</P>
  <li>
    <p align="justify">lower domestic delivery revenues, due to a decrease in
      deliveries of electricity, impacted by milder weather; and</P>
  <li>
    <p align="justify">decreased PPL Global international electric delivery revenues,
      primarily due to lower CEMAR revenues.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Both PPL Gas Utilities and PPL EnergyPlus experienced lower
  retail gas revenues in the three months ended March 31, 2002 compared with the
  same period in 2001. These decreases were primarily due to milder weather.</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 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=5>
      <div align="center"><B>Three Months Ended</b><BR>
        <B><U>March 31, 2002 vs. March 31, 2001</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Bilateral/Spot market</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(47</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Cost-based</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Gas &amp; oil</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(48</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(97</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(96</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(193</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in eastern U.S. markets was primarily due to lower
  bilateral/spot market sales and lower gas and oil trading activity. (Energy
  purchases also decreased in 2002 compared with 2001. Refer to &quot;Energy Purchases&quot;
  for more information.) </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in western U.S. markets 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 7 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 $41 million for the three months ended
  March 31, 2002, compared with the same period in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Electric fuel costs decreased by $28 million in the first quarter
  of 2002 compared with the same period in 2001. This decrease was attributable
  to lower generation by oil/gas-fired and coal-fired stations, resulting from
  a decrease in electricity sales because of milder weather, the expiration of
  certain PPL EnergyPlus retail contracts and accelerated timing of annual overhaul
  work at the Montour generating station.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The cost of natural gas and propane decreased by $13 million
  for the three months ended March 31, 2002, compared with the same period in
  2001. The decrease reflects lower volumes due to milder weather, as well as
  lower off-system gas prices.</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 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=5>
      <div align="center"><B>Three Months Ended</b><BR>
        <B><U>March 31, 2002 vs. March 31, 2001</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Domestic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(125</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(14</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> International</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">2</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(137</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="63%" colspan=3>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in eastern U.S. markets was attributable to lower
  purchases of gas, due to lower volumes of gas trading activity, and lower wholesale
  prices for electric energy purchases. Eastern U.S. market energy purchases also
  reflect a $25 million benefit from the termination of an energy purchase contract
  with a NUG. See Note 7 to the Financial Statements for additional information.
  The decrease in western U.S. markets was due to lower wholesale prices for electric
  energy purchases.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Other Operation Expenses</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Other operation expenses increased by $7 million for the three
  months ended March 31, 2002, compared to the same period in 2001. This increase
  was primarily due to higher administrative and general expenses, offset by a
  payment made in March 2001 to Duke Energy Trading and Marketing, to release
  their obligation to perform certain services related to the purchase and sale
  of gas and energy during commercial operation of the Griffith plant.</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 $18
  million during the three months ended March 31, 2002, compared with the same
  period in 2001. This decrease was primarily due to 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.
  Also contributing to the decrease were lower billed CTC revenues in 2002 and
  changes in amortization of CTC deferrals.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Maintenance Expenses</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Maintenance expenses increased by $8 million for the three
  months ended March 31, 2002, compared with the same period in 2001. This increase
  was primarily due to higher refueling outage and non-outage costs at the Susquehanna
  generating station, as well as accelerated timing of annual overhaul work at
  the Montour generating station.</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 $10 million during the
  three months ended March 31, 2002, compared with the same period in 2001. This
  change was 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 12 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 to reflect an
  additional write-down of PPL Global's investment in CEMAR. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Financing Costs</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Interest expense decreased by $7 million during the three months
  ended March 31, 2002, compared with the same period in 2001. This decrease was
  primarily due to lower levels of short-term debt and retirements of mortgage
  bonds, transition bonds and medium-term notes, partially offset by interest
  paid on senior secured bonds, senior unsecured notes and other long-term debt
  issued after March 2001. The decrease also reflects a charge in 2001 to buy
  back a call option to re-market securities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Dividends on preferred securities increased by $11 million
  during the three months ended March 31, 2002, compared with the same period
  in 2001. This increase was primarily due to dividends paid on the PEPS Units,
  issued in the second quarter of 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 $64 million for the three months
  ended March 31, 2002, compared to the same period in 2001, primarily due to
  a decrease in pre-tax book income and an increase in the amount of federal synfuel
  tax credits recognized.</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 "Cumulative Effect of a Change in Accounting Principle" on the Statement of
  Income. See Note 10 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 March 31, 2002, PPL's net cash position was $374 million,
  which reflects $486 million in cash and cash equivalents less $112 million of
  short-term debt. This compares to PPL's net cash position of $832 million at
  December 31, 2001. The decrease in net cash position resulted from less cash
  provided from operating activities due primarily to the net effect of a $59
  million turbine cancellation payment, a $50 million payment to terminate an
  energy purchase contract with a NUG, mild weather and seasonal cash outflows
  that normally occur in the first quarter of each year (such as the prepayment
  of the Pennsylvania gross receipts tax). In addition, PPL incurred one-time
  acquisition costs of approximately $140 million for certain generation equipment
  it purchased from two lessor trusts in the first quarter of 2002. PPL and its
  subsidiaries also retired $78 million of securities in the first quarter of
  2002.</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">PPL, through PPL EnergyPlus, sells and purchases 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 March 31, 2002, PPL had net assets of $24 million
  related to its energy hedging activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Certain transactions, however, meet the definition of trading
  activities as defined by EITF 98-10, &quot;Accounting for Contracts Involved
  in Energy Trading and Risk Management Activities.&quot; These trading activities
  include physical and financial energy contracts, such as forwards, futures,
  options, and swaps that do not qualify for hedge accounting or were entered
  into to profit from market fluctuations. Trading activities also include certain
  transactions for capacity and ancillary products, such as transmission congestion
  credits (TCCs) and fixed transmission rights (FTRs).</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL's trading contracts mature at various times through 2006.
  The following chart sets forth PPL's net fair market value of trading contracts
  as of March 31, 2002 (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="56%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="41%" VALIGN="TOP" COLSPAN=5>
      <div align="center"><B><U>Gains/(Losses</u>)</b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=3> Fair value of contracts outstanding
      at the<BR>
      &nbsp;&nbsp;&nbsp;beginning of the year</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">
      <div align="right">$</div>
    </TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">0</div>
    </TD>
    <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=3> Contracts realized or otherwise
      settled <BR>
      &nbsp;&nbsp;&nbsp;during the period</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="15%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=3> Fair value of new contracts when
      entered<BR>
      &nbsp;&nbsp;&nbsp;into during the period</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">(2</div>
    </TD>
    <TD WIDTH="15%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=3> Other changes in fair values</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">12</div>
    </TD>
    <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=3>&nbsp; </td>
    <td width="3%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="15%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="71%" VALIGN="BOTTOM" COLSPAN=3> Fair value of contracts outstanding
      at<br>
      &nbsp;&nbsp;&nbsp; March 31, 2002</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">
      <div align="right">$</div>
    </TD>
    <TD WIDTH="9%" VALIGN="BOTTOM">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="15%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="71%" colspan=3>&nbsp; </td>
    <td width="3%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="15%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">During the three months ended March 31, 2002, PPL reversed
  net gains of approximately $3 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 March 31, 2002, the net loss on PPL's trading activities
  expected to be recognized in earnings during the next three months is approximately
  $1 million. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The following chart segregates estimated fair values of PPL's
  trading portfolio at March 31, 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>
<table border=0 cellpadding=0 cellspacing=0 width=97%>
  <tr>
    <td width="37%" valign="BOTTOM">&nbsp;</td>
    <td width="62%" valign="BOTTOM" colspan=18>
      <div align="center"><b>Fair Value of Contracts at Period-End</b><br>
        <b>Gains/(Losses)</b></div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="37%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center">Maturity<br>
        less than<br>
        1 year</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center">Maturity<br>
        1-3 years</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center">Maturity<br>
        4-5 years</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center">Maturity<br>
        in excess<br>
        of 5 years</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
    <td width="10%" valign="BOTTOM" colspan=2>
      <div align="center">Total fair<br>
        value</div>
    </td>
    <td width="1%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="37%">&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="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="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr>
    <td width="37%" valign="BOTTOM"> <b>Source of Fair Value</b></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="TOP">&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="TOP">&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="TOP">&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="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
    <td width="9%" valign="TOP">&nbsp;</td>
    <td width="1%" valign="TOP">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="37%"> Prices actively quoted</td>
    <td width="1%"> $</td>
    <td width="9%">
      <div align="right">1</div>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%"> $</td>
    <td width="9%">
      <div align="right">(1</div>
    </td>
    <td width="1%"> )</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%"> $</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="37%"> Prices provided by other external<br>
      &nbsp;&nbsp;&nbsp; sources</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">
      <div align="right">8</div>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">
      <div align="right">2</div>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">
      <div align="right">
        <div align="right">10</div>
      </div>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="37%"> Prices based on models and other<br>
      &nbsp;&nbsp;&nbsp; valuation methods </td>
    <td width="1%">&nbsp;</td>
    <td width="9%">
      <div align="right">(3</div>
    </td>
    <td width="1%"> )</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">
      <div align="right">(3</div>
    </td>
    <td width="1%">
      <div align="right">
        <div align="right">)</div>
      </div>
    </td>
  </tr>
  <tr valign="top">
    <td width="37%">&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="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="10%" colspan=2>
      <hr noshade>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign="bottom">
    <td width="37%"> Fair value of contracts outstanding<br>
      &nbsp;&nbsp;&nbsp; at the end of the period&nbsp;&nbsp;&nbsp; </td>
    <td width="1%"> $</td>
    <td width="9%">
      <div align="right">6</div>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%"> $</td>
    <td width="9%">
      <div align="right">1</div>
    </td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="9%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%">&nbsp;</td>
    <td width="1%"> $</td>
    <td width="9%">
      <div align="right">7</div>
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="37%">&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="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="10%" colspan=2>
      <hr noshade size="5">
    </td>
    <td width="1%">&nbsp;</td>
  </tr>
</table>
<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
  or other entities doing business with PPL.</P>
<P ALIGN="JUSTIFY"></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
  6 to the Financial Statements for information regarding recent acquisitions
  and development activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In January 2002, construction activities were completed on
  the Griffith project, located near Kingman, Arizona, and the facility began
  commercial operations. Griffith is currently in the process of applying for
  membership in the Southwest Reserve Sharing Group. Acceptance into the Southwest
  Reserve Sharing Group would allow Griffith to sell significantly more of the
  plant's generation at firm prices and require fewer reserves for the firm sales.
</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At March 31, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. The Sundance, University Park, Edgewood and Shoreham
  projects are expected to be in commercial operation in the summer of 2002.</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>Cash Flow</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Cash and cash equivalents decreased by $253 million more during
  the three months ended March 31, 2002, than during the same period in 2001.
