**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 quarterly period ended September 30,                2007        |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     | OR                                                                                                                                                                                                      |
| [                 ] | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 for the transition period from _________ to                ___________ |

|   | Commission                FileNumber | Registrant;                State of Incorporation;Address                and Telephone Number                                                                                                                                                                | IRS                EmployerIdentification                No. |
|--------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|
|   |                                 |                                                                                                                                                                                                                                                         |                                                         |
|   | 1-11459                              | **PPL                Corporation**(Exact                name of Registrant as specified in its charter)(Pennsylvania)Two                North Ninth StreetAllentown,                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 StreetAllentown,                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 StreetAllentown,                PA  18101-1179(610)                774-5151 | 23-0959590                                                   |

|   | PPL                Corporation                    | Yes                 X    | No                        |   |
|--------|---------------------------------------------------|----------------------------------------------|--------------------------------------------------------------|--------|
|   | PPL                Energy Supply, LLC             | Yes                 X    | No                        |   |
|   | PPL                Electric Utilities Corporation | Yes                 X    | No                        |   |

|   |                                              | Large                accelerated filer | Accelerated                filer | Non-accelerated                filer |
|--------|---------------------------------------------------|----------------------------------------|----------------------------------|--------------------------------------|
|   | PPL                Corporation                    | [                X                ]    | [     ] | [     ]     |
|   | PPL                Energy Supply, LLC             | [     ]       | [     ] | [                X                ]  |
|   | PPL                Electric Utilities Corporation | [     ]       | [     ] | [                X                ]  |

|   | PPL                Corporation                    | Yes                        | No                 X    |   |
|--------|---------------------------------------------------|---------------------------------------------------------------|---------------------------------------------|--------|
|   | PPL                Energy Supply, LLC             | Yes                        | No                 X    |   |
|   | PPL                Electric Utilities Corporation | Yes                        | No                 X    |   |

|   | PPL                Corporation                    | Common                stock, $.01 par value, 372,196,010 shares outstanding at October 31,                2007.                                        |
|--------|---------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                              |                                                                                                                                                        |
|   | PPL                Energy Supply, LLC             | PPL                Corporation indirectly holds all of the membership interests in PPL                Energy                Supply, LLC.                    |
|   |                                              |                                                                                                                                                        |
|   | PPL                Electric Utilities Corporation | Common                stock, no par value, 66,368,056 shares outstanding and all held by                PPL                Corporation at October 31, 2007. |
|   |                                              |                                                                                                                                                        |

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

----

**PPL      CORPORATION**

**PPL      ENERGY SUPPLY, LLC**

**PPL      ELECTRIC UTILITIES CORPORATION**

|                                                                                                                                                                                                                                       | Page                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| GLOSSARY                  OF TERMS AND ABBREVIATIONS                                                                                                                                                                                       | i                                                                                                                                                           |   |
| FORWARD-LOOKING                  INFORMATION                                                                                                                                                                                               | 1                                                                                                                                                           |   |
| PART                  I.  FINANCIAL INFORMATION                                                                                                                                                                                  |                                                                                                                                                        |   |
|                                                                                                                                                                                                                                       | Item                  1.  Financial                  Statements                                                                                   |   |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        | **PPL                  Corporation and                  Subsidiaries** |   |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of                  Income | 2 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of Cash                  Flows | 3 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated Balance                  Sheets | 4 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        | **PPL                  Energy Supply, LLC and                  Subsidiaries** |   |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of                  Income | 6 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of Cash                  Flows | 7 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated Balance                  Sheets | 8 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        | **PPL                  Electric Utilities Corporation                  and Subsidiaries** |   |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of                  Income | 10 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated                  Statements                  of Cash                  Flows | 11 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | Condensed                  Consolidated Balance                  Sheets | 12 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        | Combined                  Notes to Condensed Consolidated Financial                  Statements | 14 |   |
|                                                                                                                                                                                                                                       | Item                  2.  Management's                  Discussion and Analysis of                  Financial Condition and Results of Operations |   |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Corporation and Subsidiaries | 49 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Energy Supply, LLC and Subsidiaries | 65 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Electric Utilities Corporation and                  Subsidiaries | 78 |   |
|                                                                                                                                                                                                                                       | Item                  3.  Quantitative                  and Qualitative                  Disclosures About Market Risk                       | 84 |   |
|                                                                                                                                                                                                                                       | Item                  4.  Controls                  and                  Procedures                                                               | 84 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| PART                  II.  OTHER                  INFORMATION                                                                                                                                                                    |                                                                                                                                                        |   |
|                                                                                                                                                                                                                                       | Item                  1.  Legal                  Proceedings                                                                                      | 84 |   |
|                                                                                                                                                                                                                                       | Item                  1A.  Risk                  Factors                                                                                          | 84 |   |
|                                                                                                                                                                                                                                       | Item                  2.  Unregistered Sales of Equity Securities and Use of                  Proceeds                                            | 84 |   |
|                                                                                                                                                                                                                                       | Item                  6.  Exhibits                                                                                                                | 85 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| SIGNATURES                                                                                                                                                                                                                                 | 86                                                                                                                                                          |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| COMPUTATION                  OF RATIO OF EARNINGS                  TO FIXED CHARGES                                                                                                                                                        |                                                                                                                                                        |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Corporation and                  Subsidiaries | 87 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Energy Supply, LLC and                  Subsidiaries | 88 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Electric Utilities                  Corporation and Subsidiaries | 89 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| CERTIFICATES                  OF PRINCIPAL                  EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERPURSUANT                  TO SECTION 302 OF THE                  SARBANES-OXLEY                  ACT OF                  2002 |                                                                                                                                                        |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Corporation | 90 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Energy Supply, LLC | 92 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Electric Utilities Corporation | 94 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   |
| CERTIFICATES                  OF PRINCIPAL                  EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICERPURSUANT                  TO SECTION 906 OF THE                  SARBANES-OXLEY                  ACT OF                  2002 |                                                                                                                                                        |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Corporation | 96 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Energy Supply, LLC | 98 |   |
|                                                                                                                                                                                                                                       |                                                                                                                                                        |   | PPL                  Electric Utilities Corporation | 100 |   |

----

**GLOSSARY      OF TERMS AND ABBREVIATIONS**

***PPL      Corporation and its current and former      subsidiaries***

***Elfec***

***Emel***

***Griffith***

***Hyder***

***PPL***

*** ***

***PPL      Capital      Funding***

***PPL      Electric***

*** ***

***PPL      Energy      Funding***

***PPL      EnergyPlus***

***PPL      Energy      Supply***

***PPL      Gas      Utilities***

***PPL      Generation***

***PPL      Global***

***PPL      Holtwood***

***PPL      Martins      Creek***

***PPL      Montana***

***PPL      Services***

***PPL      Susquehanna***

***PPL      Transition Bond Company***

***SIUK      Capital      Trust I***

***WPD***

***WPD      LLP***

***WPD***

**(South      Wales)**

***WPD***

**(South      West)**

***WPDH      Limited***

***WPDL***

***Other      terms and abbreviations***

**£**

***1945      First      Mortgage Bond Indenture***

***2001      Senior      Secured Bond Indenture***

***2006      Form      10-K***

***APB***

***ARO***

***Bcf***

***Clean      Air      Act***

***COLA***

***CTC***

***Customer      Choice Act***

*** ***

***DEP***

***DOE***

***EITF***

***EMF***

***EPA***

***EPS***

***EWG***

***FASB***

** **

***FERC***

***FIN***

***Fitch***

***FSP***

***FTR***

***GWh***

***IRS***

*** ***

***ISO***

***ITC***

***LIBOR***

** **
** **

***Montana      Power***

***Moody's***

***MW***

***MWh***

***NorthWestern***

***NRC***

***NUGs***

* *

***NYMEX***

***PCB***

***PJM***

*** ***

***PLR***

***PP&E***

*** ***

***Preferred      Securities***

***PUC***

*** ***

***PUHCA***

***PURPA***

*** ***

***Regulation      S-X***

***RMR***

***SCR***

***Scrubber***

***SEC***

***SFAS***

***S&P***

***Superfund***

***Synfuel      projects***

***Tolling      agreement***

*** ***

***VaR***

*** ***

----

**FORWARD-LOOKING        INFORMATION**

| · | market                demand and prices for energy, capacity and fuel;                                                                                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | market                prices for crude oil and the potential impact on synthetic fuel                operations, synthetic fuel purchases from third parties and the phase-out                of synthetic fuel tax credits;                                         |
| · | weather                conditions affecting generation production, customer energy usage                and                operating costs;                                                                                                                          |
| · | competition                in retail and wholesale power markets;                                                                                                                                                                                                    |
| · | liquidity                of wholesale power markets;                                                                                                                                                                                                                 |
| · | defaults                by our counterparties under our energy or fuel                contracts;                                                                                                                                                                     |
| · | the                effect of any business or industry restructuring;                                                                                                                                                                                                 |
| · | the                profitability and liquidity, including access to capital markets                and                credit facilities, of PPL and its subsidiaries;                                                                                                |
| · | new                accounting requirements or new interpretations or applications of                existing                requirements;                                                                                                                            |
| · | operation                and availability of existing generation facilities and operating                costs;                                                                                                                                                      |
| · | transmission                and distribution system conditions and operating costs;                                                                                                                                                                                  |
| · | current                and future environmental conditions and requirements and the related                costs                of compliance, including environmental capital expenditures and emission                allowances and other expenses;               |
| · | significant                delays in the planned installation of pollution control equipment                at                certain coal-fired generating units in Pennsylvania due to weather                conditions, contractor performance or other reasons; |
| · | market                prices of commodity inputs for ongoing capital                expenditures;                                                                                                                                                                    |

| · | collective                labor bargaining negotiations;                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | development                of new projects, markets and technologies;                                                                                                                                         |
| · | performance                of new ventures;                                                                                                                                                                   |
| · | asset                acquisitions and dispositions;                                                                                                                                                           |
| · | political,                regulatory or economic conditions in states, regions or countries                where                PPL or its subsidiaries conduct business;                                     |
| · | any                impact of hurricanes or other severe weather on PPL and its subsidiaries,                including any impact on fuel prices;                                                              |
| · | receipt                of necessary governmental permits, approvals and rate                relief;                                                                                                           |
| · | new                state, federal or foreign legislation, including new tax                legislation;                                                                                                       |
| · | state,                federal and foreign regulatory developments;                                                                                                                                            |
| · | the                impact of any state, federal or foreign investigations applicable                to PPL                and its subsidiaries and the energy industry;                                       |
| · | capital                market conditions, including changes in interest rates, and decisions                regarding capital structure;                                                                      |
| · | stock                price performance of PPL;                                                                                                                                                                |
| · | the                market prices of equity securities and the impact on pension costs                and                resultant cash funding requirements for defined benefit pension                plans; |
| · | securities                and credit ratings;                                                                                                                                                                 |
| · | foreign                currency exchange rates;                                                                                                                                                               |
| · | the                outcome of litigation against PPL and its subsidiaries;                                                                                                                                    |
| · | potential                effects of threatened or actual terrorism or war or other hostilities;                and                                                                                            |
| · | the                commitments and liabilities of PPL and its                subsidiaries.                                                                                                                    |

----

| **Part I.                  FINANCIAL                  INFORMATION**                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Item                  1. Financial                  Statements**                                                                                                                    |
|                                                                                                                                                                                  |
| **CONDENSED                  CONSOLIDATED STATEMENTS                  OF INCOME**                                                                                                     |
| **PPL                  Corporation and                  Subsidiaries**                                                                                                                |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                  of Dollars, except per                  share data)*                                                                                                      |
|                                                                                                                                                                                  |   | **Three                  Months                  Ended****September                  30,** |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                  |   | **2007** |   | **2006** |   | **2007** |   | **2006** |
| **Operating                  Revenues**                                                                                                                                               |   |   |   |   |   |   |   |   |
| Utility                                                                                                                                                                               |   | **$** | **1,016** |   |   | $ | 972 |   |   | **$** | **3,074** |   |   | $ | 2,892 |   |
| Unregulated                  retail                  electric                                                                                                                         |   |   | **28** |   |   |   | 23 |   |   |   | **73** |   |   |   | 68 |   |
| Wholesale                  energy                  marketing                                                                                                                          |   |   | **516** |   |   |   | 446 |   |   |   | **1,144** |   |   |   | 1,164 |   |
| Net                  energy trading                  margins                                                                                                                          |   |   | **10** |   |   |   | 15 |   |   |   | **23** |   |   |   | 26 |   |
| Energy-related                  businesses                                                                                                                                            |   |   | **193** |   |   |   | 133 |   |   |   | **563** |   |   |   | 454 |   |
| Total                                                                                                                                                                                 |   |   | **1,763** |   |   |   | 1,589 |   |   |   | **4,877** |   |   |   | 4,604 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses**                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                                  |   |   | **257** |   |   |   | 236 |   |   |   | **692** |   |   |   | 588 |   |
| Energy                  purchases                                                                                                                                                     |   |   | **224** |   |   |   | 284 |   |   |   | **534** |   |   |   | 738 |   |
| Other                  operation and                  maintenance                                                                                                                     |   |   | **324** |   |   |   | 299 |   |   |   | **996** |   |   |   | 914 |   |
| Amortization                  of recoverable                  transition costs                                                                                                        |   |   | **78** |   |   |   | 75 |   |   |   | **229** |   |   |   | 210 |   |
| Depreciation                                                                                                                                                                          |   |   | **108** |   |   |   | 105 |   |   |   | **334** |   |   |   | 308 |   |
| Taxes,                  other than                  income                                                                                                                            |   |   | **73** |   |   |   | 74 |   |   |   | **223** |   |   |   | 213 |   |
| Energy-related                  businesses (Note                  8)                                                                                                                  |   |   | **178** |   |   |   | 156 |   |   |   | **581** |   |   |   | 453 |   |
| Total                                                                                                                                                                                 |   |   | **1,242** |   |   |   | 1,229 |   |   |   | **3,589** |   |   |   | 3,424 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income**                                                                                                                                                 |   |   | **521** |   |   |   | 360 |   |   |   | **1,288** |   |   |   | 1,180 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  Income -                  net                                                                                                                                  |   |   | **23** |   |   |   | 19 |   |   |   | **71** |   |   |   | 55 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense                                                                                                                                                     |   |   | **117** |   |   |   | 114 |   |   |   | **357** |   |   |   | 338 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  from Continuing Operations                  Before Income Taxes, Minority Interest and Dividends on Preferred                  Securities of a Subsidiary** |   |   | **427** |   |   |   | 265 |   |   |   | **1,002** |   |   |   | 897 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  Taxes                                                                                                                                                         |   |   | **88** |   |   |   | 44 |   |   |   | **188** |   |   |   | 214 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority                  Interest                                                                                                                                                    |   |   | **1** |   |   |   | 1 |   |   |   | **2** |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  on Preferred Securities                  of a Subsidiary                                                                                                   |   |   | **5** |   |   |   | 5 |   |   |   | **14** |   |   |   | 10 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  from Continuing                  Operations**                                                                                                               |   |   | **333** |   |   |   | 215 |   |   |   | **798** |   |   |   | 671 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (Loss) from Discontinued                  Operations (net of income taxes) (Note 8)                                                                           |   |   | **(11** | **)** |   |   | 11 |   |   |   | **72** |   |   |   | 16 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income**                                                                                                                                                       |   | **$** | **322** |   |   | $ | 226 |   |   | **$** | **870** |   |   | $ | 687 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Earnings                  Per Share of Common                  Stock:**                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  from Continuing                  Operations:                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                 |   | **$** | **0.88** |   |   | $ | 0.56 |   |   | **$** | **2.08** |   |   | $ | 1.77 |   |
| Diluted                                                                                                                                                                               |   |   | **0.87** |   |   |   | 0.55 |   |   |   | **2.06** |   |   |   | 1.74 |   |
| Net                  income:                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                 |   | **$** | **0.85** |   |   | $ | 0.59 |   |   | **$** | **2.27** |   |   | $ | 1.81 |   |
| Diluted                                                                                                                                                                               |   |   | **0.84** |   |   |   | 0.58 |   |   |   | **2.25** |   |   |   | 1.78 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Dividends                  Declared Per Share of                  Common Stock**                                                                                                    |   | **$** | **0.305** |   |   | $ | 0.275 |   |   | **$** | **0.915** |   |   | $ | 0.825 |   |
|                                                                                                                                                                                  |

