<PAGE>

                                                                  EXHIBIT 4(C)-4

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                          PP&L CAPITAL FUNDING, INC.,
                                    Issuer

                                      and

                             PP&L RESOURCES, INC.,
                                   Guarantor

                                      TO

                           THE CHASE MANHATTAN BANK,
                                    Trustee

                                   _________

                         Supplemental Indenture No. 3

                          Dated as of October 1, 1999

                         Supplemental to the Indenture
                         dated as of November 1, 1997



                Establishing a series of Securities designated
                          Medium-Term Notes, Series C
             limited in aggregate principal amount to $500,000,000

================================================================================
<PAGE>

          SUPPLEMENTAL INDENTURE No. 3, dated as of October 1, 1999 among PP&L
CAPITAL FUNDING, INC., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company"), PP&L RESOURCES, INC., a
corporation duly organized and existing under the laws of the Commonwealth of
Pennsylvania (herein called the "Guarantor"), and THE CHASE MANHATTAN BANK, a
New York banking corporation, as Trustee (herein called the "Trustee), under the
Indenture dated as of November 1, 1997 (hereinafter called the "Original
Indenture"), this Supplemental Indenture No. 3 being supplemental thereto.  The
Original Indenture and any and all indentures and instruments supplemental
thereto are hereinafter sometimes collectively called the "Indenture."

                   Recitals of the Company and the Guarantor

          The Original Indenture was authorized, executed and delivered by the
Company and the Guarantor to provide for the issuance by the Company from time
to time of its Securities (such term and all other capitalized terms used herein
without definition having the meanings assigned to them in the Original
Indenture), to be issued in one or more series as contemplated therein, and for
the Guarantee by the Guarantor of the payment of the principal, premium, if any,
and interest, if any, on such Securities.

          As contemplated by Sections 301 and 1201(f) of the Original Indenture,
the Company wishes to establish a series of Securities to be designated "Medium-
Term Notes, Series C" to be limited in aggregate principal amount (except as
contemplated in Section 301(b) of the Original Indenture) to $500,000,000, such
series of Securities to be hereinafter sometimes called "Series No. 3."

          As contemplated by Section 201 and 1402 of the Original Indenture, the
Guarantor wishes to establish the form and terms of the Guarantees to be
endorsed on the Securities of Series No. 3.

          The Company has duly authorized the execution and delivery of this
Supplemental Indenture No. 3 to establish the Securities of Series No. 3 and has
duly authorized the issuance of such Securities; the Guarantor has duly
authorized the execution and delivery of this Supplemental Indenture No. 3 and
has duly authorized its Guarantees of the Securities of Series No. 3; and all
acts necessary to make this Supplemental Indenture No. 3 a valid agreement of
the Company and the Guarantor, to make the Securities of Series No. 3 valid
obligations of the Company, and to make the Guarantees valid obligations of the
Guarantor, have been performed.

          NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE No. 3 WITNESSETH:

          For and in consideration of the premises and of the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities of Series No.
3, as follows:
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                                  ARTICLE ONE

                          Third Series of Securities

          Section 1.  There is hereby created a series of Securities designated
"Medium-Term Notes, Series C" and limited in aggregate principal amount (except
as contemplated in Section 301(b) of the Original Indenture) to $500,000,000.
The forms and terms of the Securities of Series No. 3 shall be established in an
Officer's Certificate of the Company, as contemplated by Section 301 of the
Original Indenture.

          Section 2.  The Company hereby agrees that, if the Company shall make
any deposit of money and/or Eligible Obligations with respect to any Securities
of Series No. 3, or any portion of the principal amount thereof, as contemplated
by Section 701 of the Indenture, the Company shall not deliver an Officer's
Certificate described in clause (z) in the first paragraph of said Section 701
unless the Company shall also deliver to the Trustee, together with such
Officer's Certificate, either:

          (A)  an instrument wherein the Company, notwithstanding the
     satisfaction and discharge of its indebtedness in respect of such
     Securities, shall assume the obligation (which shall be absolute and
     unconditional) to irrevocably deposit with the Trustee or Paying Agent such
     additional sums of money, if any, or additional Eligible Obligations
     (meeting the requirements of Section 701), if any, or any combination
     thereof, at such time or times, as shall be necessary, together with the
     money and/or Eligible Obligations theretofore so deposited, to pay when due
     the principal of and premium, if any, and interest due and to become due on
     such Securities or portions thereof, all in accordance with and subject to
     the provisions of said Section 701; provided, however, that such instrument
     may state that the obligation of the Company to make additional deposits as
     aforesaid shall be subject to the delivery to the Company by the Trustee of
     a notice asserting the deficiency accompanied by an opinion of an
     independent public accountant of nationally recognized standing, selected
     by the Trustee, showing the calculation thereof (which opinion shall be
     obtained at the expense of the Company); or

          (B)  an Opinion of Counsel to the effect that the Holders of such
     Securities, or portions of the principal amount thereof, will not recognize
     income, gain or loss for United States federal income tax purposes as a
     result of the satisfaction and discharge of the Company's indebtedness in
     respect thereof and will be subject to United States federal income tax on
     the same amounts, at the same times and in the same manner as if such
     satisfaction and discharge had not been effected.