  The reasons for this change were:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">a $194 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayment of Pennsylvania
      gross receipts tax, a $59 million turbine cancellation payment, and a $50
      million payment to terminate an energy purchase contract with a NUG;</P>
  <li>
    <p align="justify">a $23 million increase in cash used in investing activities;
      and</P>
  <li>
    <p align="justify">a $36 million increase in cash used in financing activities,
      primarily due to higher retirements of long-term debt and an increase in
      dividend payments.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Environmental Matters</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 7 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.</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 "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.</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 months ended March 31,
  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 in 2002 was impacted by two 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=75%>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM" COLSPAN=9> <B><U>Three Months Ended March
      31,</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> (Millions of dollars)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2002</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="15%" VALIGN="BOTTOM" COLSPAN=2>
      <div align="center"><B><U>2001</u></b></div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Net income (loss) - actual</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(5</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Unusual items (net of tax):</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> SFAS 142 goodwill impairment<BR>
      &nbsp;&nbsp;(Note 10)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(150</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="47%" VALIGN="BOTTOM"> Write-down of investment in <BR>
      &nbsp;&nbsp;CEMAR (Note 12)</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> )</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="5%" colspan=2>&nbsp;</td>
    <td width="47%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
    <td width="7%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="53%" VALIGN="BOTTOM" COLSPAN=3> Net income from core operations</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">149</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="7%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="13%" VALIGN="BOTTOM">
      <div align="right">201</div>
    </TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <tr valign="top">
    <td width="5%" colspan=2>&nbsp;</td>
    <td width="47%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
    <td width="7%">&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="2%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">This earnings decline was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">lower wholesale energy prices, particularly in the western
      U.S.;</P>
  <li>
    <p align="justify">lower earnings from international operations; and</P>
  <li>
    <p align="justify">lower supply revenues due to the expiration of certain
      PPL EnergyPlus retail contracts. </P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">These earnings declines were partially offset by increased
  volume of wholesale energy sales in the western U.S., and improved earnings
  contributions from synfuel projects and mechanical contractor and engineering
  subsidiaries. Earnings also benefited from the termination of an energy purchase
  contract with a NUG. See Note 7 to the Financial Statements for additional information.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL Energy Supply expects that lower wholesale energy prices
  will adversely impact core earnings for the remainder of 2002. In addition,
  PPL Energy Supply expects that it will continue to incur quarterly operating
  losses from CEMAR, as it continues to consider ways to maximize the value of
  CEMAR. See Note 12 to the Financial Statements for additional information on
  PPL Global's investment in CEMAR.</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 cellspacing=0 border=0 width=82%>
  <tr>
    <td width="27%" valign="BOTTOM">&nbsp;</td>
    <td width="73%" valign="BOTTOM">
      <div align="center"><b>Three Months Ended</b><u><br>
        <b>March 31, 2002 vs. March 31, 2001</b></u></div>
    </td>
  </tr>
</table>
<TABLE BORDER=0 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Domestic</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Eastern U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(57</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Western U.S. markets</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(96</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="5%">&nbsp;</td>
    <td width="59%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(153</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="5%">&nbsp;</td>
    <td width="59%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in wholesale energy marketing revenues was primarily
  due to lower western U.S. market revenues, resulting from 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 7 to the Financial Statements for further discussion
  on the California situation. </P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Also contributing to the decrease were lower eastern U.S. market
  revenues due to lower gas and oil trading activity. </P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Retail Electric and Gas</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in revenues from retail electric and gas operations
  was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<table cellspacing=0 border=0 width=82%>
  <tr>
    <td width="27%" valign="BOTTOM">&nbsp;</td>
    <td width="73%" valign="BOTTOM">
      <div align="center"><b>Three Months Ended</b><u><br>
        <b>March 31, 2002 vs. March 31, 2001</b></u></div>
    </td>
  </tr>
</table>
<TABLE BORDER=0 cellpadding=0 CELLSPACING=0 WIDTH=75%>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Retail Electric Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="21%" VALIGN="BOTTOM">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> Domestic electric supply</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(87</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2> International electric delivery</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(8</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="5%">&nbsp;</td>
    <td width="59%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="5%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="59%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(95</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Retail Gas Revenue</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(4</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="5%">&nbsp;</td>
    <td width="59%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="63%" VALIGN="BOTTOM" COLSPAN=3> Retail Electric and Gas Revenues</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="2%" VALIGN="BOTTOM"> $</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(99</div>
    </TD>
    <TD WIDTH="21%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr valign="top">
    <td width="5%">&nbsp;</td>
    <td width="59%" colspan=2>&nbsp;</td>
    <td width="2%">&nbsp;</td>
    <td colspan="2">
      <hr noshade size="5">
    </td>
    <td width="21%">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in operating revenues from retail electric operations
  was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">the expiration of certain PPL EnergyPlus retail contracts;
      and</P>
  <li>
    <p align="justify">decreased PPL Global international electric delivery revenues,
      primarily due to lower CEMAR revenues.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">PPL EnergyPlus experienced lower retail gas revenues in the
  three months ended March 31, 2002, compared with the same period in 2001 primarily
  due to milder weather.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Energy Related Businesses</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Energy related businesses contributed $36 million and $42 million
  to operating income for the three months ended March 31, 2002 and 2001. The
  decrease of $6 million in 2002 from 2001 was primarily due to lower equity earnings,
  including PPL Global's investment in WPDH Limited. This decrease was offset
  by lower project development costs and improved earnings from the mechanical
  contracting and engineering subsidiaries.</P>
<P ALIGN="JUSTIFY"></P>
<p><b>Fuel</b></p>
<P ALIGN="JUSTIFY">Fuel costs decreased by $27 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This decrease was attributable
  to lower generation by oil/gas-fired and coal-fired stations resulting from
  a decrease in sales of electricity because of milder weather, the expiration
  of certain PPL EnergyPlus retail contracts and accelerated timing of annual
  overhaul work at the Montour generating station.</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>
<p align="JUSTIFY"></p>
<table cellspacing=0 border=0 width=75%>
  <tr>
    <td width="27%" valign="BOTTOM">&nbsp;</td>
    <td width="73%" valign="BOTTOM">
      <div align="center"><b>Three Months Ended</b><u><br>
        <b>March 31, 2002 vs. March 31, 2001</b></u></div>
    </td>
  </tr>
</table>
<p align="JUSTIFY"></p>
<table border=0 cellspacing=0 cellpadding=0 width=50%>
  <tr>
    <td width="76%" valign="BOTTOM" colspan=3> Domestic</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr>
    <td width="5%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="71%" valign="BOTTOM"> Eastern U.S. markets</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM"> $</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">(120</div>
    </td>
    <td width="3%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="5%" valign="BOTTOM" colspan=2>&nbsp;</td>
    <td width="71%" valign="BOTTOM"> Western U.S. markets</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">(13</div>
    </td>
    <td width="3%" valign="BOTTOM"> )</td>
  </tr>
  <tr>
    <td width="76%" valign="BOTTOM" colspan=3> International</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">2</div>
    </td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
  </tr>
  <tr valign="top">
    <td width="76%" colspan=3>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2">
      <hr noshade>
    </td>
    <td width="3%">&nbsp;</td>
  </tr>
  <tr>
    <td width="76%" valign="BOTTOM" colspan=3>&nbsp;</td>
    <td width="3%" valign="BOTTOM">&nbsp;</td>
    <td width="3%" valign="BOTTOM"> $</td>
    <td width="15%" valign="BOTTOM">
      <div align="right">(131</div>
    </td>
    <td width="3%" valign="BOTTOM"> )</td>
  </tr>
  <tr valign="top">
    <td width="76%" colspan=3>&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td colspan="2">
      <hr size="5" noshade>
    </td>
    <td width="3%">&nbsp;</td>
  </tr>
</table>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in eastern U.S. markets was attributable to lower
  purchases of gas, due to lower volumes of gas trading activity and lower wholesale
  prices for electric energy purchases. Eastern U.S. market energy purchases also
  reflect a $25 million benefit from the termination of an energy purchase contract
  with a NUG. See Note 7 to the Financial Statements for additional information.
  The decrease in western U.S. markets was due to lower wholesale prices for electric
  energy purchases.</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 increased by $17 million
  for the three months ended March 31, 2002, compared to the same period in 2001.
  The increase was primarily due to higher allocations of corporate expenses from
  PPL Services, higher refueling outage and non-outage costs at the Susquehanna
  generating station and accelerated timing of annual overhaul work at the Montour
  generating station. These increases were partially offset by a payment made
  in March 2001 to Duke Energy Trading and Marketing to release their obligation
  to perform certain services related to the purchase and sale of gas and energy
  during commercial operation of the Griffith plant.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Transmission </b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Transmission expenses decreased by $12 million during the three
  months ended March 31, 2002, compared with the same period in 2001. This change
  was primarily due to a decrease in the unregulated retail sales of PPL EnergyPlus.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Depreciation</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Depreciation decreased by $6 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This decrease was primarily
  due to PPL Global's write-down of CEMAR assets in December 2001, resulting in
  lower depreciation on those assets in 2002. In addition, PPL ceased amortization
  of goodwill effective January 1, 2002, in accordance with the adoption of SFAS
  142, as described in Note 10 to the Financial Statements.</P>
<p align="justify"><b>Write-down of International Energy Projects</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 12 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 to reflect an
  additional write-down of PPL Global's investment in CEMAR.</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 $5 million during the three months
  ended March 31, 2002, compared with the same period in 2001. This decrease was
  due to a reduction in interest income from affiliated companies.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Interest Expense</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Interest expense decreased by $5 million during the three months
  ended March 31, 2002, compared with the same period in 2001, primarily due to
  a decrease in short-term debt payable to affiliates. This decrease was partially
  offset by the interest paid on senior unsecured notes and other long-term debt
  issued after March 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 $45 million for the three months
  ended March 31, 2002, compared to the same period in 2001. This change was primarily
  due to a decrease in pre-tax book income and an increase in the amount of federal
  synfuel tax credits recognized.</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 "Cumulative Effect of a Change in Accounting Principle"
  on the Statement of Income. See Note 10 to the Financial Statements for additional
  information on the adoption of SFAS 142.</P>
<P ALIGN="JUSTIFY"></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 6 to the Financial Statements for information regarding recent acquisitions
  and development activities.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">In January 2002, construction activities were completed on
  the Griffith project, located near Kingman, Arizona, and the facility began
  commercial operations. Griffith is currently in the process of applying for
  membership in the Southwest Reserve Sharing Group. Acceptance into the Southwest
  Reserve Sharing Group would allow Griffith to sell significantly more of the
  plant's generation at firm prices and require fewer reserves for the firm sales.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">At March 31, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. The Sundance, University Park, Edgewood and Shoreham
  projects are expected to be in commercial operation in the summer of 2002.</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.</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 "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.</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 months ended March 31,
  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 $14 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This earnings decline
  was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">lower delivery revenues, due to a decrease in delivery
      sales, in part due to milder weather;</P>
  <li>
    <p align="justify">higher energy purchase costs, partially due to the amortization
      of an up-front payment to PPL EnergyPlus under the PLR contract; and</P>
  <li>
    <p align="justify">additional PJM ancillary service expense.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">These earnings decreases were partially offset by lower interest
  expense and lower operating costs.</P>
<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>
<P ALIGN="JUSTIFY">&nbsp;</P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=75%>
  <TR valign="bottom">
    <TD WIDTH="57%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="43%" COLSPAN=6>
      <div align="center"><B>Three Months Ended</b></div>
    </TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="48%" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="52%" COLSPAN=6>
      <div align="center"><B><U>March 31, 2002 vs. March 31, 2001</u></b></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="62%" VALIGN="TOP" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="62%" COLSPAN=3> Electric delivery</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="3%"> $</TD>
    <TD WIDTH="11%">
      <div align="right">(28</div>
    </TD>
    <TD WIDTH="18%"> )</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="62%" COLSPAN=3> PLR electric generation supply</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="11%">
      <div align="right">36</div>
    </TD>
    <TD WIDTH="18%">&nbsp;</TD>
  </TR>
  <TR valign="bottom">
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="62%" COLSPAN=3> Other</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="11%">
      <div align="right">(1</div>
    </TD>
    <TD WIDTH="18%"> )</TD>
  </TR>
  <tr>
    <td width="4%" valign="TOP">&nbsp;</td>
    <td width="62%" valign="TOP" colspan=3>&nbsp; </td>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="18%" valign="TOP">&nbsp;</td>
  </tr>
  <TR valign="bottom">
    <TD WIDTH="4%">&nbsp;</TD>
    <TD WIDTH="62%" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="3%">&nbsp;</TD>
    <TD WIDTH="3%"> $</TD>
    <TD WIDTH="11%">
      <div align="right">7</div>
    </TD>
    <TD WIDTH="18%">&nbsp;</TD>
  </TR>
  <tr>
    <td width="4%" valign="TOP">&nbsp;</td>
    <td width="62%" valign="TOP" colspan=3>&nbsp; </td>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade size="5">
    </td>
    <td width="18%" valign="TOP">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The increase in operating revenues from retail electric operations
  was primarily due to:</P>
<P ALIGN="JUSTIFY"></P>
<UL>
  <li>
    <p align="justify">higher PPL Electric revenues as a PLR resulting from the
      return of shoppers due to fewer alternate suppliers under the Customer Choice
      Act; partially offset by</P>
  <li>
    <p align="justify">lower delivery revenues, reflecting an 8% decrease in deliveries
      of electricity, in part due to milder weather.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><u>Wholesale Electric</u></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in revenues from wholesale electric activities
  was attributable to the following (millions of dollars):</P>
<P ALIGN="JUSTIFY"></P>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH=80%>
  <TR>
    <TD WIDTH="56%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="44%" VALIGN="TOP" COLSPAN=6>
      <div align="center"> <font size=2><B>Three Months Ended</b></font></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="47%" VALIGN="TOP" COLSPAN=2>&nbsp;</TD>
    <TD WIDTH="53%" VALIGN="TOP" COLSPAN=6>
      <div align="center"><font size=2><B><U>March 31, 2002 vs. March 31, 2001</u></b></font></div>
    </TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="TOP" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="TOP" COLSPAN=3> Sales to municipalities</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP"> $</TD>
    <TD WIDTH="11%" VALIGN="TOP">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="19%" VALIGN="TOP"> )</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="BOTTOM" COLSPAN=3> NUG purchased power sold to PPL
      &nbsp;&nbsp;EnergyPlus</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
    <TD WIDTH="11%" VALIGN="BOTTOM">
      <div align="right">(3</div>
    </TD>
    <TD WIDTH="19%" VALIGN="BOTTOM"> )</TD>
  </TR>
  <tr>
    <td width="4%" valign="TOP">&nbsp;</td>
    <td width="62%" valign="TOP" colspan=3>&nbsp; </td>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade>
    </td>
    <td width="18%" valign="TOP">&nbsp;</td>
  </tr>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="61%" VALIGN="TOP" COLSPAN=3>&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
    <TD WIDTH="3%" VALIGN="TOP"> $</TD>
    <TD WIDTH="11%" VALIGN="TOP">
      <div align="right">(6</div>
    </TD>
    <TD WIDTH="19%" VALIGN="TOP"> )</TD>
  </TR>
  <tr>
    <td width="4%" valign="TOP">&nbsp;</td>
    <td width="62%" valign="TOP" colspan=3>&nbsp; </td>
    <td width="3%" valign="TOP">&nbsp;</td>
    <td colspan="2" valign="TOP">
      <hr noshade size="5">
    </td>
    <td width="18%" valign="TOP">&nbsp;</td>
  </tr>
</TABLE>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">The decrease in wholesale electric revenues was due to lower
  sales to municipalities and lower sales of power (purchased from NUGs) to PPL
  EnergyPlus.</P>
<p align="justify"><b>Energy Purchases</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Energy purchases increased by $44 million for the three months
  ended March 31, 2002, compared with the same period in 2001. This increase represents
  additional purchases needed to support a higher PLR load, due to the return
  of customers to PPL Electric as their PLR. In addition, effective January 1,
  2002, PPL Electric began incurring the cost of certain PJM ancillary services
  in connection with its new power supply contract with PPL EnergyPlus.</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 $18
  million during the three months ended March 31, 2002, compared with the same
  period in 2001. This decrease was primarily due to 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.