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

----

| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH                  FLOWS**                                                                                                                          |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Corporation and                  Subsidiaries**                                                                                                                                         |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                                           |   | **2007** |   | **2006** |
| **Cash                  Flows from Operating                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                                                                                                    |   | **$** | **870** |   |   | $ | 687 |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities                                                                                             |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                                                   |   |   | **345** |   |   |   | 326 |   |
| Amortizations -                  recoverable transition costs and                  other                                                                                                                  |   |   | **327** |   |   |   | 234 |   |
| Pre-tax                  gain from the sale of the                  El Salvadoran business                                                                                                                     |   |   | **(94** | **)** |   |   |   |   |
| Pre-tax                  loss from the sale of                  interest in the Griffith                  plant                                                                                                |   |   |   |   |   |   | 40 |   |
| Pensionand                  other postretirement                  benefits                                                                                                                                     |   |   | **31** |   |   |   | (28 | ) |
| Deferred                  income taxes                  and investment tax                  credits                                                                                                            |   |   | **(95** | **)** |   |   | (81 | ) |
| Impairment                  of                  assets                                                                                                                                                         |   |   | **97** |   |   |   |   |   |
| Unrealized                  gains                  on derivatives and other hedging                  activities                                                                                                |   |   | **(68** | **)** |   |   | (2 | ) |
| Other                                                                                                                                                                                                          |   |   | **(42** | **)** |   |   | 13 |   |
| Change                  in current assets and                  current liabilities                                                                                                                             |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                                                           |   |   | **(65** | **)** |   |   | (2 | ) |
| Accounts                  payable                                                                                                                                                                              |   |   | **(60** | **)** |   |   | (14 | ) |
| Fuel,                  materials and                  supplies                                                                                                                                                 |   |   | **23** |   |   |   | (22 | ) |
| Other                                                                                                                                                                                                          |   |   | **71** |   |   |   | 100 |   |
| Other                  operating                  activities                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Other                  assets                                                                                                                                                                                  |   |   | **(33** | **)** |   |   | 5 |   |
| Other                  liabilities                                                                                                                                                                             |   |   | **(55** | **)** |   |   | 2 |   |
| Net                  cash provided by operating                  activities                                                                                                                                    |   |   | **1,252** |   |   |   | 1,258 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Investing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Expenditures                  for property, plant                  and equipment                                                                                                                               |   |   | **(1,121** | **)** |   |   | (859 | ) |
| Proceeds                  from the sale of the El                  Salvadoran and Bolivian businesses                                                                                                          |   |   | **191** |   |   |   |   |   |
| Proceeds                  from the sale of                  telecommunication operations                                                                                                                       |   |   | **47** |   |   |   |   |   |
| Proceeds                  from the sale of interest                  in the Griffith                  plant                                                                                                    |   |   |   |   |   |   | 115 |   |
| Purchases                  of emission                  allowances                                                                                                                                             |   |   | **(20** | **)** |   |   | (68 | ) |
| Proceeds                  from the sale of emission                  allowances                                                                                                                                |   |   | **82** |   |   |   | 42 |   |
| Purchases                  of nuclear                  decommissioning trust investments                                                                                                                       |   |   | **(176** | **)** |   |   | (178 | ) |
| Proceeds                  from the sale of nuclear                  decommissioning trust investments                                                                                                          |   |   | **165** |   |   |   | 166 |   |
| Purchases                  of short-term                  investments                                                                                                                                          |   |   | **(516** | **)** |   |   | (331 | ) |
| Proceeds                  from the sale of                  short-term investments                                                                                                                             |   |   | **574** |   |   |   | 271 |   |
| Net                  (increase) decrease in                  restricted cash                                                                                                                                   |   |   | **(35** | **)** |   |   | 8 |   |
| Other                  investing                  activities                                                                                                                                                   |   |   | **12** |   |   |   | 16 |   |
| Net                  cash used in investing                  activities                                                                                                                                        |   |   | **(797** | **)** |   |   | (818 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Financing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Issuance                  of long-term                  debt                                                                                                                                                   |   |   | **855** |   |   |   | 800 |   |
| Retirement                  of long-term                  debt                                                                                                                                                 |   |   | **(904** | **)** |   |   | (757 | ) |
| Issuance                  of common                  stock                                                                                                                                                     |   |   | **25** |   |   |   | 13 |   |
| Repurchase                  of common                  stock                                                                                                                                                   |   |   | **(565** | **)** |   |   |   |   |
| Issuance                  of preference stock, net                  of issuance costs                                                                                                                          |   |   |   |   |   |   | 245 |   |
| Payment                  of common stock                  dividends                                                                                                                                            |   |   | **(343** | **)** |   |   | (304 | ) |
| Net                  increase (decrease) in                  short-term debt                                                                                                                                   |   |   | **150** |   |   |   | (172 | ) |
| Other                  financing                  activities                                                                                                                                                   |   |   | **(17** | **)** |   |   | (21 | ) |
| Net                  cash used in financing                  activities                                                                                                                                        |   |   | **(799** | **)** |   |   | (196 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Effect                  of Exchange Rates on Cash                  and Cash Equivalents**                                                                                                                    |   |   | **2** |   |   |   | 1 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Net                  (Decrease) Increase in Cash                  and Cash Equivalents**                                                                                                                     |   |   | **(342** | **)** |   |   | 245 |   |
| Cash                  and Cash Equivalents at                  Beginning of Period                                                                                                                             |   |   | **794** |   |   |   | 555 |   |
| Cash                  and Cash Equivalents included                  in Assets Held for Sale                                                                                                                   |   |   | **(13** | ) |   |   |   |   |
| Cash                  and Cash Equivalents at End                  of Period                                                                                                                                   |   | **$** | **439** |   |   | $ | 800 |   |
|                                                                                                                                                                                                           |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED BALANCE                  SHEETS**                                                                                                                                    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Corporation and                  Subsidiaries**                                                                                                                                         |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Assets**                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Current                  Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                  and cash                  equivalents                                                                                                                                                    |   | **$** | **439** |   |   | $ | 794 |   |
| Short-term                  investments                                                                                                                                                                        |   |   | **308** |   |   |   | 359 |   |
| Restricted                  cash                                                                                                                                                                               |   |   | **135** |   |   |   | 102 |   |
| Accounts                  receivable (less                  reserve:  2007, $39;                  2006,                  $50)                                                                        |   |   | **542** |   |   |   | 591 |   |
| Unbilled                  revenues                                                                                                                                                                             |   |   | **447** |   |   |   | 469 |   |
| Fuel,                  materials and                  supplies                                                                                                                                                 |   |   | **320** |   |   |   | 378 |   |
| Prepayments                                                                                                                                                                                                    |   |   | **123** |   |   |   | 79 |   |
| Deferred                  income                  taxes                                                                                                                                                        |   |   | **76** |   |   |   | 162 |   |
| Price                  risk management                  assets                                                                                                                                                 |   |   | **472** |   |   |   | 551 |   |
| Other                  intangibles                                                                                                                                                                             |   |   | **97** |   |   |   | 124 |   |
| Assets                  held for sale (Note                  8)                                                                                                                                                |   |   | **979** |   |   |   |   |   |
| Other                                                                                                                                                                                                          |   |   | **19** |   |   |   | 21 |   |
| Total                  Current                  Assets                                                                                                                                                         |   |   | **3,957** |   |   |   | 3,630 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                                                |   |   |   |   |   |   |   |   |
| Investment                  in unconsolidated                  affiliates - at equity                                                                                                                          |   |   | **46** |   |   |   | 47 |   |
| Nuclear                  plant decommissioning                  trust funds                                                                                                                                    |   |   | **558** |   |   |   | 510 |   |
| Other                                                                                                                                                                                                          |   |   | **8** |   |   |   | 7 |   |
| Total                  Investments                                                                                                                                                                             |   |   | **612** |   |   |   | 564 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Property,                  Plant and                  Equipment**                                                                                                                                            |   |   |   |   |   |   |   |   |
| Electric                  plant in                  service                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Transmission                  and                  distribution                                                                                                                                                |   |   | **8,563** |   |   |   | 8,836 |   |
| Generation                                                                                                                                                                                                     |   |   | **8,736** |   |   |   | 8,744 |   |
| General                                                                                                                                                                                                        |   |   | **796** |   |   |   | 779 |   |
|                                                                                                                                                                                                           |   |   | **18,095** |   |   |   | 18,359 |   |
| Construction                  work in                  progress                                                                                                                                                |   |   | **1,131** |   |   |   | 682 |   |
| Nuclear                  fuel                                                                                                                                                                                  |   |   | **336** |   |   |   | 354 |   |
| Electric                  plant                                                                                                                                                                                |   |   | **19,562** |   |   |   | 19,395 |   |
| Gas                  and oil                  plant                                                                                                                                                            |   |   | **66** |   |   |   | 373 |   |
| Other                  property                                                                                                                                                                                |   |   | **191** |   |   |   | 311 |   |
|                                                                                                                                                                                                           |   |   | **19,819** |   |   |   | 20,079 |   |
| Less:  accumulated                  depreciation                                                                                                                                                     |   |   | **7,696** |   |   |   | 8,010 |   |
| Total                  Property,                  Plant and                  Equipment                                                                                                                         |   |   | **12,123** |   |   |   | 12,069 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Regulatory                  and Other Noncurrent                  Assets**                                                                                                                                   |   |   |   |   |   |   |   |   |
| Recoverable                  transition                  costs                                                                                                                                                 |   |   | **654** |   |   |   | 884 |   |
| Goodwill                                                                                                                                                                                                       |   |   | **974** |   |   |   | 1,154 |   |
| Other                  intangibles                                                                                                                                                                             |   |   | **302** |   |   |   | 367 |   |
| Price                  risk management                  assets                                                                                                                                                 |   |   | **294** |   |   |   | 144 |   |
| Other                                                                                                                                                                                                          |   |   | **909** |   |   |   | 935 |   |
| Total                  Regulatory and Other                  Noncurrent Assets                                                                                                                                 |   |   | **3,133** |   |   |   | 3,484 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                                                                                              |   | **$** | **19,825** |   |   | $ | 19,747 |   |
|                                                                                                                                                                                                           |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED BALANCE                  SHEETS**                                                                                                                                    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Corporation and                  Subsidiaries**                                                                                                                                         |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Liabilities                  and                  Equity**                                                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Current                  Liabilities**                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Short-term                  debt                                                                                                                                                                               |   | **$** | **181** |   |   | $ | 42 |   |
| Long-term                  debt                                                                                                                                                                                |   |   | **481** |   |   |   | 1,018 |   |
| Long-term                  debt with affiliate                  trust                                                                                                                                          |   |   |   |   |   |   | 89 |   |
| Accounts                  payable                                                                                                                                                                              |   |   | **539** |   |   |   | 667 |   |
| Above                  market NUG                  contracts                                                                                                                                                   |   |   | **47** |   |   |   | 65 |   |
| Taxes                                                                                                                                                                                                          |   |   | **137** |   |   |   | 194 |   |
| Interest                                                                                                                                                                                                       |   |   | **153** |   |   |   | 109 |   |
| Dividends                                                                                                                                                                                                      |   |   | **120** |   |   |   | 111 |   |
| Price                  risk management                  liabilities                                                                                                                                            |   |   | **529** |   |   |   | 550 |   |
| Liabilities                  held for sale and                  related minority interest (Note 8)                                                                                                             |   |   | **394** |   |   |   |   |   |
| Other                                                                                                                                                                                                          |   |   | **443** |   |   |   | 503 |   |
| Total                  Current                  Liabilities                                                                                                                                                    |   |   | **3,024** |   |   |   | 3,348 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Long-term                  Debt**                                                                                                                                                                            |   |   | **7,171** |   |   |   | 6,728 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Deferred                  Credits and Other                  Noncurrent Liabilities**                                                                                                                        |   |   |   |   |   |   |   |   |
| Deferred                  income taxes and                  investment tax credits                                                                                                                             |   |   | **2,059** |   |   |   | 2,331 |   |
| Price                  risk management                  liabilities                                                                                                                                            |   |   | **580** |   |   |   | 459 |   |
| Accrued                  pension                  obligations                                                                                                                                                  |   |   | **320** |   |   |   | 364 |   |
| Asset                  retirement                  obligations                                                                                                                                                 |   |   | **369** |   |   |   | 336 |   |
| Above                  market NUG                  contracts                                                                                                                                                   |   |   | **40** |   |   |   | 71 |   |
| Other                                                                                                                                                                                                          |   |   | **775** |   |   |   | 627 |   |
| Total                  Deferred Credits and Other                  Noncurrent Liabilities                                                                                                                      |   |   | **4,143** |   |   |   | 4,188 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Commitments                  and Contingent                  Liabilities (Note                  10)**                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Minority                  Interest**                                                                                                                                                                         |   |   | **26** |   |   |   | 60 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **PreferredSecurities                  of a                  Subsidiary**                                                                                                                                      |   |   | **301** |   |   |   | 301 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Shareowners'                  Common                  Equity**                                                                                                                                               |   |   |   |   |   |   |   |   |
| Common                  stock - $0.01                  par value                  (a)                                                                                                                          |   |   | **4** |   |   |   | 4 |   |
| Capital                  in excess of par                  value                                                                                                                                               |   |   | **2,303** |   |   |   | 2,810 |   |
| Earnings                  reinvested                                                                                                                                                                           |   |   | **3,144** |   |   |   | 2,626 |   |
| Accumulated                  other comprehensive                  loss                                                                                                                                         |   |   | **(291** | **)** |   |   | (318 | ) |