                                  ARTICLE TWO

                               Form of Guarantee

          Guarantees to be endorsed on the Securities of Series No. 3 shall be
in substantially the form set forth below:

                                       2
<PAGE>

                              [FORM OF GUARANTEE]

          PP&L Resources, Inc., a corporation organized under the laws of the
Commonwealth of Pennsylvania (the "Guarantor", which term includes any successor
under the Indenture (the "Indenture") referred to in the Security upon which
this Guarantee is endorsed), for value received, hereby unconditionally
guarantees to the Holder of the Security upon which this Guarantee is endorsed,
the due and punctual payment of the principal of, and premium, if any, and
interest, if any, on such Security when and as the same shall become due and
payable, whether at the Stated Maturity, by declaration of acceleration, call
for redemption, or otherwise, in accordance with the terms of such Security and
of the Indenture. In case of the failure of PP&L Capital Funding, Inc., a
corporation organized under the laws of the State of Delaware (the "Company",
which term includes any successor under the Indenture), punctually to make any
such payment, the Guarantor hereby agrees to cause such payment to be made
punctually when and as the same shall become due and payable, whether at the
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise, and as if such payment were made by the Company.

          The Guarantor hereby agrees that its obligations hereunder shall be
absolute and unconditional irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of such Security or the Indenture,
any failure to enforce the provisions of such Security or the Indenture, or any
waiver, modification or indulgence granted to the Company with respect thereto,
by the Holder of such Security or the Trustee or any other circumstance which
may otherwise constitute a legal or equitable discharge or defense of a surety
or guarantor; provided, however, that notwithstanding the foregoing, no such
waiver, modification or indulgence shall, without the consent of the Guarantor,
increase the principal amount of such Security, or increase the interest rate
thereon, or change any redemption provisions thereof (including any change to
increase any premium payable upon redemption thereof) or change the Stated
Maturity thereof.

          The Guarantor hereby waives the benefits of diligence, presentment,
demand for payment, any requirement that the Trustee or the Holder of such
Security exhaust any right or take any action against the Company or any other
Person, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest or notice with respect to such Security or the indebtedness evidenced
thereby and all demands whatsoever, and covenants that this Guarantee will not
be discharged in respect of such Security except by complete performance of the
obligations contained in such Security and in this Guarantee. This Guarantee
shall constitute a guaranty of payment and not of collection. The Guarantor
hereby agrees that, in the event of a default in payment of principal, or
premium, if any, or interest, if any, on such Security, whether at its Stated
Maturity, by declaration of acceleration, call for redemption, or otherwise,
legal proceedings may be instituted by the Trustee on behalf of, or by, the
Holder of such Security, subject to the terms and conditions set forth in the
Indenture,

                                       3
<PAGE>

directly against the Guarantor to enforce this Guarantee without first
proceeding against the Company.

          The obligations of the Guarantor hereunder with respect to such
Security shall be continuing and irrevocable until the date upon which the
entire principal of, premium, if any, and interest, if any, on such Security has
been, or has been deemed pursuant to the provisions of Article Seven of the
Indenture to have been, paid in full or otherwise discharged.

          The Guarantor shall be subrogated to all rights of the Holder of such
Security upon which this Guarantee is endorsed against the Company in respect of
any amounts paid by the Guarantor on account of such Security pursuant to the
provisions of this Guarantee or the Indenture; provided, however, that the
Guarantor shall not be entitled to enforce or to receive any payments arising
out of, or based upon, such right of subrogation until the principal of, and
premium, if any, and interest, if any, on all Securities issued under the
Indenture shall have been paid in full.

          This Guarantee shall remain in full force and effect and continue
notwithstanding any petition filed by or against the Company for liquidation or
reorganization, the Company becoming insolvent or making an assignment for the
benefit of creditors or a receiver or trustee being appointed for all or any
significant part of the Company's assets, and shall, to the fullest extent
permitted by law, continue to be effective or reinstated, as the case may be, if
at any time payment of the Security upon which this Guarantee is endorsed, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Holder of such Security, whether as a "voidable
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned on such Security, such
Security shall, to the fullest extent permitted by law, be reinstated and deemed
paid only by such amount paid and not so rescinded, reduced, restored or
returned.

          This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication of the Security upon which this Guarantee is
endorsed shall have been manually executed by or on behalf of the Trustee under
the Indenture.

          All terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in such Indenture.

          This Guarantee shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be governed by and construed
in accordance with the laws of the State of New York.

                                       4
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          IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
executed as of the date first written above.

                                    PP&L RESOURCES, INC.

                                    By:___________________________


                                 [END OF FORM]

                                 ARTICLE THREE

                           Miscellaneous Provisions

     Section 1.  This Supplemental Indenture No. 3 is a supplement to the
Original Indenture. As supplemented by this Supplemental Indenture No. 3, the
Indenture is in all respects ratified, approved and confirmed, and the Original
Indenture and this Supplemental Indenture No. 3 shall together constitute one
and the same instrument.

     Section 2.  The recitals contained in this Supplemental Indenture No. 3
shall be taken as the statements of the Company and the Guarantor, and the
Trustee assumes no responsibility for their correctness and makes no
representations as to the validity or sufficiency of this Supplemental Indenture
No. 3.

     Section 3.  This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

                                       5
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          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 3 to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first written above.

                                    PP&L CAPITAL FUNDING, INC.

                                    By: /s/ John R. Biggar
                                        ----------------------------
                                        Name:  John R. Biggar
                                        Title: President

[SEAL]

ATTEST:

/s/ Diane M. Koch
-----------------

                                    PP&L RESOURCES, INC.

                                    By: /s/ James E. Abel
                                        ----------------------------

                                        Name:  James E. Abel
                                        Title: Vice President-Finance and
                                               Treasurer

[SEAL]

ATTEST:

/s/ Diane M. Koch
-----------------

                                    THE CHASE MANHATTAN BANK,
                                     as Trustee

                                    By: /s/ Francine Springer
                                        ----------------------------
                                        Name: Francine Springer
                                        Title: Assistant Vice President

[SEAL]

ATTEST:

/s/ [Illegible]
-----------------

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