  Also contributing to the decrease were lower billed CTC revenues in 2002 and
  changes in amortization of CTC deferrals.</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 $13 million during the
  three months ended March 31, 2002, compared with the same period in 2001. The
  change was 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>Interest Expense</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Interest expense decreased by $6 million during the three months
  ended March 31, 2002, compared with the same period in 2001. While interest
  expense increased due to the issuance of senior secured bonds in the third quarter
  of 2001, this was more than offset by the retirements of first mortgage bonds
  and transition bonds, and a charge in 2001 to buy back a call option to re-market
  first mortgage bonds.</P>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Income Taxes</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Income taxes decreased by $11 million for the three months
  ended March 31, 2002, compared to the same period in 2001, primarily due to
  a decrease in 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 March 31, 2002, PPL Electric's net cash position was $112
  million, consisting entirely of cash and cash equivalents and no short-term
  debt. This compares to PPL Electric's net cash position of $79 million at December
  31, 2001. The increase in net cash position resulted from the net effect of
  a $275 million repayment of a notes receivable from an affiliate, offset by
  less cash provided from operating activities due primarily to mild weather,
  seasonal cash outflows that normally occur in the first quarter of each year
  (such as the prepayment of the Pennsylvania gross receipts tax) and by the retirement
  of $68 million of long-term debt.</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 8 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 increased by $209 million more during
  the three months ended March 31, 2002, compared with the same period in 2001.
  The reasons for this change were:</P>
<UL>
  <li>
    <p align="justify">a $142 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayments of Pennsylvania
      gross receipts tax and payment of collateral to PPL EnergyPlus under the
      power supply contract;</P>
</UL>
<UL>
  <li>
    <p align="justify">a $359 million increase in cash provided by investing activities,
      primarily due to a net repayment of loans by affiliated companies; and</P>
  <li>
    <p align="justify">an $8 million increase in cash used in financing activities,
      primarily due to retirements of long-term debt.</P>
</UL>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Environmental Matters</b></p>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 7 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.</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 "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 three months ended March 31,
  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 $64 million for the three months ended
  March 31, 2002, compared with the same period in 2001, primarily due to lower
  wholesale prices in the western U.S. This earnings decline was partially offset
  by the increased volume of wholesale energy sales 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">Wholesale energy marketing and trading revenues decreased by
  $116 million during the three months ended March 31, 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 during the energy supply shortage
  in the western U.S. in the first half of 2001.</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 7 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 $10 million during the three
  months ended March 31, 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. This change was primarily due to decreased power
  costs in the first quarter of 2002, compared with the same period in 2001.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">Generation increased by 57 million kWh during the three months
  ended March 31, 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 quarter of 2002.</P>
<P ALIGN="JUSTIFY"></P>
<p align="center"><b><u>Critical Accounting Policies</u></b></p>

<P ALIGN="JUSTIFY"></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 or 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 9 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 March 31, 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 $25 million. A similar adverse movement
  in market prices would have decreased the value of its hedge portfolio by approximately
  $128 million at March 31, 2002. However, the change in the value of the hedge
  portfolio would have been offset by an increase in the value of the underlying
  commodity, the electricity generated. In addition to commodity price risk, PPL's
  commodity positions are also subject to operational and event risks including,
  among others, increases in load demand and forced outages at power plants. </P>
<p align="justify"></p>
<P ALIGN="JUSTIFY">PPL's risk management program is designed to manage the risks
  associated with market fluctuations in the price of electricity, natural gas,
  oil and emission allowances. 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 March 31, 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 March 31, 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 $117 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 March 31, 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 $6 million. See Note 9 to the Financial Statements
  for a discussion of financial derivative instruments outstanding at March 31,
  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 March 31,
  2002, being the amount PPL would have to pay to terminate them, was $4 million.
</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 March 31, 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 March 31, 2002, a hypothetical 10% increase in interest
  rates and a 10% decrease in equity prices would have resulted in an estimated
  $18 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. Therefore,
  PPL's securities price risk is expected to remain insignificant.</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="JUSTIFY"></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 9 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 March 31, 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 $25 million. A
  similar adverse movement in market prices would have decreased the value of
  its hedge portfolio by approximately $128 million. However, the change in the
  value of the hedge portfolio would have been offset by an increase in the value
  of the underlying commodity, the electricity generated. In addition to commodity
  price risk, PPL Energy Supply's commodity positions are also subject to operational
  and event risks including, among others, increases in load demand 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,
  natural gas, oil and emission allowances. 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 Contract </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 March 31, 2002, PPL Energy Supply's potential annual exposure
  to increased interest expense, based on a 10% increase in interest rates, was
  estimated at $2 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 March 31, 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 $12 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 March 31, 2002, PPL Energy Supply had not entered
  into any such instruments.</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">See Note 9 to the Financial Statements for a discussion of
  financial derivative instruments outstanding at March 31, 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 March 31,
  2002, being the amount PPL would have to pay to terminate them, was $4 million.
</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 March 31, 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 March 31, 2002,
  a hypothetical 10% increase in interest rates and a 10% decrease in equity prices
  would have resulted in an estimated $18 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. Therefore,
  PPL Energy Supply's securities price risk is expected to remain insignificant.</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"></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 March 31, 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 March 31, 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 $68 million
  at March 31, 2002. A similar adverse movement in market prices would have decreased
  the value of the non-hedge portfolio by an insignificant amount at March 31,
  2002. However, the change in the value of the hedge portfolio would have been
  offset by an increase in the value of the underlying commodity, the electricity
  generated. In addition to commodity price risk, PPL Montana's commodity positions
  are also subject to operational and event risks including, among others, increases
  in load demand 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 $30 million in borrowings outstanding as of March 31, 2002,
  and its interest rate risk was not significant. </P>
<P ALIGN="CENTER"></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="center"></P>

<p align="center"><b><u>PART II. OTHER INFORMATION</u></b></p>
<P ALIGN="JUSTIFY"></P>
<p align="justify"><b>Item 1. Legal Proceedings</b></p>
<P ALIGN="JUSTIFY"></P>

    <P ALIGN="JUSTIFY">Reference is made to 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 to the companies'
      &quot;Notes to Condensed Consolidated Financial Statements&quot; for additional
      information regarding various pending administrative and judicial proceedings
      involving regulatory, environmental and other matters.</P>
    <p align="justify"></P>

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=0 WIDTH=100%>
  <TR>
    <TD VALIGN="TOP" COLSPAN=6 HEIGHT=17> <B><U><A NAME="ITEM6"></A>Item 6. Exhibits
      and Reports on Form 8-K</u></b></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17> (a)</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> Exhibits</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17>
       <A HREF=ppl10q3-02_exhibit12a.htm>12(a)</A> - Computation of Ratio
      of Earnings to Combined Fixed Charges and Preferred Stock Dividends <BR>
      <A HREF=ppl10q3-02_exhibit12b.htm>12(b)</a>, <A HREF=ppl10q3-02_exhibit12c.htm>12(c)</a>
      and <A HREF=ppl10q3-02_exhibit12d.htm> 12(d)</a> - Computation of Ratio of Earnings to Fixed Charges</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17> (b)</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> Reports on Form 8-K</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <U>Report dated January
      4, 2002 - PPL</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 5.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Announced the scaling back of the
      generation expansion program in light of continuing declines in wholesale
      energy prices, and revised the earnings forecasts for 2001 and 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <U>Report dated January
      14, 2002 - PPL</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 5.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Announced the evaluation of the business
      and regulatory situation in Brazil to determine what actions should be taken
      with respect to the CEMAR investment.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <U>Report dated January
      14, 2002 - PPL Energy Supply</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 5.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Announced that PPL was evaluating
      the business and regulatory situation in Brazil to determine what actions
      should be taken with respect to the CEMAR investment.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <U>Report dated January
      30, 2002 - PPL</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 5.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Reported earnings for 2001, announced
      a 36% increase in the common stock dividend and revised the earnings forecast
      for core operations in 2002.</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 7.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Financial Statements and Exhibits</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Unaudited Consolidated Financial Information</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="91%" VALIGN="TOP" COLSPAN=3 HEIGHT=17> <U>Report dated January
      30, 2002 - PPL Energy Supply</U></TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17> Item 5.</TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Other Events</TD>
  </TR>
  <TR>
    <TD WIDTH="4%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="3%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="7%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="2%" VALIGN="TOP" HEIGHT=17></TD>
    <TD WIDTH="83%" VALIGN="TOP" HEIGHT=17> Reported updated information regarding
      the Brazilian and United Kingdom electric delivery businesses and summary
      consolidated income statement information for 2001.</TD>
  </TR>
</TABLE>
<BR><HR NOSHADE><BR>
<p align="center"><u><A NAME="SIGNATURES"></A>SIGNATURES</u></P>

<P ALIGN="JUSTIFY"></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 WIDTH="32%" VALIGN="TOP" COLSPAN=2> <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 WIDTH="32%" VALIGN="TOP" COLSPAN=2> <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 WIDTH="32%" VALIGN="TOP" COLSPAN=2> <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 WIDTH="32%" VALIGN="TOP" COLSPAN=2> <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: May 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>
</BODY>
</HTML>
[{"type": "10-Q", "sequence": "1", "filename": "ppl10q3-02.htm", "description": "PPL 10-Q 1ST QUARTER 2002", "secsgml_size_bytes": 816592}]
[{"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": "02643341"}, "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 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": "02643342"}, "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"}}, {"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": "02643343"}, "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": "02643344"}, "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"}}]
PPL Form 10-Q 1st Quarter 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
March 31, 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, 147,142,007
shares outstanding at April 30, 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 April 30, 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 PAGE LEFT BLANK INTENTIONALLY.)
PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION
PPL MONTANA, LLC
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 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
37
PPL Energy
      Supply, LLC and Subsidiaries
42
PPL Electric
      Utilities Corporation and Subsidiaries
45
PPL
      Montana, LLC and Subsidiaries
47
Item 3. Quantitative and
      Qualitative Disclosures About Market Risk
PPL
      Corporation and Subsidiaries
48
PPL Energy
      Supply, LLC and Subsidiaries
50
PPL Electric
      Utilities Corporation and Subsidiaries
52
PPL
      Montana, LLC and Subsidiaries
52
PART II. OTHER INFORMATION
Item 1.
      Legal Proceedings
53
Item 6.
      Exhibits and Reports on Form 8-K
53
SIGNATURES
54
COMPUTATION OF RATIO OF
      EARNINGS TO FIXED CHARGES
PPL
      Corporation and Subsidiaries
55
PPL Energy
      Supply, LLC and Subsidiaries
56
PPL Electric
      Utilities Corporation and Subsidiaries
57
PPL
      Montana, LLC and Subsidiaries
58
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.
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.
It requires no initial net investment or an initial net
      investment that is smaller than would be required for other types of contracts
      that would be expected to have a similar response to changes in market factors.
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.
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
- kilowatthours.
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
- megawatts.
NorthWestern Energy
- NorthWestern Energy, LLC, 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 Corporation 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, effective July 1, 2000, owns and operates U.S. generating
  facilities through various subsidiaries.
PPL Global
- PPL Global, LLC, a subsidiary of
  PPL Energy Supply, which invests in and develops domestic and international
  power projects, and owns and operates international power projects.
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 Montour
- PPL Montour, LLC, a fossil generating
  subsidiary of PPL Generation.
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.
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.
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.
SNCR
- selective non-catalytic reduction, a
  pollution control process.
SO
2
- sulfur dioxide.
Superfund
- federal environmental legislation
  that addresses remediation of contaminated sites; states also have similar acts.