| Total                  Shareowners' Common                  Equity                                                                                                                                             |   |   | **5,160** |   |   |   | 5,122 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Total                  Liabilities and                  Equity**                                                                                                                                             |   | **$** | **19,825** |   |   | $ | 19,747 |   |
|                                                                                                                                                                                                           |
| (a)                                                                                                                                                                                                            |   | 780                  million shares authorized;                  375 million                  shares                  outstanding at September                  30, 2007, and 385                  million shares                  outstanding at December                  31, 2006. |
|                                                                                                                                                                                                           |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED STATEMENTS                  OF INCOME**                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Energy Supply, LLC and                  Subsidiaries**                                                                                                                                  |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **Three                  Months                  Ended****September                  30,** |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                                           |   | **2007** |   | **2006** |   | **2007** |   | **2006** |
| **Operating                  Revenues**                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Wholesale                  energy                  marketing                                                                                                                                                   |   | **$** | **516** |   |   | $ | 446 |   |   | **$** | **1,144** |   |   | $ | 1,164 |   |
| Wholesale                  energy marketing to                  affiliate                                                                                                                                      |   |   | **453** |   |   |   | 445 |   |   |   | **1,356** |   |   |   | 1,286 |   |
| Utility                                                                                                                                                                                                        |   |   | **204** |   |   |   | 174 |   |   |   | **638** |   |   |   | 562 |   |
| Unregulated                  retail                  electric                                                                                                                                                  |   |   | **28** |   |   |   | 23 |   |   |   | **73** |   |   |   | 68 |   |
| Net                  energy trading                  margins                                                                                                                                                   |   |   | **10** |   |   |   | 15 |   |   |   | **23** |   |   |   | 26 |   |
| Energy-related                  businesses                                                                                                                                                                     |   |   | **191** |   |   |   | 129 |   |   |   | **557** |   |   |   | 434 |   |
| Total                                                                                                                                                                                                          |   |   | **1,402** |   |   |   | 1,232 |   |   |   | **3,791** |   |   |   | 3,540 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses**                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                                                           |   |   | **257** |   |   |   | 236 |   |   |   | **692** |   |   |   | 588 |   |
| Energy                  purchases                                                                                                                                                                              |   |   | **167** |   |   |   | 231 |   |   |   | **377** |   |   |   | 584 |   |
| Energy                  purchases from                  affiliate                                                                                                                                              |   |   | **43** |   |   |   | 41 |   |   |   | **117** |   |   |   | 119 |   |
| Other                  operation and                  maintenance                                                                                                                                              |   |   | **238** |   |   |   | 229 |   |   |   | **743** |   |   |   | 681 |   |
| Depreciation                                                                                                                                                                                                   |   |   | **72** |   |   |   | 74 |   |   |   | **227** |   |   |   | 212 |   |
| Taxes,                  other than                  income                                                                                                                                                     |   |   | **24** |   |   |   | 25 |   |   |   | **74** |   |   |   | 70 |   |
| Energy-related                  businesses (Note                  8)                                                                                                                                           |   |   | **177** |   |   |   | 154 |   |   |   | **578** |   |   |   | 437 |   |
| Total                                                                                                                                                                                                          |   |   | **978** |   |   |   | 990 |   |   |   | **2,808** |   |   |   | 2,691 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income**                                                                                                                                                                          |   |   | **424** |   |   |   | 242 |   |   |   | **983** |   |   |   | 849 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  Income -                  net                                                                                                                                                           |   |   | **32** |   |   |   | 21 |   |   |   | **80** |   |   |   | 62 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense                                                                                                                                                                              |   |   | **73** |   |   |   | 65 |   |   |   | **217** |   |   |   | 180 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense with                  Affiliates                                                                                                                                             |   |   |   |   |   |   | 3 |   |   |   | **4** |   |   |   | 9 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  from Continuing Operations                  Before Income Taxes                  and Minority Interest**                                                                             |   |   | **383** |   |   |   | 195 |   |   |   | **842** |   |   |   | 722 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  Taxes                                                                                                                                                                                  |   |   | **72** |   |   |   | 26 |   |   |   | **139** |   |   |   | 164 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minority                  Interest                                                                                                                                                                             |   |   | **1** |   |   |   | 1 |   |   |   | **2** |   |   |   | 2 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  from Continuing                  Operations**                                                                                                                                        |   |   | **310** |   |   |   | 168 |   |   |   | **701** |   |   |   | 556 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  from Discontinued                  Operations (net of income taxes) (Note 8)                                                                                                      |   |   | **13** |   |   |   | 14 |   |   |   | **89** |   |   |   | 14 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income**                                                                                                                                                                                |   | **$** | **323** |   |   | $ | 182 |   |   | **$** | **790** |   |   | $ | 570 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH                  FLOWS**                                                                                                                          |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Energy Supply, LLC and                  Subsidiaries**                                                                                                                                  |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                                           |   | **2007** |   | **2006** |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Operating                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                                                                                                    |   | **$** | **790** |   |   | $ | 570 |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities                                                                                             |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                                                   |   |   | **234** |   |   |   | 225 |   |
| Pre-tax                  gain from the sale of the                  El Salvadoran business                                                                                                                     |   |   | **(94** | **)** |   |   |   |   |
| Pre-tax                  loss from the sale of                  interest in the Griffith                  plant                                                                                                |   |   |   |   |   |   | 40 |   |
| Pensionand                  other postretirement                  benefits                                                                                                                                     |   |   | **26** |   |   |   | (35 | ) |
| Deferred                  income taxes and                  investment tax                  credits                                                                                                       |   |   | **(25** | **)** |   |   | 23 |   |
| Impairment                  of                  assets                                                                                                                                                         |   |   | **97** |   |   |   |   |   |
| Unrealized                  gains                  on derivatives and other hedging                  activities                                                                                                |   |   | **(70** | **)** |   |   | (6 | ) |
| Other                                                                                                                                                                                                          |   |   | **27** |   |   |   | 28 |   |
| Change                  in current assets and                  current liabilities                                                                                                                             |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                                                           |   |   | **(61** | **)** |   |   | (13 | ) |
| Accounts                  payable                                                                                                                                                                              |   |   | **(95** | **)** |   |   | (2 | ) |
| Fuel,                  materials and                  supplies                                                                                                                                                 |   |   | **32** |   |   |   | (22 | ) |
| Other                                                                                                                                                                                                          |   |   | **130** |   |   |   | 112 |   |
| Other                  operating                  activities                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Other                  assets                                                                                                                                                                                  |   |   | **(26** | **)** |   |   |   |   |
| Other                  liabilities                                                                                                                                                                             |   |   | **(71** | **)** |   |   | (23 | ) |
| Net                  cash provided by operating                  activities                                                                                                                                    |   |   | **894** |   |   |   | 897 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Investing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Expenditures                  for property, plant                  and equipment                                                                                                                               |   |   | **(884** | **)** |   |   | (584 | ) |
| Proceeds                  from the sale of the El                  Salvadoran and Bolivian businesses                                                                                                          |   |   | **191** |   |   |   |   |   |
| Proceeds                  from the sale of                  telecommunication operations                                                                                                                       |   |   | **47** |   |   |   |   |   |
| Proceeds                  from the sale of interest                  in the Griffith                  plant                                                                                                    |   |   |   |   |   |   | 115 |   |
| Purchases                  of emission                  allowances                                                                                                                                             |   |   | **(20** | **)** |   |   | (68 | ) |
| Proceeds                  from the sale of emission                  allowances                                                                                                                                |   |   | **82** |   |   |   | 42 |   |
| Purchases                  of nuclear                  decommissioning trust investments                                                                                                                       |   |   | **(176** | **)** |   |   | (178 | ) |
| Proceeds                  from the sale of nuclear                  decommissioning trust investments                                                                                                          |   |   | **165** |   |   |   | 166 |   |
| Purchases                  of short-term                  investments                                                                                                                                          |   |   | **(477** | **)** |   |   | (196 | ) |
| Proceeds                  from the sale of                  short-term investments                                                                                                                             |   |   | **509** |   |   |   | 136 |   |
| Net                  (increase) decrease in                  restricted cash                                                                                                                                   |   |   | **(27** | **)** |   |   | 4 |   |
| Other                  investing                  activities                                                                                                                                                   |   |   | **7** |   |   |   | 13 |   |
| Net                  cash used in investing                  activities                                                                                                                                        |   |   | **(583** | **)** |   |   | (550 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Financing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Issuance                  of long-term                  debt                                                                                                                                                   |   |   | **6** |   |   |   | 800 |   |
| Retirement                  of long-term                  debt                                                                                                                                                 |   |   | **(141** | **)** |   |   | (144 | ) |
| Distributions                  to                  Member                                                                                                                                                      |   |   | **(1,272** | **)** |   |   | (651 | ) |
| Contributions                  from                  Member                                                                                                                                                    |   |   | **700** |   |   |   | 116 |   |
| Net                  increase (decrease) in                  short-term debt                                                                                                                                   |   |   | **111** |   |   |   | (172 | ) |
| Other                  financing                  activities                                                                                                                                                   |   |   | **(7** | **)** |   |   | (28 | ) |
| Net                  cash used in financing                  activities                                                                                                                                        |   |   | **(603** | **)** |   |   | (79 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Effect                  of Exchange Rates on Cash                  and Cash Equivalents**                                                                                                                    |   |   | **2** |   |   |   | 1 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Net                  (Decrease) Increase in Cash                  and Cash Equivalents**                                                                                                                     |   |   | **(290** | **)** |   |   | 269 |   |
| Cash                  and Cash Equivalents at                  Beginning of Period                                                                                                                             |   |   | **524** |   |   |   | 227 |   |
| Cash                  and Cash Equivalents included                  in Assets Held for Sale                                                                                                                   |   |   | **(13** | **)** |   |   |   |   |
| Cash                  and Cash Equivalents at End                  of Period                                                                                                                                   |   | **$** | **221** |   |   | $ | 496 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSEDCONSOLIDATED                  BALANCE SHEETS**                                                                                                                                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Energy Supply, LLC and Subsidiaries**                                                                                                                                  |
| (Unaudited)                                                                                                                                                                                   |
| *(Millions                  of Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                          |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Assets**                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Current                  Assets**                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                                                                    |   | **$** | **221** |   |   | $ | 524 |   |
| Short-term                  investments                                                                                                                                                       |   |   | **303** |   |   |   | 328 |   |
| Restricted                  cash                                                                                                                                                              |   |   | **79** |   |   |   | 51 |   |
| Accounts                  receivable (less reserve:  2007, $21; 2006, $29)                                                                                                          |   |   | **305** |   |   |   | 354 |   |
| Unbilled                  revenues                                                                                                                                                            |   |   | **293** |   |   |   | 301 |   |
| Accounts                  receivable from affiliates                                                                                                                                          |   |   | **142** |   |   |   | 136 |   |
| Collateral                  on PLR energy supply to affiliate                                                                                                                                 |   |   | **300** |   |   |   | 300 |   |
| Fuel,                  materials and supplies                                                                                                                                                 |   |   | **286** |   |   |   | 330 |   |
| Prepayments                                                                                                                                                                                   |   |   | **81** |   |   |   | 66 |   |
| Deferred                  income taxes                                                                                                                                                        |   |   | **118** |   |   |   | 117 |   |
| Price                  risk management assets                                                                                                                                                 |   |   | **471** |   |   |   | 551 |   |
| Other                  intangibles                                                                                                                                                            |   |   | **97** |   |   |   | 124 |   |
| Assets                  held for sale (Note 8)                                                                                                                                                |   |   | **626** |   |   |   |   |   |
| Other                                                                                                                                                                                         |   |   | **6** |   |   |   | 10 |   |
| Total                  Current Assets                                                                                                                                                         |   |   | **3,328** |   |   |   | 3,192 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                               |   |   |   |   |   |   |   |   |
| Investment                  in unconsolidated affiliates - at equity                                                                                                                          |   |   | **46** |   |   |   | 47 |   |
| Nuclear                  plant decommissioning trust funds                                                                                                                                    |   |   | **558** |   |   |   | 510 |   |
| Other                                                                                                                                                                                         |   |   | **5** |   |   |   | 4 |   |
| Total                  Investments                                                                                                                                                            |   |   | **609** |   |   |   | 561 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Property,                  Plant and Equipment**                                                                                                                                            |   |   |   |   |   |   |   |   |
| Electric                  plant in service                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Transmission                  and distribution                                                                                                                                                |   |   | **4,295** |   |   |   | 4,673 |   |
| Generation                                                                                                                                                                                    |   |   | **8,736** |   |   |   | 8,744 |   |
| General                                                                                                                                                                                       |   |   | **303** |   |   |   | 318 |   |
|                                                                                                                                                                                          |   |   | **13,334** |   |   |   | 13,735 |   |
| Construction                  work in progress                                                                                                                                                |   |   | **991** |   |   |   | 578 |   |
| Nuclear                  fuel                                                                                                                                                                 |   |   | **336** |   |   |   | 354 |   |
| Electric                  plant                                                                                                                                                               |   |   | **14,661** |   |   |   | 14,667 |   |
| Gas                  and oil plant                                                                                                                                                            |   |   | **66** |   |   |   | 64 |   |
| Other                  property                                                                                                                                                               |   |   | **190** |   |   |   | 309 |   |
|                                                                                                                                                                                          |   |   | **14,917** |   |   |   | 15,040 |   |
| Less:  accumulated                  depreciation                                                                                                                                    |   |   | **5,825** |   |   |   | 6,115 |   |
| Total                  Property, Plant and Equipment                                                                                                                                          |   |   | **9,092** |   |   |   | 8,925 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Other                  Noncurrent Assets**                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Goodwill                                                                                                                                                                                      |   |   | **974** |   |   |   | 1,099 |   |
| Other                  intangibles                                                                                                                                                            |   |   | **183** |   |   |   | 245 |   |
| Price                  risk management assets                                                                                                                                                 |   |   | **287** |   |   |   | 135 |   |
| Other                                                                                                                                                                                         |   |   | **501** |   |   |   | 498 |   |
| Total                  Other Noncurrent Assets                                                                                                                                                |   |   | **1,945** |   |   |   | 1,977 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                                                                             |   | **$** | **14,974** |   |   | $ | 14,655 |   |
|                                                                                                                                                                                          |
| *The                  accompanying Notes to Condensed Consolidated Financial Statements                  are an                  integral part of the financial                  statements.* |