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 have been 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 permits and
approvals; capital market conditions and decisions regarding capital structure;
  stock price performance; credit ratings; foreign exchange rates; state and federal
  regulatory developments; 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 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 March 31, 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
      March 31, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
Three Months Ended
March 31,
(Millions
      of Dollars, except per share data)
2002
2001
Operating Revenues
Retail electric and gas
$
847
$
956
Wholesale energy marketing and
      trading
275
468
Energy related businesses
153
142
Total
1,275
1,566
Operating Expenses
Operation
Fuel
146
187
Energy purchases
259
396
Other
191
184
Amortization of recoverable transition costs
53
71
Maintenance
62
54
Depreciation
62
66
Taxes, other than income
51
41
Energy related businesses
126
113
Write-down of international energy
      projects
6
Total
956
1,112
Operating Income
319
454
Other Income - net
5
6
Interest Expense
97
104
Income Before Income Taxes and
      Minority Interest
227
356
Income Taxes
62
126
Minority Interest
1
2
Income Before Cumulative Effect
      of a Change in Accounting Principle
164
228
Cumulative Effect of a Change in
      Accounting Principle
(150
)
Income Before Dividends on Preferred
      Securities
14
228
Dividends - Preferred Securities
17
6
Net Income (Loss)
$
(3
)
$
222
Earnings (Loss) Per Share of
      Common Stock
Basic
$
(0.02
)
$
1.53
Diluted
$
(0.02
)
$
1.52
Dividends Declared per Share
      of Common Stock
$
0.36
$
0.265
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)
Three Months Ended
March 31,
2002
2001
Net Cash Provided
      by (Used in) Operating Activities
$
(13
)
$
181
Cash Flows From Investing
      Activities
Expenditures for property,
      plant and equipment
(107
)
(108
)
Investment in generating
      assets and electric energy projects
(179
)
(163
)
Other investing activities
      - net
(17
)
(9
)
Net cash used in investing activities
(303
)
(280
)
Cash Flows From Financing
      Activities
Issuance of common stock
19
24
Deposit of funds for
      the retirement of long-term debt
(11
)
(5
)
Retirement of long-term
      debt
(78
)
(65
)
Payment of common and
      preferred dividends
(57
)
(44
)
Net decrease in short-term
      debt
(21
)
(22
)
Net cash used in financing activities
(148
)
(112
)
Net Decrease In Cash
      and Cash Equivalents
(464
)
(211
)
Cash and Cash Equivalents
      at Beginning of Period
950
480
Cash and Cash Equivalents
      at End of Period
$
486
$
269
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)
March 31,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
486
$
950
Accounts receivable (less
      reserve: 2002, $122; 2001, $121)
609
535
Unbilled revenues
199
248
Fuel, materials and supplies
      - at average cost
243
251
Prepayments
197
51
Deferred income taxes
85
77
Price risk management
      assets
138
124
Other
117
102
2,074
2,338
Investments
Investment in unconsolidated
      affiliates - at equity
586
586
Investment in unconsolidated
      affiliates - at cost
117
114
Nuclear plant decommissioning
      trust fund
289
276
Other
49
55
1,041
1,031
Property, Plant and
      Equipment - net
Electric plant in service
Transmission and distribution
2,633
2,565
Generation
2,466
2,464
General
312
310
5,411
5,339
Construction work in
      progress
262
181
Nuclear fuel
116
127
Electric plant
5,789
5,647
Gas and oil plant
199
197
Other property
104
103
6,092
5,947
Regulatory and Other
      Noncurrent Assets
Recoverable transition
      costs
2,119
2,172
Other
1,042
1,086
3,161
3,258
$
12,368
$
12,574
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)
March 31,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Short-term debt
$
112
$
118
Long-term debt
579
498
Above market NUG contracts
76
87
Accounts payable
484
558
Taxes
168
146
Interest
67
61
Dividends
64
51
Price risk management liabilities
135
106
Other
194
213
1,879
1,838
Long-term Debt
4,940
5,081
Deferred Credits and Other Noncurrent
      Liabilities
Deferred income taxes and investment
      tax credits
1,504
1,449
Above market NUG contracts
409
493
Other
876
911
2,789
2,853
Commitments and Contingent Liabilities
Minority Interest
39
38
Company-obligated Mandatorily
      Redeemable Preferred Securities
of Subsidiary Trusts Holding Solely Company Debentures
825
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
1,975
1,956
Treasury stock
(836
)
(836
)
Earnings reinvested
967
1,023
Accumulated other comprehensive
      loss
(255
)
(251
)
Capital stock expense and other
(39
)
(37
)
1,814
1,857
$
12,368
$
12,574
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)
For the Three Months
Ended March 31,
2002
2001
Common stock at beginning of period
$
2
$
2
Common stock at end of period
2
2
Capital in excess of par value
      at beginning of period
1,956
1,895
Common stock issued (a)
19
24
Capital in excess of par value
      at end of period
1,975
1,919
Treasury stock at beginning of
      period
(836
)
(836
)
Treasury stock at end of period
(836
)
(836
)
Earnings reinvested at beginning
      of period
1,023
999
Net income (loss) (b)
(3
)
222
Cash dividends declared on common
      stock
(53
)
(39
)
Earnings reinvested at end of period
967
1,182
Accumulated other comprehensive
      loss at beginning of period
(251
)
(36
)
Foreign currency translation adjustments
      (b)
8
(25
)
Unrealized loss on available-for-sale
      securities (b)
(1
)
(2
)
Unrealized loss on qualifying derivatives
      (b) (c)
(11
)
(190
)
Accumulated other comprehensive
      loss at end of period
(255
)
(253
)
Capital stock expense and other
      at beginning of period
(37
)
(12
)
Other
(2
)
Capital stock expense and other
      at end of period
(39
)
(12
)
Total Shareowners' Common Equity
$
1,814
$
2,002
Common stock shares at beginning
      of period (a)
146,580
145,041
Common stock issued through the
      ESOP, DRIP, ICP, ICPKE and structured equity program
542
582
Common stock shares at end of period
147,122
145,623
(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)
$
(3
)
$
222
Other comprehensive income (loss):
Foreign currency translation adjustments,
      net of tax (benefit) of $(6), $(11)
8
(25
)
Unrealized loss on available-for-sale securities,
      net of tax (benefit) of $0, $(2)
(1
)
(2
)
Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(7), $(126)
(11
)
(190
)
Total other comprehensive loss
(4
)
(217
)
Comprehensive Income (Loss)
$
(7
)
$
5
(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
      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 March 31, 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
      March 31, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT
      OF INCOME
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
Three Months Ended
March 31,
(Millions of
      Dollars)
2002
2001
Operating Revenues
Wholesale energy marketing and
      trading
$
637
$
790
Retail electric and gas
152
251
Energy related businesses
151
136
Total
940
1,177
Operating Expenses
Operation
Fuel
112
139
Energy purchases
244
375
Other operation and maintenance
190
173
Transmission
7
19
Depreciation
37
43
Taxes, other than income
9
12
Energy related businesses
115
94
Write-down of international energy
      projects
6
Total
720
855
Operating Income
220
322
Other Income - net
9
14
Interest Expense
18
23
Income Before Income Taxes and
      Minority Interest
211
313
Income Taxes
65
110
Minority Interest
1
2
Income Before Cumulative Effect
      of a Change in Accounting Principle
145
201
Cumulative Effect of a Change in
      Accounting Principle
(150
)
Net Income (Loss)
$
(5
)
$
201
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)
Three Months Ended
March 31,
2002
2001
Net Cash Provided by Operating
      Activities
$
105
$
401
Cash Flows From Investing Activities
Expenditures for property, plant
      and equipment
(70
)
(77
)
Investment in generating assets
      and electric energy projects
(179
)
(163
)
Net (increase) decrease in notes
      receivable from affiliates
(144
)
669
Other investing activities - net
(18
)
(3
)
Net cash provided by (used in)
      investing activities
(411
)
426
Cash Flows From Financing Activities
Contributions from Member
1
Distributions to Member
(221
)
(193
)
Net decrease in short-term debt
(21
)
(115
)
Net decrease in short-term debt
      payable to affiliates
(513
)
Net cash used in financing activities
(241
)
(821
)
Net Increase (Decrease) in Cash
      and Cash Equivalents
(547
)
6
Cash and Cash Equivalents at Beginning
      of Period
832
130
Cash and Cash Equivalents at End
      of Period
$
285
$
136
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)
March 31,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
285
$
832
Accounts receivable (less reserve:
      2002, $102; 2001, $100)
355
341
Unbilled revenues
91
114
Accounts receivable from affiliated
      companies
103
113
Notes receivable from affiliated
      companies
449
305
Fuel, materials and supplies -
      at average cost
209
209
Prepayments
62
39
Price risk management assets
134
123
Deferred income taxes
21
17
Other
49
37
1,758
2,130
Investments
Investment in unconsolidated affiliates
      - at equity
586
586
Investment in unconsolidated affiliates
      - at cost
117
114
Note receivable from affiliated
      companies
90
90
Nuclear plant decommissioning trust
      fund
289
276
Other
5
7
1,087
1,073
Property, Plant and Equipment
      - net
Electric plant in service
Transmission and distribution
521
465
Generation
2,466
2,464
General
120
122
3,107
3,051
Construction work in progress
228
146
Nuclear fuel
116
127
Electric plant
3,451
3,324
Gas and oil plant
24
24
Other property
71
71
3,546
3,419
Other Noncurrent Assets
503
547
$
6,894
$
7,169
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)
March 31,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Short-term debt
$
112
$
118
Long-term debt
24
24
Accounts payable
422
493
Accounts payable to affiliated
      companies
23
47
Above market NUG contracts
76
87
Wholesale energy commitments
7
13
Taxes
89
102
Collateral on PLR energy supply
      to affiliate
56
Deferred revenue on PLR energy
      supply to affiliate
12
11
Price risk management liabilities
129
97
Other
147
152
1,097
1,144
Long-term Debt
755
737
Deferred Credits and Other Noncurrent
      Liabilities
Deferred income taxes and investment
      tax credits
130
55
Above market NUG contracts
409
493
Wholesale energy commitments
63
65
Nuclear plant decommissioning
299
294
Deferred revenue on PLR energy
      supply to affiliate
78
79
Other
282
292
1,261
1,278
Commitments and Contingent Liabilities
Minority Interest
39
38
Member's Equity
3,742
3,972
$
6,894
$
7,169
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)
For the Three Months Ended
March 31,
2002
2001
Member's Equity at beginning of
      period
$
3,972
$
2,577
Member contributions
1
920
Net income (loss) (a)
(5
)
201
Other comprehensive income (loss),
      net of tax:
Foreign currency translation adjustments
      (a)
8
(25
)
Unrealized loss on qualifying derivatives
      (a) (b)
(13
)
(186
)
Distributions to Member
(221
)
(232
)
Member's Equity at end of period
$
3,742
$
3,255
(a) Statement of Comprehensive
      Income:
Net income (loss)
$
(5
)
$
201
Other comprehensive income (loss):
Foreign currency translation adjustments,
      net of tax (benefit) of $(6), $(11)
8
(25
)
Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(9), $(124)
(13
)
(186
)
Total other comprehensive loss
(5
)
(211
)
Comprehensive Loss
$
(10
)
$
(10
)
(b)
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 March 31, 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 March 31, 2002 and 2001.