----

| **CONDENSEDCONSOLIDATED                  BALANCE SHEETS**                                                                                                                                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Energy Supply, LLC and Subsidiaries**                                                                                                                                  |
| (Unaudited)                                                                                                                                                                                   |
| *(Millions                  of Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                          |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Liabilities                  and Equity**                                                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Current                  Liabilities**                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Short-term                  debt                                                                                                                                                              |   | **$** | **100** |   |   |   |   |   |
| Long-term                  debt                                                                                                                                                               |   |   | **176** |   |   | $ | 181 |   |
| Long-term                  debt with affiliate trust                                                                                                                                          |   |   |   |   |   |   | 89 |   |
| Accounts                  payable                                                                                                                                                             |   |   | **457** |   |   |   | 571 |   |
| Accounts                  payable to affiliates                                                                                                                                               |   |   | **15** |   |   |   | 36 |   |
| Above                  market NUG contracts                                                                                                                                                   |   |   | **47** |   |   |   | 65 |   |
| Taxes                                                                                                                                                                                         |   |   | **150** |   |   |   | 151 |   |
| Interest                                                                                                                                                                                      |   |   | **119** |   |   |   | 82 |   |
| Deferred                  revenue on PLR energy supply to affiliate                                                                                                                           |   |   | **12** |   |   |   | 12 |   |
| Price                  risk management liabilities                                                                                                                                            |   |   | **517** |   |   |   | 541 |   |
| Liabilities                  held for sale and related minority interest (Note 8)                                                                                                             |   |   | **326** |   |   |   |   |   |
| Other                                                                                                                                                                                         |   |   | **327** |   |   |   | 325 |   |
| Total                  Current Liabilities                                                                                                                                                    |   |   | **2,246** |   |   |   | 2,053 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Long-term                  Debt**                                                                                                                                                           |   |   | **4,931** |   |   |   | 5,106 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Deferred                  Credits and Other Noncurrent Liabilities**                                                                                                                        |   |   |   |   |   |   |   |   |
| Deferred                  income taxes and investment tax credits                                                                                                                             |   |   | **1,274** |   |   |   | 1,363 |   |
| Price                  risk management liabilities                                                                                                                                            |   |   | **568** |   |   |   | 437 |   |
| Accrued                  pension obligations                                                                                                                                                  |   |   | **253** |   |   |   | 279 |   |
| Asset                  retirement obligations                                                                                                                                                 |   |   | **369** |   |   |   | 336 |   |
| Above                  market NUG contracts                                                                                                                                                   |   |   | **40** |   |   |   | 71 |   |
| Deferred                  revenue on PLR energy supply to affiliate                                                                                                                           |   |   | **14** |   |   |   | 23 |   |
| Other                                                                                                                                                                                         |   |   | **480** |   |   |   | 393 |   |
| Total                  Deferred Credits and Other Noncurrent Liabilities                                                                                                                      |   |   | **2,998** |   |   |   | 2,902 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Commitments                  and Contingent Liabilities (Note 10)**                                                                                                                         |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Minority                  Interest**                                                                                                                                                        |   |   | **26** |   |   |   | 60 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Member's                  Equity**                                                                                                                                                          |   |   | **4,773** |   |   |   | 4,534 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Total                  Liabilities and Equity**                                                                                                                                             |   | **$** | **14,974** |   |   | $ | 14,655 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| *The                  accompanying Notes to Condensed Consolidated Financial Statements                  are an                  integral part of the financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED STATEMENTS OF                  INCOME**                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Electric Utilities Corporation                  and Subsidiaries**                                                                                                                      |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **Three                  Months                  Ended****September                  30,** |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                                           |   | **2007** |   | **2006** |   | **2007** |   | **2006** |
| **Operating                  Revenues**                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail                  electric                                                                                                                                                                               |   | **$** | **812** |   |   | $ | 800 |   |   | **$** | **2,438** |   |   | $ | 2,333 |   |
| Wholesale                  electric to                  affiliate                                                                                                                                              |   |   | **43** |   |   |   | 41 |   |   |   | **117** |   |   |   | 119 |   |
| Total                                                                                                                                                                                                          |   |   | **855** |   |   |   | 841 |   |   |   | **2,555** |   |   |   | 2,452 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses**                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Energy                  purchases                                                                                                                                                                              |   |   | **55** |   |   |   | 53 |   |   |   | **156** |   |   |   | 155 |   |
| Energy                  purchases from                  affiliate                                                                                                                                              |   |   | **453** |   |   |   | 445 |   |   |   | **1,356** |   |   |   | 1,286 |   |
| Other                  operation and                  maintenance                                                                                                                                              |   |   | **104** |   |   |   | 81 |   |   |   | **295** |   |   |   | 266 |   |
| Amortization                  of recoverable                  transition costs                                                                                                                                 |   |   | **78** |   |   |   | 75 |   |   |   | **229** |   |   |   | 210 |   |
| Depreciation                                                                                                                                                                                                   |   |   | **34** |   |   |   | 29 |   |   |   | **99** |   |   |   | 86 |   |
| Taxes,                  other than                  income                                                                                                                                                     |   |   | **49** |   |   |   | 49 |   |   |   | **149** |   |   |   | 143 |   |
| Total                                                                                                                                                                                                          |   |   | **773** |   |   |   | 732 |   |   |   | **2,284** |   |   |   | 2,146 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Income**                                                                                                                                                                          |   |   | **82** |   |   |   | 109 |   |   |   | **271** |   |   |   | 306 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  Income -                  net                                                                                                                                                           |   |   | **7** |   |   |   | 7 |   |   |   | **26** |   |   |   | 23 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense                                                                                                                                                                              |   |   | **29** |   |   |   | 34 |   |   |   | **91** |   |   |   | 108 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense with                  Affiliate                                                                                                                                              |   |   | **4** |   |   |   | 4 |   |   |   | **13** |   |   |   | 12 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  Before Income                  Taxes**                                                                                                                                               |   |   | **56** |   |   |   | 78 |   |   |   | **193** |   |   |   | 209 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  Taxes                                                                                                                                                                                  |   |   | **16** |   |   |   | 23 |   |   |   | **62** |   |   |   | 68 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                  Income**                                                                                                                                                                                |   |   | **40** |   |   |   | 55 |   |   |   | **131** |   |   |   | 141 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  on Preferred                  Securities                                                                                                                                            |   |   | **5** |   |   |   | 5 |   |   |   | **14** |   |   |   | 10 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                  Available to                  PPL**                                                                                                                                                  |   | **$** | **35** |   |   | $ | 50 |   |   | **$** | **117** |   |   | $ | 131 |   |
|                                                                                                                                                                                                           |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH                  FLOWS**                                                                                                                          |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Electric Utilities Corporation                  and Subsidiaries**                                                                                                                      |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **Nine                  Months                  Ended****September                  30,** |
|                                                                                                                                                                                                           |   | **2007** |   | **2006** |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Operating                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                                                                                                    |   | **$** | **131** |   |   | $ | 141 |   |
| Adjustments                  to reconcile net income to net                  cash provided by operating activities                                                                                             |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                                                   |   |   | **99** |   |   |   | 86 |   |
| Amortization                  - recoverable                  transition costs and other                                                                                                                        |   |   | **242** |   |   |   | 226 |   |
| Realization                  of benefits related to                  Black Lung Trust assets                                                                                                                   |   |   |   |   |   |   | (36 | ) |
| Write-off                  of storm related                  costs                                                                                                                                             |   |   |   |   |   |   | 11 |   |
| Other                                                                                                                                                                                                          |   |   | **4** |   |   |   | 8 |   |
| Change                  in current assets and                  current liabilities                                                                                                                             |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                                                           |   |   | **(14** | **)** |   |   | (4 | ) |
| Accounts                  payable                                                                                                                                                                              |   |   | **(28** | **)** |   |   | (40 | ) |
| Prepayments                                                                                                                                                                                                    |   |   | **(52** | **)** |   |   | (16 | ) |
| Other                                                                                                                                                                                                          |   |   | **(32** | **)** |   |   | (17 | ) |
| Other                  operating                  activities                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Other                  assets                                                                                                                                                                                  |   |   | **13** |   |   |   | 2 |   |
| Other                  liabilities                                                                                                                                                                             |   |   | **(4** | **)** |   |   | (1 | ) |
| Net                  cash provided by operating                  activities                                                                                                                                    |   |   | **359** |   |   |   | 360 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Investing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Expenditures                  for property, plant                  and equipment                                                                                                                               |   |   | **(210** | **)** |   |   | (200 | ) |
| Purchases                  of short-term                  investments                                                                                                                                          |   |   | **(32** | **)** |   |   | (122 | ) |
| Proceeds                  from the sale of                  short-term investments                                                                                                                             |   |   | **57** |   |   |   | 122 |   |
| Net                  (increase) decrease in                  restricted cash                                                                                                                                   |   |   | **(10** | **)** |   |   | 3 |   |
| Other                  investing                  activities                                                                                                                                                   |   |   | **7** |   |   |   | 3 |   |
| Net                  cash used in investing                  activities                                                                                                                                        |   |   | **(188** | **)** |   |   | (194 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Financing                  Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Issuance                  of preference stock, net                  of issuance costs                                                                                                                          |   |   |   |   |   |   | 245 |   |
| Issuance                  of long-term                  debt                                                                                                                                                   |   |   | **250** |   |   |   |   |   |
| Retirement                  of long-term                  debt                                                                                                                                                 |   |   | **(483** | **)** |   |   | (365 | ) |
| Contribution                  from                  PPL                                                                                                                                                        |   |   |   |   |   |   | 75 |   |
| Repurchase                  of common stock from                  PPL                                                                                                                                          |   |   |   |   |   |   | (200 | ) |
| Payment                  of common stock dividends                  to PPL                                                                                                                                     |   |   | **(95** | **)** |   |   | (84 | ) |
| Net                  increase in short-term                  debt                                                                                                                                              |   |   | **39** |   |   |   |   |   |
| Other                  financing                  activities                                                                                                                                                   |   |   | **(17** | **)** |   |   | (5 | ) |
| Net                  cash used in financing                  activities                                                                                                                                        |   |   | **(306** | **)** |   |   | (334 | ) |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Net                  Decrease in Cash and Cash                  Equivalents**                                                                                                                                |   |   | **(135** | **)** |   |   | (168 | ) |
| Cash                  and Cash Equivalents at                  Beginning of Period                                                                                                                             |   |   | **150** |   |   |   | 298 |   |
| Cash                  and Cash Equivalents at End                  of Period                                                                                                                                   |   | **$** | **15** |   |   | $ | 130 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED BALANCE                  SHEETS**                                                                                                                                    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Electric Utilities Corporation                  and Subsidiaries**                                                                                                                      |
| (Unaudited)                                                                                                                                                                                                    |
| *(Millions                  of                  Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                                           |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Assets**                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Current                  Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Cash                  and cash                  equivalents                                                                                                                                                    |   | **$** | **15** |   |   | $ | 150 |   |
| Restricted                  cash                                                                                                                                                                               |   |   | **50** |   |   |   | 43 |   |
| Accounts                  receivable (less                  reserve:  2007,                  $18; 2006,                  $19)                                                                        |   |   | **233** |   |   |   | 219 |   |
| Unbilled                  revenues                                                                                                                                                                             |   |   | **154** |   |   |   | 163 |   |
| Accounts                  receivable from                  affiliates                                                                                                                                          |   |   | **6** |   |   |   | 6 |   |
| Note                  receivable from                  affiliate                                                                                                                                               |   |   | **300** |   |   |   | 300 |   |
| Prepayments                                                                                                                                                                                                    |   |   | **55** |   |   |   | 3 |   |
| Prepayment                  on PLR energy supply                  from affiliate                                                                                                                               |   |   | **12** |   |   |   | 12 |   |
| Other                                                                                                                                                                                                          |   |   | **45** |   |   |   | 101 |   |
| Total                  Current                  Assets                                                                                                                                                         |   |   | **870** |   |   |   | 997 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Property,                  Plant and                  Equipment**                                                                                                                                            |   |   |   |   |   |   |   |   |
| Electric                  plant in                  service                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Transmission                  and                  distribution                                                                                                                                                |   |   | **4,268** |   |   |   | 4,163 |   |
| General                                                                                                                                                                                                        |   |   | **441** |   |   |   | 412 |   |
|                                                                                                                                                                                                           |   |   | **4,709** |   |   |   | 4,575 |   |
| Construction                  work in                  progress                                                                                                                                                |   |   | **121** |   |   |   | 95 |   |
| Electric                  plant                                                                                                                                                                                |   |   | **4,830** |   |   |   | 4,670 |   |
| Other                  property                                                                                                                                                                                |   |   | **2** |   |   |   | 3 |   |
|                                                                                                                                                                                                           |   |   | **4,832** |   |   |   | 4,673 |   |
| Less:  accumulated                  depreciation                                                                                                                                                     |   |   | **1,849** |   |   |   | 1,793 |   |
| Total                  Property, Plant and                  Equipment                                                                                                                                          |   |   | **2,983** |   |   |   | 2,880 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Regulatory                  and Other Noncurrent                  Assets**                                                                                                                                   |   |   |   |   |   |   |   |   |
| Recoverable                  transition                  costs                                                                                                                                                 |   |   | **654** |   |   |   | 884 |   |
| Intangibles                                                                                                                                                                                                    |   |   | **119** |   |   |   | 118 |   |
| Prepayment                  on PLR energy supply                  from affiliate                                                                                                                               |   |   | **14** |   |   |   | 23 |   |
| Taxes                  recoverable through future                  rates                                                                                                                                       |   |   | **252** |   |   |   | 256 |   |
| Other                                                                                                                                                                                                          |   |   | **148** |   |   |   | 157 |   |
| Total                  Regulatory and Other                  Noncurrent Assets                                                                                                                                 |   |   | **1,187** |   |   |   | 1,438 |   |
|                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                                                                                                                              |   | **$** | **5,040** |   |   | $ | 5,315 |   |
|                                                                                                                                                                                                           |
| *The                  accompanying Notes to                  Condensed Consolidated Financial Statements are an integral part                  of the                  financial                  statements.* |

----

| **CONDENSED                  CONSOLIDATED BALANCE                  SHEETS**                             |
|---------------------------------------------------------------------------------------------------------|
| **PPL                  Electric Utilities Corporation                  and Subsidiaries**               |
| (Unaudited)                                                                                             |
| *(Millions                  of                  Dollars)*                                               |
|                                                                                                    |   | **September                  30,****2007** |   | **December                  31,****2006** |
| **Liabilities                  and                  Equity**                                            |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Current                  Liabilities**                                                                |   |   |   |   |   |   |   |   |
| Short-term                  debt                                                                        |   | **$** | **81** |   |   | $ | 42 |   |
| Long-term                  debt                                                                         |   |   | **304** |   |   |   | 555 |   |
| Accounts                  payable                                                                       |   |   | **58** |   |   |   | 53 |   |
| Accounts                  payable to                  affiliates                                        |   |   | **135** |   |   |   | 164 |   |
| Taxes                                                                                                   |   |   | **28** |   |   |   | 58 |   |
| Collateral                  on PLR energy supply                  from affiliate                        |   |   | **300** |   |   |   | 300 |   |
| Other                                                                                                   |   |   | **95** |   |   |   | 141 |   |
| Total                  Current                  Liabilities                                             |   |   | **1,001** |   |   |   | 1,313 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Long-term                  Debt**                                                                     |   |   | **1,441** |   |   |   | 1,423 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Deferred                  Credits and Other                  Noncurrent Liabilities**                 |   |   |   |   |   |   |   |   |
| Deferred                  income taxes and                  investment tax credits                      |   |   | **757** |   |   |   | 814 |   |
| Other                                                                                                   |   |   | **258** |   |   |   | 206 |   |
| Total                  Deferred Credits and Other                  Noncurrent Liabilities               |   |   | **1,015** |   |   |   | 1,020 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Commitments                  and Contingent                  Liabilities (Note                  10)** |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Shareowners'                  Equity**                                                                |   |   |   |   |   |   |   |   |
| Preferred                  securities                                                                   |   |   | **301** |   |   |   | 301 |   |
| Common                  stock - no par                  value                  (a)                      |   |   | **364** |   |   |   | 364 |   |
| Additional                  paid-in                  capital                                            |   |   | **424** |   |   |   | 424 |   |
| Earnings                  reinvested                                                                    |   |   | **494** |   |   |   | 470 |   |
| Total                  Shareowners'                  Equity                                             |   |   | **1,583** |   |   |   | 1,559 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| **Total                  Liabilities and                  Equity**                                      |   | **$** | **5,040** |   |   | $ | 5,315 |   |

| (a)                                                                                                                                                                                   |   | 170                million shares authorized; 66                million shares outstanding                at September                30, 2007 and December                31, 2006. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                  |
| *The                accompanying Notes to                Condensed Consolidated Financial Statements are an integral part                of the                financial statements.* |

----

**Combined      Notes to Condensed Consolidated Financial Statements      (Unaudited)**

| **1.  ** | **Interim                Financial Statements** |
|--------------------|-------------------------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

*(PPL      and PPL Energy Supply)*

| **2.  ** | **Summary                of Significant Accounting                Policies** |
|--------------------|------------------------------------------------------------------------------|

**Revenue      Recognition**
* *
*(PPL and PPL Energy      Supply)*

**Depreciation**
* *
*(PPL      and PPL Energy Supply)*

**Income      Taxes **
*(PPL, PPL Energy Supply and PPL Electric)*

**Regulation      **
*(PPL and PPL Electric)*

**New      Accounting Standards **
*(PPL, PPL Energy Supply and PPL      Electric)*

| **3.  ** | **Segment                and Related Information** |
|--------------------|----------------------------------------------------|

*(PPL      and PPL Energy Supply)*

|                                                           |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|----------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
| **PPL**                                                        |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
| **Income                Statement                Data**        |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                from external                customers |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                                         |   | $                                                                                    | 740    |                                                                                |   | $ | 608 |   |   | $ | 1,776 |   |   | $ | 1,684 |   |
| International                Delivery                          |   |                                                                                 | 212    |                                                                                |   |   | 181 |   |   |   | 665 |   |   |   | 589 |   |
| Pennsylvania                Delivery                           |   |                                                                                 | 811    |                                                                                |   |   | 800 |   |   |   | 2,436 |   |   |   | 2,331 |   |
|                                                           |   |                                                                                 | 1,763  |                                                                                |   |   | 1,589 |   |   |   | 4,877 |   |   |   | 4,604 |   |
| Intersegment                revenues                           |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                                         |   |                                                                                 | 453    |                                                                                |   |   | 445 |   |   |   | 1,356 |   |   |   | 1,286 |   |
| Pennsylvania                Delivery                           |   |                                                                                 | 44     |                                                                                |   |   | 41 |   |   |   | 119 |   |   |   | 121 |   |
|                                                           |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                      |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                (a)                                      |   |                                                                                 | 205    |                                                                                |   |   | 120 |   |   |   | 454 |   |   |   | 337 |   |
| International                Delivery                (b)       |   |                                                                                 | 108    |                                                                                |   |   | 59 |   |   |   | 319 |   |   |   | 219 |   |
| Pennsylvania                Delivery                (c)        |   |                                                                                 | 9      |                                                                                |   |   | 47 |   |   |   | 97 |   |   |   | 131 |   |
|                                                           |   | $                                                                                    | 322    |                                                                                |   | $ | 226 |   |   | $ | 870 |   |   | $ | 687 |   |

|                                  |   | **September                30,****2007** |   | **December                31,****2006** |
|---------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
| **Balance                Sheet Data** |   |                                     |   |                                    |   |   |   |   |
| Total                assets           |   |                                     |   |                                    |   |   |   |   |
| Supply                                |   | $                                        | 8,449  |                                    |   | $ | 8,039 |   |
| International                Delivery |   |                                     | 6,164  |                                    |   |   | 6,208 |   |
| Pennsylvania                Delivery  |   |                                     | 5,212  |                                    |   |   | 5,500 |   |
|                                  |   | $                                        | 19,825 |                                    |   | $ | 19,747 |   |

|                                                           |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|----------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
| **PPL                Energy                Supply**            |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
| **Income                Statement                Data**        |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                from external                customers |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                                         |   | $                                                                                    | 1,190  |                                                                                |   | $ | 1,051 |   |   | $ | 3,126 |   |   | $ | 2,951 |   |
| International                Delivery                          |   |                                                                                 | 212    |                                                                                |   |   | 181 |   |   |   | 665 |   |   |   | 589 |   |
|                                                           |   |                                                                                 | 1,402  |                                                                                |   |   | 1,232 |   |   |   | 3,791 |   |   |   | 3,540 |   |
| Net                Income                                      |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                (a)                                      |   |                                                                                 | 215    |                                                                                |   |   | 123 |   |   |   | 471 |   |   |   | 351 |   |
| International                Delivery                (b)       |   |                                                                                 | 108    |                                                                                |   |   | 59 |   |   |   | 319 |   |   |   | 219 |   |
|                                                           |   | $                                                                                    | 323    |                                                                                |   | $ | 182 |   |   | $ | 790 |   |   | $ | 570 |   |

|                                  |   | **September                30,****2007** |   | **December                31,****2006** |
|---------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
| **Balance                Sheet Data** |   |                                     |   |                                    |   |   |   |   |
| Total                assets           |   |                                     |   |                                    |   |   |   |   |
| Supply                                |   | $                                        | 8,810  |                                    |   | $ | 8,447 |   |
| International                Delivery |   |                                     | 6,164  |                                    |   |   | 6,208 |   |
|                                  |   | $                                        | 14,974 |                                    |   | $ | 14,655 |   |

| (a) |   | 2006                includes the results of                discontinued operations of the Griffith                plant.  See Note 8                for additional information.                                                      |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | 2007                and 2006 include the results                of discontinued operations of the Latin American                businesses.  See Note 8 for additional                information.                                        |
| (c) |   | 2007                and 2006 include the results                of discontinued operations of PPL's natural gas distribution and                propane                businesses.  See Note 8 for additional                information. |

| **4.  ** | **Earnings                Per Share** |
|--------------------|---------------------------------------|

*(PPL)*

| · | stock                options, restricted stock and restricted stock units granted under                the                incentive compensation plans; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | stock                units representing common stock granted under the directors compensation                programs; and                              |
| · | convertible                senior notes.                                                                                                                |

|                                                                                                          |   | **Three                Months                Ended****September30,** |    | **Nine                Months                Ended****September30,** |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|---------------------------------------------------------------------|
|                                                                                                          |   | **2007**                                                             |    | **2006**                                                            |   | **2007** |   | **2006** |
| **Income                (Numerator)**                                                                         |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing                operations                                               |   | $                                                                    | 333     |                                                                |   | $ | 215 |   |   | $ | 798 |   |   | $ | 671 |   |
| Income                (loss)                from discontinued operations (net                of income taxes) |   |                                                                 | (11     | )                                                                   |   |   | 11 |   |   |   | 72 |   |   |   | 16 |   |
| Net                Income                                                                                     |   | $                                                                    | 322     |                                                                |   | $ | 226 |   |   | $ | 870 |   |   | $ | 687 |   |
|                                                                                                          |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| **Shares                (Denominator)**                                                                       |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares                for Basic                EPS                                                            |   |                                                                 | 379,896 |                                                                |   |   | 380,806 |   |   |   | 383,036 |   |   |   | 380,269 |   |
| Add                incremental                shares:                                                         |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                Senior                Notes                                                        |   |                                                                 | 1,710   |                                                                |   |   | 3,920 |   |   |   | 1,620 |   |   |   | 3,212 |   |
| Stock                options and other                share-based awards                                      |   |                                                                 | 2,969   |                                                                |   |   | 2,876 |   |   |   | 3,002 |   |   |   | 2,792 |   |
| Shares                for Diluted                EPS                                                          |   |                                                                 | 384,575 |                                                                |   |   | 387,602 |   |   |   | 387,658 |   |   |   | 386,273 |   |
|                                                                                                          |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| **Basic                EPS**                                                                                  |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing                operations                                               |   | $                                                                    | 0.88    |                                                                |   | $ | 0.56 |   |   | $ | 2.08 |   |   | $ | 1.77 |   |
| Income                (loss) from discontinued                operations (net                of income taxes) |   |                                                                 | (0.03   | )                                                                   |   |   | 0.03 |   |   |   | 0.19 |   |   |   | 0.04 |   |
| Net                Income                                                                                     |   | $                                                                    | 0.85    |                                                                |   | $ | 0.59 |   |   | $ | 2.27 |   |   | $ | 1.81 |   |
|                                                                                                          |   |                                                                 |    |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |

| **Diluted                EPS**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Income                from continuing                operations                                              |   | $      | 0.87   |   |   | $      | 0.55   |   |   | $      | 2.06   |   |   | $      | 1.74   |   |
| Income                (loss)from                discontinued operations (net                of income taxes) |   |   | (0.03  | )      |   |   | 0.03   |   |   |   | 0.19   |   |   |   | 0.04   |   |
| Net                Income                                                                                    |   | $      | 0.84   |   |   | $      | 0.58   |   |   | $      | 2.25   |   |   | $      | 1.78   |   |

| **5.  ** | **Income                Taxes** |
|--------------------|---------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