CONDENSED CONSOLIDATED STATEMENT
      OF INCOME
PPL Electric Utilities Corporation
      and Subsidiaries
(Unaudited)
(Millions of
      Dollars)
Three Months Ended
March 31,
2002
2001
Operating Revenues
Retail electric
$
646
$
639
Wholesale electric
49
55
Energy related businesses
2
6
Total
697
700
Operating Expenses
Operation
Energy purchases
423
379
Other
55
59
Amortization of recoverable transition
      costs
53
71
Maintenance
11
13
Depreciation
23
23
Taxes, other than income
41
28
Energy related businesses
2
6
Total
608
579
Operating Income
89
121
Other Income - net
5
4
Interest Expense
56
62
Income Before Income Taxes
38
63
Income Taxes
12
23
Income Before Dividends on Preferred
      Securities
26
40
Dividends - Preferred Securities
6
6
Net Income
$
20
$
34
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)
Three Months Ended
March 31,
2002
2001
Net Cash Provided by (Used in)
      Operating Activities
$
(106
)
$
36
Cash Flows From Investing Activities
Expenditures for property, plant
      and equipment
(35
)
(26
)
Net (increase) decrease in notes
      receivable from affiliates
275
(80
)
Other investing activities - net
3
(10
)
Net cash provided by (used in)
      investing activities
243
(116
)
Cash Flows From Financing Activities
Retirement of long-term debt
(68
)
(65
)
Deposit of funds for the retirement
      of long-term debt
(11
)
(5
)
Payment of common and preferred
      dividends
(25
)
(22
)
Net decrease in short-term debt
(4
)
Net cash used in financing activities
(104
)
(96
)
Net Increase (Decrease) in Cash
      and Cash Equivalents
33
(176
)
Cash and Cash Equivalents at Beginning
      of Period
79
267
Cash and Cash Equivalents at End
      of Period
$
112
$
91
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)
March 31,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
112
$
79
Accounts receivable (less reserve:
      2002, $19; 2001, $19)
210
178
Unbilled revenues
105
131
Accounts receivable from affiliated
      companies
31
18
Notes receivable from affiliated
      companies
75
350
Income tax receivable
37
36
Fuel, materials and supplies -
      at average cost
27
27
Prepayments
125
4
Prepayment on PLR energy supply
      from affiliate
12
11
Deferred income taxes
41
41
Collateral on PLR energy supply
      from affiliate
56
Other
23
8
854
883
Investments
32
35
Property, Plant and Equipment
      - net
Electric plant in service
Transmission and distribution
2,112
2,100
General
186
182
2,298
2,282
Construction work in progress
32
32
Electric plant
2,330
2,314
Other property
4
4
2,334
2,318
Regulatory and Other Noncurrent
      Assets
Recoverable transition costs
2,119
2,172
Prepayment on PLR energy supply
      from affiliate
78
79
Other
433
434
2,630
2,685
$
5,850
$
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)
March 31,
2002
December 31,
2001
Liabilities and Equity
Current Liabilities
Long-term debt
$
294
$
274
Accounts payable
30
34
Accounts payable to affiliated
      companies
124
122
Taxes
101
74
Interest
20
34
Dividends
6
6
Other
40
40
615
584
Long-term Debt
3,097
3,185
Deferred Credits and Other Noncurrent
      Liabilities
Deferred income taxes and investment
      tax credits
759
757
Other
115
132
874
889
Commitments and Contingent Liabilities
Company-obligated Mandatorily
      Redeemable Preferred Securities
of Subsidiary Trusts Holding Solely
      Company Debentures
250
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
333
332
Capital stock expense and other
(16
)
(16
)
932
931
$
5,850
$
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)
For the Three Months Ended
March 31,
2002
2001
Common stock at beginning of period
$
1,476
$
1,476
Common stock at end of period
1,476
1,476
Additional paid-in capital at beginning
      of period
51
55
Additional paid-in capital at end
      of period
51
55
Treasury stock at beginning of
      period
(912
)
(632
)
Treasury stock at end of period
(912
)
(632
)
Earnings reinvested at beginning
      of period
332
277
Net income (b)
20
34
Cash dividends declared on common
      stock
(19
)
(7
)
Earnings reinvested at end of period
333
304
Capital stock expense and other
      at beginning of period
(16
)
(16
)
Capital stock expense and other
      at end of period
(16
)
(16
)
Total Shareowner's Common Equity
$
932
$
1,187
Common stock shares at beginning
      of period (a)
78,030
102,230
Common stock shares at end of period
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. PPL Electric's
      net income approximates comprehensive income.
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 March 31, 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 March 31, 2002 and
      2001.
CONDENSED CONSOLIDATED
      STATEMENT OF INCOME
PPL Montana, LLC and
      Subsidiaries
(Unaudited)
(Millions
      of Dollars)
Three Months Ended
March 31,
2002
2001
Operating Revenues
Wholesale energy marketing
      and trading
$
66
$
182
Other
1
1
Total
67
183
Operating Expenses
Operation
Fuel
8
9
Energy purchases
5
17
Other operation and maintenance
23
20
Transmission
2
3
Depreciation
3
3
Taxes, other than income
4
3
Total
45
55
Operating Income
22
128
Other Income - net
1
Interest Expense
1
2
Income Before Income
      Taxes
21
127
Income Taxes
8
50
Net Income
$
13
$
77
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)
Three Months Ended
March 31,
2002
2001
Net Cash Provided by Operating
      Activities
$
11
$
117
Cash Flows From Investing Activities
Expenditures for property, plant
      and equipment
(4
)
(7
)
Net cash used in investing activities
(4
)
(7
)
Cash Flows From Financing Activities
Repayments on revolving line of
      credit
(14
)
Distribution to Member
(100
)
Net cash used in financing activities
(14
)
(100
)
Net Increase (Decrease) in Cash
      and Cash Equivalents
(7
)
10
Cash and Cash Equivalents at Beginning
      of Period
24
79
Cash and Cash Equivalents at End
      of Period
$
17
$
89
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)
March 31,
2002
December 31,
2001
Assets
Current Assets
Cash and cash equivalents
$
17
$
24
Accounts receivable (less reserve: 2002,
      $47; 2001, $47)
26
22
Accounts receivable from joint owners
5
6
Accounts receivable from affiliated companies
2
4
Fuel, materials and supplies - at average
      cost
6
6
Price risk management assets
8
14
Deferred income taxes
10
4
Prepayments and other
6
4
80
84
Noncurrent Assets
Property, plant and equipment - net
426
425
Deferred income taxes
17
20
Other
108
122
551
567
$
631
$
651
Liabilities and Equity
Current Liabilities
Accounts payable
$
32
$
36
Accounts payable to Member
16
11
Revolving line of credit
30
44
Accrued expenses
15
14
Price risk management liabilities
3
4
Wholesale energy commitments
7
13
103
122
Noncurrent Liabilities
Employee benefit obligations
17
16
Wholesale energy commitments
63
65
Other
28
27
108
108
Commitments and Contingent Liabilities
Member's Equity
420
421
$
631
$
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)
For the Three Months Ended
March 31,
2002
2001
Member's Equity at beginning of
      period
$
421
$
453
Net income (a)
13
77
Distribution to Member
(100
)
Other comprehensive loss, net of
      tax
Unrealized loss on qualifying derivatives
      (a) (b)
(14
)
(182
)
Member's Equity at end of period
$
420
$
248
(a) Statement of Comprehensive
      Income:
Net income
$
13
$
77
Other comprehensive loss:
Unrealized loss on qualifying derivatives,
      net of tax (benefit) of $(9), $(119)
(14
)
(182
)
Total other comprehensive loss
(14
)
(182
)
Comprehensive Loss
$
(1
)
$
(105
)
(b)
Includes a $(156) 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.
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 March 31, 2001 and December 31,
      2001 financial statements have been reclassified to conform to the presentation
      in the March 31, 2002 financial statements.
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, El Salvador and
      Brazil.
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 be
      consistent 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 8 for a discussion of the PLR contract 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
PPL Energy Supply
Three Months
Three Months
Ended March 31,
Ended March 31,
2002
2001
2002
2001
Income Statement Data
Revenues from external customers
Supply
$
429
$
632
$
799
$
1,014
International
141
163
141
163
Delivery (a)
705
771
1,275
1,566
940
1,177
Net Income (Loss)
Supply
116
161
140
181
International (b)
(145
)
20
(145
)
20
Delivery (a)
26
41
$
(3
)
$
222
$
(5
)
$
201
PPL
PPL Energy Supply
March 31,
December 31,
March 31,
December 31,
2002
2001
2002
2001
Balance Sheet Data
Total assets
Supply
$
4,852
$
5,038
$
5,398
$
5,730
International
1,496
1,439
1,496
1,439
Delivery (a)
6,020
6,097
$
12,368
$
12,574
$
6,894
$
7,169
(a)
The Delivery segment is not a component of PPL Energy Supply.
(b)
The International segment includes the "Cumulative Effect
          of a Change in Accounting Principle" recorded in March 2002. See Note
          10 for additional information.
Investment in Unconsolidated Affiliates - at Equity
(PPL and PPL Energy Supply)
Investments in unconsolidated affiliates accounted for
      under the equity method by PPL and PPL Energy Supply were $586 million at
      both March 31, 2002 and December 31, 2001. The most significant investment
      was PPL Global's investment in WPDH Limited, which was $345 million at March
      31, 2002 and $328 million at December 31, 2001. At March 31, 2002, PPL Global
      had a 51% equity ownership interest in WPDH Limited, but shared joint control
      with Mirant. 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 and PPL Energy Supply's consolidated financial
      statements (millions of dollars):
Three Months
Ended March 31,
2002
2001
Income Statement Data
Revenues
$
178
$
176
Operating Income
97
87
Net Income
29
79
March 31,
December 31,
2002
2001
Balance Sheet Data
Current Assets
$
1,224
$
612
Noncurrent Assets
4,656
5,517
Current Liabilities
448
502
Noncurrent Liabilities
3,885
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 March 31,
2002
2001
(Millions of Dollars or
Thousands of Shares)
Income (Numerator)
Net Income - before cumulative
          effect
of a change in accounting principle
$
147
$
222
Cumulative effect of a change in
accounting principle
(150
)
Net Income (Loss)
$
(3
)
$
222
Shares (Denominator)
Shares for Basic EPS
146,753
145,317
Add: Incremental shares
Stock options
259
858
Stock units
79
69
Shares for Diluted EPS
147,091
146,244
Basic EPS
Net Income - before cumulative
          effect
of a change in accounting principle
$
1.00
$
1.53
Cumulative effect of a change in
accounting principle
(1.02
)
Net Income (Loss)
$
(0.02
)
$
1.53
Diluted EPS
Net Income - before cumulative
          effect
of a change in accounting principle
$
1.00
$
1.52
Cumulative effect of a change in
accounting principle
(1.02
)
Net Income (Loss)
$
(0.02
)
$
1.52
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 months ended March 31, 2002.
Stock options to purchase 879,000 PPL common shares for
      the three months ended March 31, 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 and Financing Activities
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 2002 and PPL Energy
      Supply maintains two credit facilities: a $600 million 364-day credit facility
      maturing in June 2002 and a $500 million three-year credit facility maturing
      in June 2004. At March 31, 2002, no borrowings were outstanding under any
      of these facilities. PPL Electric and PPL Energy Supply have the ability
      to cause the lenders to issue letters of credit under these facilities.
      At March 31, 2002, $1 million of letters of credit were outstanding under
      PPL Electric's facility and $30 million of letters of credit were outstanding
      under PPL Energy Supply's $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. The maturity
      date of this facility may be extended with the consent of the lenders. At
      March 31, 2002, PPL Montana had outstanding borrowings of $30 million and
      had outstanding letters of credit of $35 million under this facility. PPL
      Montana's $150 million credit facility was terminated in April 2002.
(PPL and PPL Electric)
PPL and PPL Electric also maintain letter of credit agreements
      for $4 million and $2 million, respectively, for the purpose of meeting
      minor letter of credit needs. At March 31, 2002, $2 million in letters of
      credit were outstanding for PPL and its subsidiaries. No letters of credit
      were outstanding for PPL Electric at March 31, 2002 under its agreement.
(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, 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, 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. As of March 31, 2002, PPL had issued $29 million of
      common stock under this program since its inception in December 2000.
In April 2002, PPL filed a universal shelf registration
      statement with the SEC for the issuance of up to $750 million in various
      securities. Subject to SEC registration of the securities and market conditions,
      PPL currently plans to issue approximately $200 million of PPL common stock
      during the second quarter of 2002 under this registration statement. PPL
      expects to use the proceeds of this issuance to retire other securities
      and to provide liquidity in support of its and its subsidiaries' general
      corporate activities.
(PPL and PPL Energy Supply)
At March 31, 2002 there was no commercial paper outstanding
     for PPL Energy Supply.  Some foreign subsidiaries of PPL Energy Supply had short-term,
     non-recourse borrowings from banks of $82 million as of March 31, 2002.
(PPL and PPL Electric)
In March 2002, PPL Electric deposited $11 million with
      its Mortgage Trustee for the purpose of retiring on May 1, 2002, all 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.
During the first quarter of 2002, PPL Transition Bond Company
      made principal payments on bonds totaling $68 million.
At March 31, 2002, there was no commercial paper
      or bank borrowings outstanding for PPL Electric.
In May 2002, pursuant to PPL Electric's instructions, the
      property trustee of PPL Capital Trust redeemed, at par value, all of the
      $100 million outstanding of the 8.20% Preferred Securities due 2027 that
      was previously issued by PPL Capital Trust.
Acquisitions, Development and Divestitures
(PPL and PPL Energy Supply)
Domestic Generation Project
In February 2002, PPL reached an agreement in principle
      with the Village of Freeport, New York, pursuant to which they would together
      construct a two-unit 88 MW combustion turbine power facility on Freeport
      property, part of which property would be leased to PPL by Freeport. The
      facility is projected to begin commercial operation in the summer of 2003.
      PPL and Freeport would each own one unit. The cost of PPL's unit is estimated
      to be approximately $50-$55 million. PPL also reached an agreement in principle
      in April 2002 with the Long Island Power Authority (LIPA) regarding a joint
      energy sales arrangement associated with the PPL unit for the first seven
      years of operation. These transactions are subject to approval of the respective
      governing boards, various regulatory approvals, and agreement on satisfactory
      definitive documentation.