|                                                                                                                                                                                                                                                                                           |   | **Three                Months                Ended****September30,** |   | **Nine                Months                Ended****September30,** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| **PPL**                                                                                                                                                                                                                                                                                        |   | **2007**                                                             |   | **2006**                                                            |   | **2007** |   | **2006** |
| **Reconciliation                of Income Tax                Expense**                                                                                                                                                                                                                         |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                income tax on Income from                Continuing Operations Before Income Taxes, Minority Interest and                Dividends                on Preferred Securities of                a Subsidiary at statutory                tax rate -                35% |   | $                                                                    | 150    |                                                                |   | $ | 93 |   |   | $ | 351 |   |   | $ | 314 |   |
| Increase                (decrease) due                to:                                                                                                                                                                                                                                      |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| State                income taxes (a)                                                                                                                                                                                                                                                          |   |                                                                 | 11     |                                                                |   |   | 1 |   |   |   | 22 |   |   |   | 13 |   |
| Amortization                of investment tax                credit                                                                                                                                                                                                                            |   |                                                                 | (3     | )                                                                   |   |   | (3 | ) |   |   | (8 | ) |   |   | (8 | ) |
| Difference                related to income                recognition of foreign affiliates (net of foreign income                taxes)                                                                                                                                                      |   |                                                                 | (4     | )                                                                   |   |   | (13 | ) |   |   | (21 | ) |   |   | (28 | ) |
| U.K.                tax rate change                (b)                                                                                                                                                                                                                                         |   |                                                                 | (54    | )                                                                   |   |   |   |   |   |   | (54 | ) |   |   |   |   |
| Transfer                of WPD tax items                (c)                                                                                                                                                                                                                                    |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   | (20 | ) |
| Stranded                cost securitization                (a)                                                                                                                                                                                                                                 |   |                                                                 | (2     | )                                                                   |   |   | (2 | ) |   |   | (5 | ) |   |   | (5 | ) |
| Federal                income tax                credits                                                                                                                                                                                                                                       |   |                                                                 | (3     | )                                                                   |   |   | (24 | ) |   |   | (55 | ) |   |   | (38 | ) |
| Change                in federal tax                reserves (a)                                                                                                                                                                                                                               |   |                                                                 | (3     | )                                                                   |   |   | (7 | ) |   |   | (33 | ) |   |   | (11 | ) |
| Other                                                                                                                                                                                                                                                                                          |   |                                                                 | (4     | )                                                                   |   |   | (1 | ) |   |   | (9 | ) |   |   | (3 | ) |
|                                                                                                                                                                                                                                                                                           |   |                                                                 | (62    | )                                                                   |   |   | (49 | ) |   |   | (163 | ) |   |   | (100 | ) |
| **Total                income tax                expense**                                                                                                                                                                                                                                     |   | $                                                                    | 88     |                                                                |   | $ | 44 |   |   | $ | 188 |   |   | $ | 214 |   |
| **Effective                income tax                rate**                                                                                                                                                                                                                                    |   |                                                                 | 20.6%  |                                                                |   |   | 16.6% |   |   |   | 18.8% |   |   |   | 23.9% |   |

| (a)    |   | For                the three months ended                September 30,                2007, PPL recorded                a                $4 million benefit related to state and federal income tax reserves,                which                consisted of a $3 million benefit reflected in "Change                in federal tax                reserves"                and a $2 million benefit                reflected in "Stranded                cost                securitization,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the three months ended                September 30,                2006, PPL recorded                a                $10 million benefit related to state and federal income tax reserves,                which consisted of a $7 million benefit reflected in "Change                in federal tax                reserves,"                a $2 million benefit reflected in                "Stranded                cost                securitization"                and a $1 million benefit                reflected in "State                income taxes." For                the nine months ended                September 30,                2007, PPL recorded                a                $37 million benefit related to state and federal income tax reserves,                which consisted of a $33 million benefit reflected in "Change                in federal tax                reserves"                and a $5 million benefit                reflected in "Stranded                cost                securitization,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the nine months ended                September 30,                2006, PPL recorded                an                $11 million benefit related to state and federal income tax reserves,                which consisted of an $11 million benefit reflected in "Change                in federal tax                reserves"                and a $5 million benefit                reflected in "Stranded                cost                securitization,"                offset by a $5 million state                expense reflected in "State                income taxes." |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (b)    |   | In                July 2007, the U.K.'s                Finance Act 2007, which includes                amendments to existing tax law,                was enacted.                 The most significant change to                the tax law was a reduction in the U.K.'s                statutory income tax rate.                 EffectiveApril                1, 2008, the statutory                income tax rate                will be reduced from 30% to 28%.  As                a result, PPL recorded a $54                million deferred tax benefit during the third quarter of                2007 related                to the reduction in its deferred tax liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (c)    |   | In                January 2006, WPD,                Hyder's                liquidator and a former Hyder                affiliate signed an agreement to transfer to the affiliate a future                tax                liability from WPD and certain surplus tax losses from                Hyder.  Inland Revenue, the U.K.                taxing authority, subsequently                confirmed this agreement.  This transfer resulted in a net                reduction of income tax expense of $20 million for the nine months                ended                September 30,                2006, and a decrease                to goodwill of $12 million from the resolution of a pre-acquisition                tax                contingency pursuant to EITF Issue 93-7, "Uncertainties                Related to Income                Taxes in a Purchase Business Combination."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

|                                                                                                                                                                       |   | **Three                Months                Ended****September30,** |   | **Nine                Months                Ended****September30,** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| **PPL                Energy                Supply**                                                                                                                        |   | **2007**                                                             |   | **2006**                                                            |   | **2007** |   | **2006** |
| **Reconciliation                of Income Tax                Expense**                                                                                                     |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                income tax on Income from                Continuing Operations Before Income Taxes and Minority Interest at                statutory tax rate - 35% |   | $                                                                    | 134    |                                                                |   | $ | 69 |   |   | $ | 295 |   |   | $ | 253 |   |
| Increase                (decrease) due                to:                                                                                                                  |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| State                income taxes (a)                                                                                                                                      |   |                                                                 | 13     |                                                                |   |   | 4 |   |   |   | 24 |   |   |   | 16 |   |
| Amortization                of investment tax                credit                                                                                                        |   |                                                                 | (2     | )                                                                   |   |   | (2 | ) |   |   | (6 | ) |   |   | (6 | ) |
| Difference                related to income                recognition of foreign affiliates (net of foreign income                taxes)                                  |   |                                                                 | (4     | )                                                                   |   |   | (13 | ) |   |   | (21 | ) |   |   | (28 | ) |
| U.K.                tax rate change                (b)                                                                                                                     |   |                                                                 | (54    | )                                                                   |   |   |   |   |   |   | (54 | ) |   |   |   |   |
| Transfer                of WPD tax items                (c)                                                                                                                |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   | (20 | ) |
| Federal                income tax                credits                                                                                                                   |   |                                                                 | (7     | )                                                                   |   |   | (24 | ) |   |   | (58 | ) |   |   | (38 | ) |
| Change                in federal tax                reserves (a)                                                                                                           |   |                                                                 | (2     | )                                                                   |   |   | (6 | ) |   |   | (31 | ) |   |   | (9 | ) |
| Other                                                                                                                                                                      |   |                                                                 | (6     | )                                                                   |   |   | (2 | ) |   |   | (10 | ) |   |   | (4 | ) |
|                                                                                                                                                                       |   |                                                                 | (62    | )                                                                   |   |   | (43 | ) |   |   | (156 | ) |   |   | (89 | ) |
| **Total                income tax                expense**                                                                                                                 |   | $                                                                    | 72     |                                                                |   | $ | 26 |   |   | $ | 139 |   |   | $ | 164 |   |
| **Effective                income tax                rate**                                                                                                                |   |                                                                 | 18.8%  |                                                                |   |   | 13.3% |   |   |   | 16.5% |   |   |   | 22.7% |   |

| (a)    |   | For                the three months ended                September 30,                2007, PPL Energy                Supply recorded a $1 million benefit related to federal and state                income                tax reserves, which consisted of a $2 million benefit reflected in                "Change in federal                tax                reserves,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the three months ended                September 30,                2006, PPL Energy                Supply recorded a $5 million benefit related to federal and state                income                tax reserves, which consisted of a $6 million benefit reflected in"Change                in federal tax                reserves,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the nine months ended                September 30,                2007, PPL Energy                Supply recorded a $30 million benefit related to federal and state                income                tax reserves, which consisted of a $31 million benefit reflected                in "Change                in federal tax                reserves,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the nine months ended                September 30,                2006, PPL Energy                Supply recorded a $4 million benefit related to federal and state                income                tax reserves, which consisted of a $9 million benefit reflected in"Change                in federal tax                reserves,"                offset by a $5 million state                expense reflected in "State                income taxes." |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (b)    |   | In                July 2007, the U.K.'s                Finance Act 2007, which includes                amendments to existing tax law,                was enacted.                 The most significant change to                the tax law was a reduction in the U.K.'s                statutory income tax rate.                 EffectiveApril                1, 2008, the statutory                income tax rate                will be reduced from 30% to 28%.  As                a result, PPL Energy Supplyrecorded                a $54 million deferred                tax benefit during the third quarter of                2007 related                to the reduction in its deferred tax liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (c)    |   | In                January 2006, WPD,                Hyder's                liquidator and a former Hyder                affiliate signed an agreement to transfer to the affiliate a future                tax                liability from WPD and certain surplus tax losses from                Hyder.  Inland Revenue, the U.K.                taxing authority, subsequently                confirmed this agreement.  This transfer resulted in a net                reduction of income tax expense of $20 million for the nine                months ended September 30,                2006, and a decrease                to goodwill of                $12 million from the resolution of a pre-acquisition tax contingency                pursuant to EITF Issue 93-7, "Uncertainties                Related to Income                Taxes in a Purchase Business Combination."                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|                                                                                                       |   | **Three                Months                Ended****September30,** |   | **Nine                Months                Ended****September30,** |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| **PPL                Electric**                                                                            |   | **2007**                                                             |   | **2006**                                                            |   | **2007** |   | **2006** |
| **Reconciliation                of****Income                Tax                Expense**                   |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                income tax on Income Before                Income Taxes at statutory tax rate - 35% |   | $                                                                    | 20     |                                                                |   | $ | 27 |   |   | $ | 68 |   |   | $ | 73 |   |
| Increase                (decrease) due                to:                                                  |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| State                income taxes (a)                                                                      |   |                                                                 |   |                                                                |   |   | 2 |   |   |   | 4 |   |   |   | 3 |   |
| Amortization                of investment tax                credit                                        |   |                                                                 | (1     | )                                                                   |   |   | (1 | ) |   |   | (2 | ) |   |   | (2 | ) |
| Stranded                cost securitization                (a)                                             |   |                                                                 | (2     | )                                                                   |   |   | (2 | ) |   |   | (5 | ) |   |   | (5 | ) |
| Change                in federal tax reserves                (a)                                           |   |                                                                 | (1     | )                                                                   |   |   | (3 | ) |   |   | (2 | ) |   |   | (2 | ) |
| Other                                                                                                      |   |                                                                 |   |                                                                |   |   |   |   |   |   | (1 | ) |   |   | 1 |   |
|                                                                                                       |   |                                                                 | (4     | )                                                                   |   |   | (4 | ) |   |   | (6 | ) |   |   | (5 | ) |
| **Total                income tax                expense**                                                 |   | $                                                                    | 16     |                                                                |   | $ | 23 |   |   | $ | 62 |   |   | $ | 68 |   |
| **Effective                income tax                rate**                                                |   |                                                                 | 28.6%  |                                                                |   |   | 29.5% |   |   |   | 32.1% |   |   |   | 32.5% |   |

| (a) |   | For                the three months ended                September 30,                2007, PPL Electric                recorded a $3 million benefit related to federal and state income                tax                reserves, which consisted of a $1 million benefit reflected in"Change                in federal tax                reserves"                and a $2 million benefit                reflected in "Stranded                cost                securitization." For                the three months ended                September 30,                2006, PPL Electric                recorded a $5 million benefit related to federal and state income                tax                reserves, which consisted of a $3 million benefit reflected in"Change                in federal tax                reserves"                and a $2 million benefit                reflected in "Stranded                cost                securitization." For                the nine months ended                September 30,                2007, PPL Electric                recorded a $6 million benefit related to federal and state income                tax                reserves, which consisted of a $2 million benefit reflected in"Change                in federal tax                reserves"                and a $5 million benefit                reflected in "Stranded                cost                securitization,"                offset by a $1 million state                expense reflected in "State                income taxes." For                the nine months ended                September 30,                2006, PPL Electric                recorded a $7 million benefit related to federal and state income                tax                reserves, which consisted of a $2 million benefit reflected in"Change                in federal tax                reserves"                and a $5 million benefit                reflected in "Stranded                cost                securitization." |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Unrecognized      Tax Benefits**

*(PPL,      PPL Energy Supply and PPL Electric)*

|                                                                                                                                              |   | **PPL** |   | **PPL                Energy Supply** |   | **PPL                Electric** |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------------------------------------|--------|---------------------------------|
|                                                                                                                                              |   |    |   |                                 |   |                            |   |   |   |   |   |   |
| Current                Assets - Prepayments                                                                                                       |   | $       | 20     |                                 |   | $                               | 20 |   |   |   |   |   |
| Current                Liabilities - Taxes                                                                                                        |   |    | (134   | )                                    |   |                            | (107 | ) |   | $ | (21 | ) |
| Deferred                Credits and Other Noncurrent Liabilities - Deferred income taxes                and                investment tax credits |   |    | 10     |                                 |   |                            | 9 |   |   |   | 2 |   |
| Regulatory                and Other Noncurrent Assets - Other                                                                                     |   |    | (5     | )                                    |   |                            |   |   |   |   | (5 | ) |
| Deferred                Credits and Other Noncurrent Liabilities - Other                                                                          |   |    | 139    |                                 |   |                            | 119 |   |   |   | 13 |   |
| Equity                - Earnings reinvested (cumulative                effect) (a)                                                                |   |    |   |                                 |   |                            | (1 | ) |   |   | 1 |   |

| (a) |   | Recorded                as an adjustment to the opening                balances. |
|-----|--------|----------------------------------------------------------------------------------|

|                                                                                                                                                |   | **PPL** |   | **PPL                Energy Supply** |   | **PPL                Electric** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------------------------------------|--------|---------------------------------|
|                                                                                                                                                |   |    |   |                                 |   |                            |   |   |   |   |   |   |
| Total                unrecognized tax benefits                                                                                                      |   | $       | 226    |                                 |   | $                               | 143 |   |   | $ | 78 |   |
| Unrecognized                tax benefits associated with taxable or deductible temporary                differences                                 |   |    | (1     | )                                    |   |                            | 9 |   |   |   | (10 | ) |
| Unrecognized                tax benefits associated with business combinations                                                                      |   |    | (19    | )                                    |   |                            | (19 | ) |   |   |   |   |
| Total                indirect effect of unrecognized tax benefits                    on other tax jurisdictions                      |   |    | (43    | )                                    |   |                            | (12 | ) |   |   | (31 | ) |
| Total                unrecognized tax benefits and related indirect effects that if recognized                would decrease the effective tax rate |   | $       | 163    |                                 |   | $                               | 121 |   |   | $ | 37 |   |

|                                |   | **PPL                and****PPL                Energy Supply** |   | **PPL                Electric**              |   |
|-------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------|--------|
| U.S.                (federal)       |   | 1995                and prior                                  |   | 1995                and                prior |   |
| Pennsylvania                (state) |   | 2000                and prior                                  |   | 2000                and                prior |   |
| Montana                (state)      |   | 2002                and prior                                  |   |                                         |   |
| U.K.                (foreign)       |   | 1999                and prior                                  |   |                                         |   |
| Chile                (foreign)      |   | 2002                and prior                                  |   |                                         |   |

*(PPL      and PPL Energy Supply)*

| **6.  ** | **Comprehensive                Income** |
|--------------------|-----------------------------------------|

*(PPL      and PPL Energy Supply)*

|                                                                                                             |   | **Three                Months                Ended****September30,** |   | **Nine                Months                Ended****September30,** |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| **PPL**                                                                                                          |   | **2007**                                                             |   | **2006**                                                            |   | **2007** |   | **2006** |
|                                                                                                             |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                                                                        |   | $                                                                    | 322    |                                                                |   | $ | 226 |   |   | $ | 870 |   |   | $ | 687 |   |
| Other                comprehensive                income:                                                        |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation                adjustments                                           |   |                                                                 | 23     |                                                                |   |   | 17 |   |   |   | 37 |   |   |   | 99 |   |
| Defined                benefit plans                amortization:                                                |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior                service                costs                                                                |   |                                                                 | 4      |                                                                |   |   |   |   |   |   | 11 |   |   |   |   |   |
| Net                actuarial                loss                                                                 |   |                                                                 | 11     |                                                                |   |   |   |   |   |   | 31 |   |   |   |   |   |
| Net                unrealized gain                (loss) on                available-for-sale securities (a)     |   |                                                                 | 4      |                                                                |   |   | 7 |   |   |   | 12 |   |   |   | (1 | ) |
| Net                unrealized gain                (loss) on                qualifying                derivatives |   |                                                                 | 22     |                                                                |   |   | 43 |   |   |   | (64 | ) |   |   | 169 |   |
| Other                                                                                                            |   |                                                                 | 1      |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                other comprehensive                income                                                   |   |                                                                 | 65     |                                                                |   |   | 67 |   |   |   | 27 |   |   |   | 267 |   |
| Comprehensive                Income                                                                              |   | $                                                                    | 387    |                                                                |   | $ | 293 |   |   | $ | 897 |   |   | $ | 954 |   |
|                                                                                                             |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL                Energy                Supply**                                                              |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                                                                                        |   | $                                                                    | 323    |                                                                |   | $ | 182 |   |   | $ | 790 |   |   | $ | 570 |   |
| Other                comprehensive                income:                                                        |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation                adjustments                                           |   |                                                                 | 23     |                                                                |   |   | 17 |   |   |   | 37 |   |   |   | 99 |   |
| Defined                benefit plans                amortization:                                                |   |                                                                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior                service                costs                                                                |   |                                                                 | 3      |                                                                |   |   |   |   |   |   | 9 |   |   |   |   |   |
| Net                actuarial                loss                                                                 |   |                                                                 | 10     |                                                                |   |   |   |   |   |   | 30 |   |   |   |   |   |
| Net                unrealized gain                (loss) on                available-for-sale securities (a)     |   |                                                                 | 4      |                                                                |   |   | 7 |   |   |   | 12 |   |   |   | (1 | ) |
| Net                unrealized gain                (loss)                on qualifying                derivatives |   |                                                                 | 28     |                                                                |   |   | 53 |   |   |   | (63 | ) |   |   | 161 |   |
| Total                other comprehensive                income                                                   |   |                                                                 | 68     |                                                                |   |   | 77 |   |   |   | 25 |   |   |   | 259 |   |
| Comprehensive                Income                                                                              |   | $                                                                    | 391    |                                                                |   | $ | 259 |   |   | $ | 815 |   |   | $ | 829 |   |

| (a) |   | The                2007 amounts exclude unrealized losses on investments in the nuclear                decommissioning trust funds.  Such losses represent                other-than-temporary impairments and are recognized in                earnings.  See Note 21 of each Registrants' 2006 Form 10-K for                discussion of 2006 unrealized                losses. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*(PPL      Electric)*

| **7.  ** | **Credit                Arrangements and Financing                Activities** |
|--------------------|--------------------------------------------------------------------------------|

**Credit      Arrangements**

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Electric)*

*(PPL,      PPL Energy Supply and PPL Electric)*

**Financing      Activities**

*(PPL)*

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Electric)*

**Common      Stock Repurchase Program **
*(PPL)*

**Distributions      and Capital Contributions**

*(PPL)*

*(PPL      Energy Supply)*

*(PPL      Electric)*

| **8.  ** | **Acquisitions,                Development and                Divestitures** |
|--------------------|------------------------------------------------------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

**Domestic**

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Electric)*

*(PPL      and PPL      Energy Supply)*

*(PPL      and PPL Energy Supply)*

**International**
*      (PPL and PPL Energy Supply)*

**Discontinued      Operations**

*(PPL      and PPL Energy Supply)*

|                                                                                                    |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                                                                                    |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
|                                                                                                    |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                                       |   | $                                                                                    | 119    |                                                                                |   | $ | 140 |   |   | $ | 432 |   |   | $ | 409 |   |
| Operating                expenses                (a)                                                    |   |                                                                                 | 70     |                                                                                |   |   | 116 |   |   |   | 375 |   |   |   | 351 |   |
| Operating                income                                                                         |   |                                                                                 | 49     |                                                                                |   |   | 24 |   |   |   | 57 |   |   |   | 58 |   |
| Other                income –                net                                                  |   |                                                                                 | (19    | )                                                                                   |   |   | 3 |   |   |   | (16 | ) |   |   | 7 |   |
| Interest                expense                (b)                                                      |   |                                                                                 | 8      |                                                                                |   |   | 11 |   |   |   | 19 |   |   |   | 23 |   |
| Income                before income taxes and                minority interest                          |   |                                                                                 | 22     |                                                                                |   |   | 16 |   |   |   | 22 |   |   |   | 42 |   |
| Income                tax expense                (benefit)                (c)                           |   |                                                                                 | 11     |                                                                                |   |   | (1 | ) |   |   | 31 |   |   |   | 2 |   |
| Minority                interest                                                                        |   |                                                                                 | (2     | )                                                                                   |   |   | 3 |   |   |   | (9 | ) |   |   | 6 |   |
| Gain                on sale of El Salvadoran                business (net of tax expense of $5 million) |   |                                                                                 |   |                                                                                |   |   |   |   |   |   | 89 |   |   |   |   |   |
| Income                from Discontinued                Operations                                       |   | $                                                                                    | 13     |                                                                                |   | $ | 14 |   |   | $ | 89 |   |   | $ | 34 |   |

| (a) |   | The                three and nine months ended September 30, 2007, includes the                impairments to the carrying value of the Bolivian                businesses.  Also included are fees associated with the                divestiture of the Latin American businesses of $5 million, or $3                million                after tax, for the three and nine months ended September 30,                2007.                                                    |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | The                three and nine months ended                September 30,                2007 and 2006,                include $3 million and $7 million of interest expense allocated pursuant                to EITF 87-24, "Allocation of Interest to Discontinued Operations,"                based                on the discontinued operation's share of the net assets of PPL Energy                Supply.                                                                              |
| (c) |   | The                three and nine months ended September 30, 2007, include U.S. deferred                tax                (credits) charges of $(7) million and $20 million.  As a result                of PPL's decision to sell its Latin American businesses, it no longer                qualifies for the permanently reinvested exception to recording deferred                taxes pursuant to APB Opinion No. 23, "Accounting for Income Taxes-Special                Areas." |

|                                                                                        |   | **September                30,****2007** |   | **December                31,****2006** |
|---------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
| Current                Assets                                                               |   |                                     |   |                                    |   |   |   |   |
| Cash                and cash                equivalents                                     |   | $                                        | 13     |                                    |   | $ | 16 |   |
| Accounts                receivable                                                          |   |                                     | 69     |                                    |   |   | 60 |   |
| Other                                                                                       |   |                                     | 30     |                                    |   |   | 31 |   |
| Total                Current                Assets                                          |   |                                     | 112    |                                    |   |   | 107 |   |
| PP&E                                                                                    |   |                                     | 337    |                                    |   |   | 324 |   |
| Other                Noncurrent                Assets                                       |   |                                     |   |                                    |   |   |   |   |
| Goodwill                                                                                    |   |                                     | 140    |                                    |   |   | 139 |   |
| Other                                                                                       |   |                                     | 37     |                                    |   |   | 27 |   |
| Total                Other Noncurrent                Assets                                 |   |                                     | 177    |                                    |   |   | 166 |   |
| Total                assets held for                sale                                    |   | $                                        | 626    |                                    |   | $ | 597 |   |
|                                                                                        |   |                                     |   |                                    |   |   |   |   |
| Current                Liabilities                                                          |   |                                     |   |                                    |   |   |   |   |
| Accounts                payable                                                             |   | $                                        | 37     |                                    |   | $ | 36 |   |
| Other                                                                                       |   |                                     | 33     |                                    |   |   | 33 |   |
| Total                Current                Liabilities                                     |   |                                     | 70     |                                    |   |   | 69 |   |
| Long-term                Debt                                                               |   |                                     | 199    |                                    |   |   | 194 |   |
| Deferred                Credits and Other                Noncurrent Liabilities             |   |                                     | 33     |                                    |   |   | 24 |   |
| Minority                Interest                                                            |   |                                     | 24     |                                    |   |   | 23 |   |
| Total                liabilities held for sale                and related minority interest |   | $                                        | 326    |                                    |   | $ | 310 |   |

|                                                                                                                                                                         |   | **September                30,                2006** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|
|                                                                                                                                                                         |   | **Three                Months                Ended** |   | **Nine                Months                Ended** |
|                                                                                                                                                                         |   |                                                 |   |   |   |   |   |   |
| Operating                revenues                                                                                                                                            |   | $                                                    |   |   |   | $ | 5 |   |
| Operating                expenses                                                                                                                                            |   |                                                 |   |   |   |   | 10 |   |
| Operating                loss before income                taxes                                                                                                             |   |                                                 |   |   |   |   | (5 | ) |
| Income                tax                benefit                                                                                                                             |   |                                                 |   |   |   |   | 2 |   |
| Loss                from                operations                                                                                                                           |   |                                                 |   |   |   |   | (3 | ) |
| Loss                on sale of interest (net of                tax benefit of $16 million)                                                                                   |   |                                                 |   |   |   |   | (24 | ) |
| Acceleration                of net unrealized                gains on derivatives associated with the plant (net of tax expense                of $4                million) |   |                                                 |   |   |   |   | 7 |   |
| Loss                from Discontinued                Operations                                                                                                              |   | $                                                    |   |   |   | $ | (20 | ) |

*(PPL)*

|                                                                          |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                                                          |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
| Operating                revenues                                             |   | $                                                                                    | 23     |                                                                                |   | $ | 24 |   |   | $ | 161 |   |   | $ | 163 |   |
| Operating                expenses                                             |   |                                                                                 | 23     |                                                                                |   |   | 27 |   |   |   | 145 |   |   |   | 154 |   |
| Operating                (loss)                income                         |   |                                                                                 |   |                                                                                |   |   | (3 | ) |   |   | 16 |   |   |   | 9 |   |
| Interest                expense                                               |   |                                                                                 | 1      |                                                                                |   |   | 2 |   |   |   | 4 |   |   |   | 4 |   |
| (Loss)                income before income                taxes               |   |                                                                                 | (1     | )                                                                                   |   |   | (5 | ) |   |   | 12 |   |   |   | 5 |   |
| Income                tax expense                (benefit)                (a) |   |                                                                                 | 23     |                                                                                |   |   | (2 | ) |   |   | 29 |   |   |   | 3 |   |
| Income                (Loss) from Discontinued                Operations      |   | $                                                                                    | (24    | )                                                                                   |   | $ | (3 | ) |   | $ | (17 | ) |   | $ | 2 |   |

| (a) |   | As                a result of classifying the natural gas distribution and propane                businesses as Discontinued Operations and in accordance with EITF                93-17,                "Recognition of Deferred Tax Assets for a Parent Company's Excess                Tax                Basis in the Stock of a Subsidiary That Is Accounted for as a Discontinued                Operation," in the third quarter of 2007 PPL recorded a deferred                income                tax charge of $23 million related to its book/tax basis difference                in the                investment in these assets. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                            |   | **September                30,****2007** |   | **December                31,****2006** |
|---------------------------------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
| Current                Assets                                                   |   |                                     |   |                                    |   |   |   |   |
| Accounts                receivable                                              |   | $                                        | 10     |                                    |   | $ | 13 |   |
| Fuel,                materials and                supplies                      |   |                                     | 23     |                                    |   |   | 16 |   |
| Other                                                                           |   |                                     | 6      |                                    |   |   | 5 |   |
| Total                Current                Assets                              |   |                                     | 39     |                                    |   |   | 34 |   |
| PP&E                                                                        |   |                                     | 229    |                                    |   |   | 224 |   |
| Regulatory                and Other Noncurrent                Assets            |   |                                     |   |                                    |   |   |   |   |
| Goodwill                                                                        |   |                                     | 55     |                                    |   |   | 55 |   |
| Other                                                                           |   |                                     | 30     |                                    |   |   | 28 |   |
| Total                Regulatory and Other                Noncurrent Assets      |   |                                     | 85     |                                    |   |   | 83 |   |
| Total                assets held for                sale                        |   | $                                        | 353    |                                    |   | $ | 341 |   |
|                                                                            |   |                                     |   |                                    |   |   |   |   |
| Current                Liabilities                                              |   |                                     |   |                                    |   |   |   |   |
| Accounts                payable                                                 |   | $                                        | 10     |                                    |   | $ | 14 |   |
| Other                                                                           |   |                                     | 20     |                                    |   |   | 4 |   |
| Total                Current                Liabilities                         |   |                                     | 30     |                                    |   |   | 18 |   |
| Long-term                Debt                                                   |   |                                     | 10     |                                    |   |   | 10 |   |
| Deferred                Credits and Other                Noncurrent Liabilities |   |                                     | 28     |                                    |   |   | 23 |   |
| Total                liabilities held for                sale                   |   | $                                        | 68     |                                    |   | $ | 51 |   |

| **9.  ** | **Pension                and Other Postretirement                Benefits** |
|--------------------|-----------------------------------------------------------------------------|