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." Through April 30,
      2002, PPL Global made payments totaling $59 million related to the cancellation
      fees. PPL Global is currently in negotiations to reduce certain of the cancellation
      fees but cannot predict whether there will be any such reduction. Accordingly,
      at this time, PPL Global believes that the original estimate of the
      loss and the associated charges are still appropriate.
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. As a result of NorthWestern
      Energy's acquisition of Montana Power's electricity delivery business in
      the first quarter of 2002, the second agreement is now between PPL Montana
      and NorthWestern Energy. The second agreement requires PPL Montana to supply
      NorthWestern Energy's actual remaining customer load. This agreement will
      expire on the earlier of June 30, 2002 or when NorthWestern Energy's remaining
      customer load is zero. 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 March 31, 2002 was
      $70 million and is included on the Balance Sheet in "Deferred Credits and
      Other Noncurrent Liabilities - Other" for PPL and in "Wholesale energy
      commitments" for PPL Energy Supply and PPL Montana.
Beginning July 1, 2002, PPL EnergyPlus will sell 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, when its generation business
      was 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.
In the first quarter of 2002, PPL Energy Supply paid approximately
      $50 million to terminate 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."
      At March 31, 2002, the remaining liability associated with these above market
      NUG contracts was $485 million.
Commitments - Acquisitions and Development Activities
(PPL and PPL Energy Supply)
PPL Global and its subsidiaries have committed additional
      capital and extended loans to certain affiliates, joint ventures and partnerships
      in which they have an interest. At March 31, 2002, PPL Global and its subsidiaries
      had approximately $611 million of such commitments. The majority of these
      commitments were for the purchase of LM-6000 turbine generators from General
      Electric.
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, for which PPL has not yet been paid
      in full. 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 March 31, 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.
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 in the California markets, 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
      sales made in the Pacific Northwest, including sales made by PPL Montana.
      The FERC Administrative Law Judge assigned to this proceeding has recommended
      that no refunds be ordered for sales into the Pacific Northwest. The FERC
      presently is considering this recommendation.
PPL cannot predict whether, or the extent to which, any
      of its subsidiaries will be the target of any governmental investigation
      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.
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. 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. A trial has
      been scheduled for June 2002. At this time, PPL Montana cannot predict the
      ultimate outcome of this matter.
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 January 2002, PPL
      filed comments as requested by the Investigation Order. The Order does not
      suggest what, if any, action the PUC may take as a result of the investigation,
      other than considering possible changes to its competitive safeguards. While
      PPL EnergyPlus and PPL Electric have filed comments with the PUC as part
      of the investigation, they have taken the position that the PUC does not
      have jurisdiction to regulate the PJM capacity markets as those markets
      are for wholesale electricity transactions and, accordingly, are within
      the exclusive jurisdiction of the FERC. In addition, PPL EnergyPlus and
      PPL Electric believe that PPL EnergyPlus' actions under review were at all
      times lawful and consistent with the rules of the market. At this time,
      neither PPL EnergyPlus nor PPL Electric can predict the ultimate outcome
      of the proceedings related to the Market Monitor report or what action the
      PUC or other agencies or courts may take in this regard.
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.
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.
Proposed Montana Hydroelectric Initiative
(PPL,
      PPL Energy Supply and PPL Montana)
In January 2002, the Montana Secretary of State certified,
      in accordance with applicable statutes, that it had approved the form of
      a proposed Montana "Hydroelectric Security Act" initiative. The
      proposed initiative may be placed on the November 2002 statewide ballot
      if sufficient signatures are obtained prior to June 21, 2002. Among the
      stated purposes of the proposed 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 PPL Montana's hydroelectric dams either pursuant to a negotiated
      purchase or an acquisition at fair market value through the power of condemnation.
      At this time, PPL, PPL Energy Supply and PPL Montana cannot predict whether
      the proposed initiative will garner enough signatures for placement on the
      November 2002 statewide ballot, whether there will be a successful legal
      challenge to the initiative, 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. PPL Montana has declared its opposition to, and
      intends to vigorously oppose, the initiative.
Montana Hydroelectric License Contingencies
(PPL
      Energy Supply and 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.
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 possible use of SCR or SNCR 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. In this regard, the EPA is expected
      to develop 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, and the Region VIII office has issued such a request
      to PPL Montana's Corette plant. PPL and its subsidiaries have responded
      to the 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. In addition, in December 2001, a PPL Global subsidiary
      entered into a synthetic lease financing transaction for the development,
      construction and operation of its Lower Mt. Bethel combined cycle generating
      facility. 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. The PPL Global subsidiary has joined with the Pennsylvania DEP
      in opposing this appeal.
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 lowered 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. In connection with the July 1, 2000 corporate
      realignment, PPL Electric's generation facilities were transferred to subsidiaries
      of PPL Generation. As of March 31, 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 March 31, 2002.
At March 31, 2002, PPL Electric and PPL Gas Utilities had
      accrued approximately $5 million and $11 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 limitatons 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 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.
(PPL, PPL Energy Supply 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 financing subsidiary, PPL Capital Funding,
      which at March 31, 2002, consisted of $1.3 billion of medium-term notes.
      At March 31, 2002, PPL has guaranteed certain obligations
      under power purchase and sales agreements of PPL EnergyPlus ($61 million)
      and certain obligations of other subsidiaries ($127 million). As of March
      31, 2002, PPL Energy Supply had guaranteed certain obligations under power
      purchase and sales agreements of PPL EnergyPlus ($2 million) and certain
      obligations of other subsidiaries ($671 million).
(PPL Electric)
At March 31, 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 Contract
(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 months ended March 31, 2002, these purchases
      totaled $369 million, including nuclear decommissioning recovery and amortization
      of an up-front contract payment. For the three months ended March 31, 2001,
      these purchases totaled $334 million, including nuclear decommissioning
      recovery, under the previous PLR contract. These purchases are included
      in the Statement of Income as "Energy purchases" by PPL Electric and as
      "Wholesale energy marketing and trading" revenues by PPL Energy Supply.
Under the current PLR contracts, PPL Electric is required
      to make performance assurance deposits with PPL EnergyPlus when market prices
      exceed the contract collateral threshold. In January 2002, PPL Electric
      was required to tender a $56 million performance assurance deposit to PPL
      EnergyPlus. This payment 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 Electric will earn interest
      equal to the three-month LIBOR plus 3% on this deposit.
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 March 31,
      2002 and 2001, these NUG purchases totaled $43 million and $45 million,
      and are included in the Statement of Income as "Wholesale electric" revenues
      by PPL Electric, and as "Energy purchases" by PPL Energy Supply.
Brokering and Contract Management Agreement
(PPL
      Montana)
Under a 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 March 31, 2002 and 2001.
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
      March 31, 2002 and 2001 were $10 million and $32 million and are included
      in "Wholesale energy marketing and trading" revenues 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. During the three months ended March 31, PPL Services
      allocated the following charges to PPL Energy Supply, PPL Electric and PPL
      Montana (in millions):
PPL Energy
Supply
PPL Electric
PPL Montana
2002
2001
2002
2001
2002
2001
Direct expenses
$
20
$
16
$
14
$
17
$
1
$
1
Overhead costs
6
8
6
5
2
1
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 affiliated companies at March
      31, 2002 or December 31, 2001 and consequently had no intercompany interest
      in the first quarter of 2002. Intercompany interest, including capitalized
      interest, was $27 million for the three months ended March 31, 2001.
PPL Energy Supply, through its financing subsidiary PPL
      Investment Corporation, had notes receivable from affiliates of PPL totaling
      $539 million and $395 million at March 31, 2002 and December 31, 2001. Interest
      earned on loans to affiliated companies was $5 million and $8 million for
      the three months ended March 31, 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 March 31, 2002 was $75 million. Intercompany interest income was
      $4 million for the three months ended March 31, 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. Additionally, PPL enters into financial contracts
      to hedge fluctuations in the market value of existing debt issuances. These
      contracts range in maturity through 2006. For the three months ended March
      31, 2002 and 2001, PPL did not recognize any gains or losses from the ineffective
      portion of fair value hedges. For the three months ended March 31, 2002,
      PPL Energy Supply recognized an immaterial amount 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 range in maturity through 2005. 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, excluding those
      forecasted transactions related to the payment of variable interest on existing
      financial instruments, range in maturity through 2003.
At March 31, 2002, PPL's unrealized gain on qualifying
      derivatives included in accumulated other comprehensive income was $12 million,
      an $11 million decrease from the December 31, 2001 unrealized gain on qualifying
      derivatives of $23 million. Also, at March 31, 2002, PPL Energy Supply's
      unrealized gain on qualifying derivatives included in accumulated other
      comprehensive income was $33 million, a $13 million decrease from the December
      31, 2001 unrealized gain on qualifying derivatives of $46 million. Finally
      at March 31, 2002, PPL Montana's unrealized gain on qualifying derivatives
      included in accumulated other comprehensive income was $19 million, a $14
      million decrease from the December 31, 2001 unrealized gain on qualifying
      derivatives of $33 million.
The after-tax impact on the financial statements of PPL
      and PPL Energy Supply resulting from cash flow hedge ineffectiveness for
      the three months ended March 31, 2002 was a loss of $2 million and was insignificant
      for the three months ended March 31, 2001.
As a result of an unplanned outage in 2001 and changes
      in economic conditions, certain cash flow hedges were discontinued, resulting
      in the following financial statement impact (millions of dollars):
Three Months
Ended March 31,
2002
2001
PPL
$
1
$
(29
)
PPL Energy Supply
1
(29
)
As of March 31, 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 $1 million, $4 million,
      and $4 million for PPL, PPL Energy Supply and PPL Montana, respectively.
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 is
      effective April 1, 2002. PPL has determined that there will be no financial
      statement impact of the revised guidance on fuel contracts classified as
      normal.
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. 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):
March 31, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Emission allowances
$
48
$
36
Land and transmission
rights
245
$
87
247
$
86
Licenses and other
32
4
31
4
Total
$
325
$
91
$
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 for the
      three months ended March 31, 2002. Estimated amortization expense for the
      years 2003 through 2007 is $4 million per year.
(PPL Energy Supply)
The carrying amount and the accumulated amortization of
      acquired intangible assets were as follows (millions of dollars):
March 31, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Emission allowances
$
48
$
36
Land and transmission
rights
44
$
10
44
$
10
Licenses and other
32
4
31
4
Total
$
124
$
14
$
111
$
14
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 months ended March 31, 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):
March 31, 2002
December 31, 2001
Carrying
Amount
Accumulated
Amortization
Carrying
Amount
Accumulated
Amortization
Land and
transmission rights
$
200
$
76
$
202
$
75
Intangible assets are included in "Regulatory and
      Other Noncurrent Assets - Other" on the Balance Sheet.
Amortization expense was approximately $1 million for the
      three months ended March 31, 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):
March 31, 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 months
      ended March 31, 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:
PPL Energy Supply
PPL
(Millions of Dollars)
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
3
3
3
Impairment losses
(150
)
(150
)
(150
)
Balance as of
March 31, 2002
$
84
$
115
$
199
$
55
$
254
(a)
The Delivery segment is not
          part of PPL Energy Supply.
Goodwill is included in "Noncurrent Assets - Other"
      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
PPL Energy Supply
Three Months
Ended March 31,
Three Months
Ended March 31,
(Millions of Dollars,
except per share data)
2002
2001
2002
2001
Reported net income
(loss)
$
(3
)
$
222
$
(5
)
$
201
Add back: Goodwill
amortization
3
3
Add back: Equity
method goodwill
amortization
1
1
Adjusted net income
(loss)
$
(3
)
$
226
$
(5
)
$
205
Basic EPS:
Reported net income
(loss)
$
(0.02
)
$
1.53
Goodwill amortization
0.02
Equity method
goodwill
amortization
0.01
Adjusted net income
(loss)
$
(0.02
)
$
1.56
Diluted EPS:
Reported net income
(loss)
$
(0.02
)
$
1.52
Goodwill amortization
0.02
Equity method
goodwill
amortization
0.01
Adjusted net income
(loss)
$
(0.02
)
$
1.55
(PPL Electric and PPL Montana)
PPL Electric and PPL Montana had no goodwill at March 31,
      2002 and December 31, 2001. 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 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 Statement 4, 44, and 64." The most relevant provision of SFAS 145 is
      the rescission of SFAS 4, 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.
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
  Global's remaining portion of its CEMAR investment, primarily related to its
  foreign currency translation adjustments (CTA) balance of $94 million, was not
  written-off as of March 31, 2002, because accounting guidance prohibits the
  inclusion of CTA in an impairment calculation where the assets are not held
  for disposal. PPL is working with CEMAR's creditors and governmental authorities
  in Brazil on a plan that could result in returning the company to financial
  stability. That plan includes a rate-increase request that is now being reviewed
  by regulators, and PPL expects that the process for the rate-increase request
  will reach conclusion in the third quarter of 2002. Because PPL has not exhausted
  all available avenues, including the pending rate request, to maximize the value
  of CEMAR, it has not yet made a decision to exit the investment. Should a decision
  be made to exit the investment, PPL would again assess impairment of the investment
  and would, most likely, record an additional impairment for the CTA balance,
  reduced by any operating losses recorded through the date of the impairment.
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. Consequently, CEMAR has notified the indenture agent, and in accordance
  with the indenture, the agent is expected to call a meeting of the holders of
  the debentures to hold a vote regarding the acceleration of the debentures.
  Unless three-fourths of the holders vote against acceleration, the agent will
  be obligated under the indenture to accelerate the debentures.
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 months ended March 31,
  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 (loss) and the related EPS were as follows:
Three Months Ended March
      31,
2002
2001
Net income (loss) (millions of
dollars)
$
(3
)
$
222
EPS - basic
$
(.02
)
$
1.53
EPS - diluted
$
(.02
)
$
1.52
Net income in 2002 was impacted by two unusual items as shown
  below. Refer to specific Notes to the Financial Statements for discussion of
  these items.
Three Months Ended March
      31,
(Millions of dollars)
2002
2001
Net income (loss) - actual
$
(3
)
$
222
Unusual items (net of tax):
SFAS 142 goodwill impairment
(Note 10)
(150
)
Write-down of investment in
CEMAR (Note 12)
(4
)
Net income from core operations
$
151
$
222
The earnings decline was primarily due to:
lower wholesale energy prices, particularly in the western
      U.S.;
lower earnings from international operations; and
lower electricity delivery sales, in part due to milder
      weather in the first quarter of 2002.
These earnings declines were partially offset by increased
  volume of wholesale energy sales in the western U.S., and improved earnings
  contributions from synfuel projects and mechanical contractor and engineering
  subsidiaries. Earnings also benefited from the termination of an energy purchase
  contract with a NUG. See Note 7 to the Financial Statements for additional information.
PPL expects that lower wholesale energy prices will adversely
  impact core earnings for the remainder of 2002. In addition, PPL expects that
  it will continue to incur quarterly operating losses from CEMAR, as it continues
  to consider ways to maximize the value of CEMAR. See Note 12 to the Financial
  Statements for information on PPL Global's investment in CEMAR.
Operating Revenues
Retail Electric and Gas
The increase (decrease) in retail revenues from electric and
  gas operations was attributable to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Retail Electric Revenue
PPL Electric
Electric
      delivery
$
(28
)
PLR
      electric generation supply
36
PPL EnergyPlus
Electric
      generation supply
(87
)
PPL Global
Electric
      delivery
(8
)
Other
(2
)
(89
)
Retail Gas Revenue
PPL Gas Utilities
(16
)
PPL EnergyPlus
(4
)
(20
)
Retail Electric and Gas Revenues
$
(109
)
The decrease in operating revenues from retail electric operations
  was primarily due to:
lower net supply revenues (caused by the expiration of
      certain PPL EnergyPlus retail contracts, partially offset by increased revenues
      by PPL Electric as a PLR);
lower domestic delivery revenues, due to a decrease in
      deliveries of electricity, impacted by milder weather; and
decreased PPL Global international electric delivery revenues,
      primarily due to lower CEMAR revenues.
Both PPL Gas Utilities and PPL EnergyPlus experienced lower
  retail gas revenues in the three months ended March 31, 2002 compared with the
  same period in 2001. These decreases were primarily due to milder weather.
Wholesale Energy Marketing and Trading
The decrease in revenues from wholesale energy marketing and
  trading activities was attributable to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Eastern U.S. markets
Bilateral/Spot market
$
(47
)
Cost-based
(2
)
Gas & oil
(48
)
(97
)
Western U.S. markets
(96
)
$
(193
)
The decrease in eastern U.S. markets was primarily due to lower
  bilateral/spot market sales and lower gas and oil trading activity. (Energy
  purchases also decreased in 2002 compared with 2001. Refer to "Energy Purchases"
  for more information.)
The decrease in western U.S. markets 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 7 to the Financial Statements for further
  discussion on the California situation.
Fuel
Fuel costs decreased by $41 million for the three months ended
  March 31, 2002, compared with the same period in 2001.
Electric fuel costs decreased by $28 million in the first quarter
  of 2002 compared with the same period in 2001. This decrease was attributable
  to lower generation by oil/gas-fired and coal-fired stations, resulting from
  a decrease in electricity sales because of milder weather, the expiration of
  certain PPL EnergyPlus retail contracts and accelerated timing of annual overhaul
  work at the Montour generating station.
The cost of natural gas and propane decreased by $13 million
  for the three months ended March 31, 2002, compared with the same period in
  2001. The decrease reflects lower volumes due to milder weather, as well as
  lower off-system gas prices.
Energy Purchases
The increase (decrease) in energy purchases was attributable
  to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Domestic
Eastern U.S. markets
$
(125
)
Western U.S. markets
(14
)
International
2
$
(137
)
The decrease in eastern U.S. markets was attributable to lower
  purchases of gas, due to lower volumes of gas trading activity, and lower wholesale
  prices for electric energy purchases. Eastern U.S. market energy purchases also
  reflect a $25 million benefit from the termination of an energy purchase contract
  with a NUG. See Note 7 to the Financial Statements for additional information.
  The decrease in western U.S. markets was due to lower wholesale prices for electric
  energy purchases.
Other Operation Expenses
Other operation expenses increased by $7 million for the three
  months ended March 31, 2002, compared to the same period in 2001. This increase
  was primarily due to higher administrative and general expenses, offset by a
  payment made in March 2001 to Duke Energy Trading and Marketing, to release
  their obligation to perform certain services related to the purchase and sale
  of gas and energy during commercial operation of the Griffith plant.
Amortization of Recoverable Transition Costs
Amortization of recoverable transition costs decreased by $18
  million during the three months ended March 31, 2002, compared with the same
  period in 2001. This decrease was primarily due to 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.
  Also contributing to the decrease were lower billed CTC revenues in 2002 and
  changes in amortization of CTC deferrals.
Maintenance Expenses
Maintenance expenses increased by $8 million for the three
  months ended March 31, 2002, compared with the same period in 2001. This increase
  was primarily due to higher refueling outage and non-outage costs at the Susquehanna
  generating station, as well as accelerated timing of annual overhaul work at
  the Montour generating station.
Taxes, Other Than Income
Taxes, other than income, increased by $10 million during the
  three months ended March 31, 2002, compared with the same period in 2001. This
  change was 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 12 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 to reflect an
  additional write-down of PPL Global's investment in CEMAR.
Financing Costs
Interest expense decreased by $7 million during the three months
  ended March 31, 2002, compared with the same period in 2001. This decrease was
  primarily due to lower levels of short-term debt and retirements of mortgage
  bonds, transition bonds and medium-term notes, partially offset by interest
  paid on senior secured bonds, senior unsecured notes and other long-term debt
  issued after March 2001. The decrease also reflects a charge in 2001 to buy
  back a call option to re-market securities.
Dividends on preferred securities increased by $11 million
  during the three months ended March 31, 2002, compared with the same period
  in 2001. This increase was primarily due to dividends paid on the PEPS Units,
  issued in the second quarter of 2001.
Income Taxes
Income taxes decreased by $64 million for the three months
  ended March 31, 2002, compared to the same period in 2001, primarily due to
  a decrease in pre-tax book income and an increase in the amount of federal synfuel
  tax credits recognized.
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 10 to the Financial Statements for additional information on
  the adoption of SFAS 142.
Financial Condition
Liquidity
At March 31, 2002, PPL's net cash position was $374 million,
  which reflects $486 million in cash and cash equivalents less $112 million of
  short-term debt. This compares to PPL's net cash position of $832 million at
  December 31, 2001. The decrease in net cash position resulted from less cash
  provided from operating activities due primarily to the net effect of a $59
  million turbine cancellation payment, a $50 million payment to terminate an
  energy purchase contract with a NUG, mild weather and seasonal cash outflows
  that normally occur in the first quarter of each year (such as the prepayment
  of the Pennsylvania gross receipts tax). In addition, PPL incurred one-time
  acquisition costs of approximately $140 million for certain generation equipment
  it purchased from two lessor trusts in the first quarter of 2002. PPL and its
  subsidiaries also retired $78 million of securities in the first quarter of
  2002.
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
PPL, through PPL EnergyPlus, sells and purchases 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 March 31, 2002, PPL had net assets of $24 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).
PPL's trading contracts mature at various times through 2006.
  The following chart sets forth PPL's net fair market value of trading contracts
  as of March 31, 2002 (millions of dollars):
Gains/(Losses
)
Fair value of contracts outstanding
      at the
beginning of the year
$
0
Contracts realized or otherwise
      settled
during the period
(3
)
Fair value of new contracts when
      entered
into during the period
(2
)
Other changes in fair values
12
Fair value of contracts outstanding
      at
March 31, 2002
$
7
During the three months ended March 31, 2002, PPL reversed
  net gains of approximately $3 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 March 31, 2002, the net loss on PPL's trading activities
  expected to be recognized in earnings during the next three months is approximately
  $1 million.
The following chart segregates estimated fair values of PPL's
  trading portfolio at March 31, 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 Period-End
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
$
1
$
(1
)
$
Prices provided by other external
sources
8
2
10
Prices based on models and other
valuation methods
(3
)
(3
)
Fair value of contracts outstanding
at the end of the period
$
6
$
1
$
7
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
  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
  6 to the Financial Statements for information regarding recent acquisitions
  and development activities.
In January 2002, construction activities were completed on
  the Griffith project, located near Kingman, Arizona, and the facility began
  commercial operations. Griffith is currently in the process of applying for
  membership in the Southwest Reserve Sharing Group. Acceptance into the Southwest
  Reserve Sharing Group would allow Griffith to sell significantly more of the
  plant's generation at firm prices and require fewer reserves for the firm sales.
At March 31, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. The Sundance, University Park, Edgewood and Shoreham
  projects are expected to be in commercial operation in the summer of 2002.
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.
Cash Flow
Cash and cash equivalents decreased by $253 million more during
  the three months ended March 31, 2002, than during the same period in 2001.
  The reasons for this change were:
a $194 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayment of Pennsylvania
      gross receipts tax, a $59 million turbine cancellation payment, and a $50
      million payment to terminate an energy purchase contract with a NUG;
a $23 million increase in cash used in investing activities;
      and
a $36 million increase in cash used in financing activities,
      primarily due to higher retirements of long-term debt and an increase in
      dividend payments.
Environmental Matters
See Note 7 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.
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 months ended March 31,
  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 in 2002 was impacted by two unusual items as shown
  below. Refer to specific Notes to the Financial Statements for discussion of
  these items.
Three Months Ended March
      31,
(Millions of dollars)
2002
2001
Net income (loss) - actual
$
(5
)
$
201
Unusual items (net of tax):
SFAS 142 goodwill impairment
(Note 10)
(150
)
Write-down of investment in
CEMAR (Note 12)
(4
)
Net income from core operations
$
149
$
201
This earnings decline was primarily due to:
lower wholesale energy prices, particularly in the western
      U.S.;
lower earnings from international operations; and
lower supply revenues due to the expiration of certain
      PPL EnergyPlus retail contracts.
These earnings declines were partially offset by increased
  volume of wholesale energy sales in the western U.S., and improved earnings
  contributions from synfuel projects and mechanical contractor and engineering
  subsidiaries. Earnings also benefited from the termination of an energy purchase
  contract with a NUG. See Note 7 to the Financial Statements for additional information.
PPL Energy Supply expects that lower wholesale energy prices
  will adversely impact core earnings for the remainder of 2002. In addition,
  PPL Energy Supply expects that it will continue to incur quarterly operating
  losses from CEMAR, as it continues to consider ways to maximize the value of
  CEMAR. See Note 12 to the Financial Statements for additional information on
  PPL Global's investment in CEMAR.
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):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Domestic
Eastern U.S. markets
$
(57
)
Western U.S. markets
(96
)
$
(153
)
The decrease in wholesale energy marketing revenues was primarily
  due to lower western U.S. market revenues, resulting from 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 7 to the Financial Statements for further discussion
  on the California situation.
Also contributing to the decrease were lower eastern U.S. market
  revenues due to lower gas and oil trading activity.
Retail Electric and Gas
The decrease in revenues from retail electric and gas operations
  was attributable to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Retail Electric Revenue
Domestic electric supply
$
(87
)
International electric delivery
(8
)
(95
)
Retail Gas Revenue
(4
)
Retail Electric and Gas Revenues
$
(99
)
The decrease in operating revenues from retail electric operations
  was primarily due to:
the expiration of certain PPL EnergyPlus retail contracts;
      and
decreased PPL Global international electric delivery revenues,
      primarily due to lower CEMAR revenues.
PPL EnergyPlus experienced lower retail gas revenues in the
  three months ended March 31, 2002, compared with the same period in 2001 primarily
  due to milder weather.
Energy Related Businesses
Energy related businesses contributed $36 million and $42 million
  to operating income for the three months ended March 31, 2002 and 2001. The
  decrease of $6 million in 2002 from 2001 was primarily due to lower equity earnings,
  including PPL Global's investment in WPDH Limited. This decrease was offset
  by lower project development costs and improved earnings from the mechanical
  contracting and engineering subsidiaries.
Fuel
Fuel costs decreased by $27 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This decrease was attributable
  to lower generation by oil/gas-fired and coal-fired stations resulting from
  a decrease in sales of electricity because of milder weather, the expiration
  of certain PPL EnergyPlus retail contracts and accelerated timing of annual
  overhaul work at the Montour generating station.
Energy Purchases
The increase (decrease) in energy purchases was attributable
  to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Domestic
Eastern U.S. markets
$
(120
)
Western U.S. markets
(13
)
International
2
$
(131
)
The decrease in eastern U.S. markets was attributable to lower
  purchases of gas, due to lower volumes of gas trading activity and lower wholesale
  prices for electric energy purchases. Eastern U.S. market energy purchases also
  reflect a $25 million benefit from the termination of an energy purchase contract
  with a NUG. See Note 7 to the Financial Statements for additional information.
  The decrease in western U.S. markets was due to lower wholesale prices for electric
  energy purchases.
Other Operation and Maintenance
Other operation and maintenance expenses increased by $17 million
  for the three months ended March 31, 2002, compared to the same period in 2001.
  The increase was primarily due to higher allocations of corporate expenses from
  PPL Services, higher refueling outage and non-outage costs at the Susquehanna
  generating station and accelerated timing of annual overhaul work at the Montour
  generating station. These increases were partially offset by a payment made
  in March 2001 to Duke Energy Trading and Marketing to release their obligation
  to perform certain services related to the purchase and sale of gas and energy
  during commercial operation of the Griffith plant.
Transmission
Transmission expenses decreased by $12 million during the three
  months ended March 31, 2002, compared with the same period in 2001. This change
  was primarily due to a decrease in the unregulated retail sales of PPL EnergyPlus.
Depreciation
Depreciation decreased by $6 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This decrease was primarily
  due to PPL Global's write-down of CEMAR assets in December 2001, resulting in
  lower depreciation on those assets in 2002. In addition, PPL ceased amortization
  of goodwill effective January 1, 2002, in accordance with the adoption of SFAS
  142, as described in Note 10 to the Financial Statements.
Write-down of International Energy Projects
See Note 12 to the Financial Statements for additional information
  on a $6 million charge in the three months ended March 31, 2002 to reflect an
  additional write-down of PPL Global's investment in CEMAR.
Other Income - net
Other income decreased by $5 million during the three months
  ended March 31, 2002, compared with the same period in 2001. This decrease was
  due to a reduction in interest income from affiliated companies.
Interest Expense
Interest expense decreased by $5 million during the three months
  ended March 31, 2002, compared with the same period in 2001, primarily due to
  a decrease in short-term debt payable to affiliates. This decrease was partially
  offset by the interest paid on senior unsecured notes and other long-term debt
  issued after March 2001.
Income Taxes
Income taxes decreased by $45 million for the three months
  ended March 31, 2002, compared to the same period in 2001. This change was primarily
  due to a decrease in pre-tax book income and an increase in the amount of federal
  synfuel tax credits recognized.
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 10 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 6 to the Financial Statements for information regarding recent acquisitions
  and development activities.
In January 2002, construction activities were completed on
  the Griffith project, located near Kingman, Arizona, and the facility began
  commercial operations. Griffith is currently in the process of applying for
  membership in the Southwest Reserve Sharing Group. Acceptance into the Southwest
  Reserve Sharing Group would allow Griffith to sell significantly more of the
  plant's generation at firm prices and require fewer reserves for the firm sales.
At March 31, 2002, PPL Global had domestic generation projects,
  either announced or under development, which would provide more than 2,200 MW
  of additional generation. The Sundance, University Park, Edgewood and Shoreham
  projects are expected to be in commercial operation in the summer of 2002.
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.
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 months ended March 31,
  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 $14 million for the three months ended
  March 31, 2002, compared with the same period in 2001. This earnings decline
  was primarily due to:
lower delivery revenues, due to a decrease in delivery
      sales, in part due to milder weather;
higher energy purchase costs, partially due to the amortization
      of an up-front payment to PPL EnergyPlus under the PLR contract; and
additional PJM ancillary service expense.
These earnings decreases were partially offset by lower interest
  expense and lower operating costs.
Operating Revenues
Retail Electric
The increase (decrease) in revenues from retail electric operations
  was attributable to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Electric delivery
$
(28
)
PLR electric generation supply
36
Other
(1
)
$
7
The increase in operating revenues from retail electric operations
  was primarily due to:
higher PPL Electric revenues as a PLR resulting from the
      return of shoppers due to fewer alternate suppliers under the Customer Choice
      Act; partially offset by
lower delivery revenues, reflecting an 8% decrease in deliveries
      of electricity, in part due to milder weather.
Wholesale Electric
The decrease in revenues from wholesale electric activities
  was attributable to the following (millions of dollars):
Three Months Ended
March 31, 2002 vs. March 31, 2001
Sales to municipalities
$
(3
)
NUG purchased power sold to PPL
        EnergyPlus
(3
)
$
(6
)
The decrease in wholesale electric revenues was due to lower
  sales to municipalities and lower sales of power (purchased from NUGs) to PPL
  EnergyPlus.
Energy Purchases
Energy purchases increased by $44 million for the three months
  ended March 31, 2002, compared with the same period in 2001. This increase represents
  additional purchases needed to support a higher PLR load, due to the return
  of customers to PPL Electric as their PLR. In addition, effective January 1,
  2002, PPL Electric began incurring the cost of certain PJM ancillary services
  in connection with its new power supply contract with PPL EnergyPlus.
Amortization of Recoverable Transition Costs
Amortization of recoverable transition costs decreased by $18
  million during the three months ended March 31, 2002, compared with the same
  period in 2001. This decrease was primarily due to 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.
  Also contributing to the decrease were lower billed CTC revenues in 2002 and
  changes in amortization of CTC deferrals.
Taxes, Other Than Income
Taxes, other than income, increased by $13 million during the
  three months ended March 31, 2002, compared with the same period in 2001. The
  change was 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.
Interest Expense
Interest expense decreased by $6 million during the three months
  ended March 31, 2002, compared with the same period in 2001. While interest
  expense increased due to the issuance of senior secured bonds in the third quarter
  of 2001, this was more than offset by the retirements of first mortgage bonds
  and transition bonds, and a charge in 2001 to buy back a call option to re-market
  first mortgage bonds.
Income Taxes
Income taxes decreased by $11 million for the three months
  ended March 31, 2002, compared to the same period in 2001, primarily due to
  a decrease in pre-tax book income.
Financial Condition
Liquidity
At March 31, 2002, PPL Electric's net cash position was $112
  million, consisting entirely of cash and cash equivalents and no short-term
  debt. This compares to PPL Electric's net cash position of $79 million at December
  31, 2001. The increase in net cash position resulted from the net effect of
  a $275 million repayment of a notes receivable from an affiliate, offset by
  less cash provided from operating activities due primarily to mild weather,
  seasonal cash outflows that normally occur in the first quarter of each year
  (such as the prepayment of the Pennsylvania gross receipts tax) and by the retirement
  of $68 million of long-term debt.
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 8 to the Financial Statements.
Cash Flow
Cash and cash equivalents increased by $209 million more during
  the three months ended March 31, 2002, compared with the same period in 2001.
  The reasons for this change were:
a $142 million decrease in cash provided by operating activities,
      primarily due to a decrease in operating income, higher prepayments of Pennsylvania
      gross receipts tax and payment of collateral to PPL EnergyPlus under the
      power supply contract;
a $359 million increase in cash provided by investing activities,
      primarily due to a net repayment of loans by affiliated companies; and
an $8 million increase in cash used in financing activities,
      primarily due to retirements of long-term debt.
Environmental Matters
See Note 7 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.
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 three months ended March 31,
  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 $64 million for the three months ended
  March 31, 2002, compared with the same period in 2001, primarily due to lower
  wholesale prices in the western U.S. This earnings decline was partially offset
  by the increased volume of wholesale energy sales in the western U.S.
Operating Revenues
Wholesale energy marketing and trading revenues decreased by
  $116 million during the three months ended March 31, 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 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 7 to the Financial Statements for further discussion on the California
  situation.
Operating Expense
Operating expenses decreased by $10 million during the three
  months ended March 31, 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. This change was primarily due to decreased power
  costs in the first quarter of 2002, compared with the same period in 2001.
Generation increased by 57 million kWh during the three months
  ended March 31, 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 quarter 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 or 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 9 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 March 31, 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 $25 million. A similar adverse movement
  in market prices would have decreased the value of its hedge portfolio by approximately
  $128 million at March 31, 2002. However, the change in the value of the hedge
  portfolio would have been offset by an increase in the value of the underlying
  commodity, the electricity generated. In addition to commodity price risk, PPL's
  commodity positions are also subject to operational and event risks including,
  among others, increases in load demand 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, natural gas,
  oil and emission allowances. 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 March 31, 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 March 31, 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 $117 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 March 31, 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 $6 million. See Note 9 to the Financial Statements
  for a discussion of financial derivative instruments outstanding at March 31,
  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 March 31,
  2002, being the amount PPL would have to pay to terminate them, was $4 million.
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 March 31, 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 March 31, 2002, a hypothetical 10% increase in interest
  rates and a 10% decrease in equity prices would have resulted in an estimated
  $18 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. Therefore,
  PPL's securities price risk is expected to remain insignificant.
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 9 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 March 31, 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 $25 million. A
  similar adverse movement in market prices would have decreased the value of
  its hedge portfolio by approximately $128 million. However, the change in the
  value of the hedge portfolio would have been offset by an increase in the value
  of the underlying commodity, the electricity generated. In addition to commodity
  price risk, PPL Energy Supply's commodity positions are also subject to operational
  and event risks including, among others, increases in load demand 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,
  natural gas, oil and emission allowances. 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 Contract
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 March 31, 2002, PPL Energy Supply's potential annual exposure
  to increased interest expense, based on a 10% increase in interest rates, was
  estimated at $2 million.
PPL Energy Supply is also exposed to changes in the fair value
  of its debt portfolio. At March 31, 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 $12 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 March 31, 2002, PPL Energy Supply had not entered
  into any such instruments.
See Note 9 to the Financial Statements for a discussion of
  financial derivative instruments outstanding at March 31, 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 March 31,
  2002, being the amount PPL would have to pay to terminate them, was $4 million.
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 March 31, 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 March 31, 2002,
  a hypothetical 10% increase in interest rates and a 10% decrease in equity prices
  would have resulted in an estimated $18 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. Therefore,
  PPL Energy Supply's securities price risk is expected to remain insignificant.
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 March 31, 2002.
PPL Electric is also exposed to changes in the fair value of
  its debt portfolio. At March 31, 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 $68 million
  at March 31, 2002. A similar adverse movement in market prices would have decreased
  the value of the non-hedge portfolio by an insignificant amount at March 31,
  2002. However, the change in the value of the hedge portfolio would have been
  offset by an increase in the value of the underlying commodity, the electricity
  generated. In addition to commodity price risk, PPL Montana's commodity positions
  are also subject to operational and event risks including, among others, increases
  in load demand 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 $30 million in borrowings outstanding as of March 31, 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
Reference is made to 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 to the companies'
      "Notes to Condensed Consolidated Financial Statements" for additional
      information regarding various pending administrative and judicial proceedings
      involving regulatory, environmental and other matters.
Item 6. Exhibits
      and Reports on Form 8-K
(a)
Exhibits
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
(b)
Reports on Form 8-K
Report dated January
      4, 2002 - PPL
Item 5.
Other Events
Announced the scaling back of the
      generation expansion program in light of continuing declines in wholesale
      energy prices, and revised the earnings forecasts for 2001 and 2002.
Report dated January
      14, 2002 - PPL
Item 5.
Other Events
Announced the evaluation of the business
      and regulatory situation in Brazil to determine what actions should be taken
      with respect to the CEMAR investment.
Report dated January
      14, 2002 - PPL Energy Supply
Item 5.
Other Events
Announced that PPL was evaluating
      the business and regulatory situation in Brazil to determine what actions
      should be taken with respect to the CEMAR investment.
Report dated January
      30, 2002 - PPL
Item 5.
Other Events
Reported earnings for 2001, announced
      a 36% increase in the common stock dividend and revised the earnings forecast
      for core operations in 2002.
Item 7.
Financial Statements and Exhibits
Unaudited Consolidated Financial Information
Report dated January
      30, 2002 - PPL Energy Supply
Item 5.
Other Events
Reported updated information regarding
      the Brazilian and United Kingdom electric delivery businesses and summary
      consolidated income statement information for 2001.
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: May 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)