*(PPL      and PPL Energy Supply)*

|                                                                                                                                |   | **Pension                Benefits**                 |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|
|                                                                                                                                |   | **Three                Months Ended September 30,** |   | **Nine                Months Ended September 30,** |
|                                                                                                                                |   | **Domestic**                                        |   | **International** |   | **Domestic** |   | **International** |
|                                                                                                                                |   | **2007**                                            |   | **2006** |   | **2007** |   | **2006** |   | **2007** |   | **2006** |   | **2007** |   | **2006** |
| **PPL**                                                                                                                             |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                                                                         |   | $                                                   | 15 |   |   | $ | 15 |   |   | $ | 6 |   |   | $ | 6 |   |   | $ | 47 |   |   | $ | 46 |   |   | $ | 18 |   |   | $ | 16 |   |
| Interest                cost                                                                                                        |   |                                                | 33 |   |   |   | 31 |   |   |   | 42 |   |   |   | 36 |   |   |   | 99 |   |   |   | 93 |   |   |   | 126 |   |   |   | 104 |   |
| Expected                return on plan                assets                                                                        |   |                                                | (43 | ) |   |   | (41 | ) |   |   | (57 | ) |   |   | (51 | ) |   |   | (131 | ) |   |   | (123 | ) |   |   | (169 | ) |   |   | (146 | ) |
| Amortization                of                :                                                                                     |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transition                obligation                                                                                                |   |                                                | (1 | ) |   |   | (1 | ) |   |   |   |   |   |   |   |   |   |   | (3 | ) |   |   | (3 | ) |   |   |   |   |   |   |   |   |
| Prior                service                cost                                                                                    |   |                                                | 5 |   |   |   | 4 |   |   |   | 2 |   |   |   | 1 |   |   |   | 14 |   |   |   | 11 |   |   |   | 4 |   |   |   | 4 |   |
| Net                actuarial                loss                                                                                    |   |                                                |   |   |   |   | 1 |   |   |   | 14 |   |   |   | 13 |   |   |   | 1 |   |   |   | 2 |   |   |   | 41 |   |   |   | 36 |   |
| Net                periodic pension costs prior                to settlement charge and special termination                benefits |   |                                                | 9 |   |   |   | 9 |   |   |   | 7 |   |   |   | 5 |   |   |   | 27 |   |   |   | 26 |   |   |   | 20 |   |   |   | 14 |   |
| Settlement                charge                                                                                                    |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Special                termination                benefits                                                                          |   |                                                | 1 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension                costs                                                                            |   | $                                                   | 10 |   |   | $ | 9 |   |   | $ | 7 |   |   | $ | 5 |   |   | $ | 31 |   |   | $ | 26 |   |   | $ | 20 |   |   | $ | 14 |   |
|                                                                                                                                |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL                Energy                Supply**                                                                                 |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                                                                         |   | $                                                   | 1 |   |   | $ | 1 |   |   | $ | 6 |   |   | $ | 6 |   |   | $ | 3 |   |   | $ | 3 |   |   | $ | 18 |   |   | $ | 16 |   |
| Interest                cost                                                                                                        |   |                                                | 1 |   |   |   | 1 |   |   |   | 42 |   |   |   | 36 |   |   |   | 4 |   |   |   | 3 |   |   |   | 126 |   |   |   | 104 |   |
| Expected                return on plan                assets                                                                        |   |                                                | (2 | ) |   |   | (1 | ) |   |   | (57 | ) |   |   | (51 | ) |   |   | (6 | ) |   |   | (5 | ) |   |   | (169 | ) |   |   | (146 | ) |
| Amortization                of                :                                                                                     |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior                service                cost                                                                                    |   |                                                |   |   |   |   |   |   |   |   | 2 |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   |   | 4 |   |   |   | 4 |   |
| Net                actuarial                     loss                                                                               |   |                                                |   |   |   |   |   |   |   |   | 14 |   |   |   | 13 |   |   |   |   |   |   |   | 1 |   |   |   | 41 |   |   |   | 36 |   |
| Net                periodic pension costs prior                to special termination benefits                                      |   |                                                |   |   |   |   | 1 |   |   |   | 7 |   |   |   | 5 |   |   |   | 1 |   |   |   | 2 |   |   |   | 20 |   |   |   | 14 |   |
| Special                termination                benefits                                                                          |   |                                                | 1 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension                costs                                                                            |   | $                                                   | 1 |   |   | $ | 1 |   |   | $ | 7 |   |   | $ | 5 |   |   | $ | 2 |   |   | $ | 2 |   |   | $ | 20 |   |   | $ | 14 |   |

|                                                                 |   | **Other                Postretirement Benefits**                      |
|----------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
|                                                                 |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|                                                                 |   | **2007**                                                              |   | **2006** |   | **2007** |   | **2006** |
| **PPL**                                                              |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                          |   | $                                                                     | 2 |   |   | $ | 2 |   |   | $ | 6 |   |   | $ | 6 |   |
| Interest                cost                                         |   |                                                                  | 8 |   |   |   | 7 |   |   |   | 23 |   |   |   | 22 |   |
| Expected                return on plan                assets         |   |                                                                  | (6 | ) |   |   | (5 | ) |   |   | (16 | ) |   |   | (15 | ) |
| Amortization                of:                                      |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transition                obligation                                 |   |                                                                  | 3 |   |   |   | 2 |   |   |   | 7 |   |   |   | 6 |   |
| Prior                service                cost                     |   |                                                                  | 2 |   |   |   | 2 |   |   |   | 7 |   |   |   | 4 |   |
| Net                actuarial                loss                     |   |                                                                  | 2 |   |   |   | 2 |   |   |   | 5 |   |   |   | 7 |   |
| Net                other postretirement benefit                costs |   | $                                                                     | 11 |   |   | $ | 10 |   |   | $ | 32 |   |   | $ | 30 |   |

*(PPL      and PPL Electric)*

| **10.  ** | **Commitments                and Contingencies** |
|---------------------|--------------------------------------------------|

**Energy      Purchases, Energy Sales and Other Commitments**

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Electric)*

*(PPL      and PPL Energy Supply)*

*(PPL      Energy Supply)*

** **

*(PPL      and PPL      Energy Supply)*

**Settlement      of Enron Receivables **
*(PPL      and PPL      Energy Supply)*

**Legal      Matters**

*(PPL,      PPL Energy Supply and PPL Electric)*

** **

*(PPL      and PPL      Energy Supply)*

*(PPL      and PPL      Energy Supply)*

**Regulatory      Issues**

*(PPL      and PPL      Energy Supply)*

** **
*(PPL, PPL Energy Supply and      PPL Electric)*

*(PPL and PPL Energy Supply)*

*(PPL, PPL Energy Supply and PPL Electric)*

*(PPL      and PPL      Energy Supply)*

*(PPL      and PPL      Energy Supply)*

*PPL and PPL Energy Supply)*

** **
*(PPL      and PPL      Energy Supply)*

*(PPL      and PPL      Energy Supply)*

*(PPL      and PPL      Energy Supply)*

*(PPL, PPL Energy Supply and PPL      Electric)*

| · | The                Public Utility Holding Company                Act of 1935 has been repealed.  PUHCA significantly restricted                mergers and acquisitions in the electric utility                sector.                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | The                FERC has appointed the North                American Electric Reliability Council as the organization to establish                and                enforce mandatory reliability standards (Reliability Standards) regarding                the bulk power system, and the FERC will oversee this process and                independently enforce the Reliability Standards, as further described                below. |
| · | The                FERC will establish incentives                for transmission companies, such as performance-based rates, recovery                of                the costs to comply with reliability rules and accelerated depreciation                for investments in transmission infrastructure.                                                                                                                                |
| · | The                Price-Anderson                Amendments Act of 1988, which provides                the framework for                nuclear liability protection, was extended to                2025.                                                                                                                                                                                                                                    |
| · | Federal                support will be available                for certain clean coal power initiatives, nuclear power projects                and                renewable energy                technologies.                                                                                                                                                                                                                              |

**Environmental      Matters - Domestic**

*(PPL,      PPL Energy Supply and PPL Electric)*

**Air      **
*(PPL and PPL Energy Supply)*

**Water/Waste**
*      (PPL and PPL Energy Supply)*

**Superfund      and Other Remediation**

*(PPL,      PPL Energy Supply and PPL Electric)*

*(PPL      and PPL Energy Supply)*

*(PPL,      PPL Energy Supply and PPL Electric)*

*(PPL)*

*(PPL, PPL Energy Supply and PPL      Electric)*

**Environmental      Matters - International **
*(PPL      and PPL      Energy Supply)*

**Other**

** **
*(PPL and PPL Energy      Supply)*

*(PPL)*

*(PPL,      PPL Energy Supply and PPL Electric)*

|                                                                                                                                                                 |   | **Recorded                Liability at** |   | **Exposure                at**       |   |                                      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|-------------------------------------------|
|                                                                                                                                                                 |   | **September                30, 2007**    |   | **December                31, 2006** |   | **September                30, 2007 (a)** |   | **Expiration                Date** |
| **PPL                Energy                Supply**                (b)                                                                                               |   |                                     |   |                                 |   |                                      |   |   |   |   |   |   |   |
| Letters                of credit issued on behalf                of affiliates                                                                                       |   |                                     |   |                                 |   |                                      |   | $ | 8 | (c) |   | 2008 |   |
| Retroactive                premiums under nuclear                insurance programs                                                                                  |   |                                     |   |                                 |   |                                      |   |   | 38 |   |   |   |   |
| Nuclear                claims under The                Price-Anderson                Act Amendmentsunder                The Energy Policy Act of                2005 |   |                                     |   |                                 |   |                                      |   |   | 201 | (d) |   |   |   |
| Contingent                purchase price payments                to former owners of synfuel projects                                                                |   |                                     |   |                                 |   |                                      |   |   | 6 | (e) |   | 2007 |   |
| Indemnifications                for entities in                liquidation and sales                of assets                                                        |   |                                     |   |                                 | $      | 1                                         |   |   | 321 | (f) |   | 2008                to 2012 |   |
| Assignment                of Enron                claims                                                                                                             |   |                                     |   |                                 |   |                                      |   |   | 7 | (g) |   |   | (g) |
| WPD                guarantee of pension and other                obligations of unconsolidated entities                                                              |   | $                                        | 4      |                                 |   | 4                                         |   |   | 34 | (h) |   | 2017 |   |
| Tax                indemnification related to                unconsolidated WPD affiliates                                                                           |   |                                     |   |                                 |   |                                      |   |   | 11 | (i) |   | 2012 |   |
|                                                                                                                                                                 |   |                                     |   |                                 |   |                                      |   |   |   |   |   |   |   |
| **PPL                Electric**** **(b)                                                                                                                         |   |                                     |   |                                 |   |                                      |   |   |   |   |   |   |   |
| Guarantee                of a portion of an                unconsolidated entity's                debt                                                               |   |                                     |   |                                 |   |                                      |   |   | 7 | (j) |   | 2008 |   |

| (a) |   | Represents                the estimated maximum potential amount of future payments that could                be                required to be made under the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Other                than the exceptions noted in (c) below, all guarantees of PPL Energy                Supply and PPL Electric also apply to PPL on a consolidated                basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (c) |   | Represents                letters of credit issued at the direction of PPL Energy Supply for                the                benefit of third parties for assurance against nonperformance by                PPL and                PPL Gas Utilities.  This is not a guarantee by PPL on a                consolidated basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (d) |   | Amount                is per incident.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (e) |   | Actual                payments are based primarily upon production levels of the synfuel                projects.  See "IRS Synthetic Fuels Tax Credits" within this                note for further discussion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (f) |   | PPL                Energy Supply's maximum exposure with respect to certain indemnifications                and the expiration of the indemnifications cannot be estimated because,                in                the case of certain of the indemnification provisions, the maximum                potential liability is not capped by the transaction documents and                the                expiration date is based on the applicable statute of                limitations.  The exposure noted is only for those cases in                which the agreements provide for a specific limit on the amount of                the                indemnification. In                connection with the liquidation of wholly owned subsidiaries that                have                been deconsolidated upon turning the entities over to the liquidators,                certain affiliates of PPL Global have agreed to indemnify the liquidators,                directors and/or the entities themselves for any liabilities or expenses                arising during the liquidation process, including liabilities and                expenses                of the entities placed into liquidation.  In some cases, the                indemnifications are limited to a maximum amount that is based on                distributions made from the subsidiary to its parent either prior                or                subsequent to being placed into liquidation.  In other cases,                the maximum amount of the indemnifications is not explicitly stated                in the                agreements.  The indemnifications generally expire two to seven                years subsequent to the date of dissolution of the                entities.  The exposure noted only includes those cases in which                the agreements provide for a specific limit on the amount of the                indemnification, and the expiration date was based on an estimate                of the                dissolution date of the entities. PPL                Energy Supply has provided indemnification to the purchaser of the                Sundance facility for losses arising out of any breach of the                representations, warranties and covenants under the related transaction                documents and for losses arising with respect to liabilities not                specifically assumed by the purchaser, including certain pre-closing                environmental and tort liabilities.  The indemnification other                than for pre-closing environmental and tort liabilities are triggered                only                if the purchaser's losses reach $1 million in the aggregate, are                capped at                50% of the purchase price (or $95 million), and either expired in                May 2007                or will expire pursuant to applicable statutes of                limitation.  The indemnification provision for unknown                environmental and tort liabilities related to periods prior to PPL                Energy                Supply's ownership of the real property on which the facility is                located                are capped at $4 million in the aggregate and survive for a maximum                period                of five years after the transaction closing. Certain                of the indemnifications provided to the purchaser of the interest                of PPL                Southwest Generation Holdings, LLC in the Griffith plant are triggered                only if the purchaser's losses reach $750,000 in the aggregate, are                capped                at 35% of the purchase price (or $41 million), and survive for a                period of                only 18 months after the June 30, 2006, transaction                closing.  For the majority of the indemnification obligations,                the purchaser's existing 50% ownership of the Griffith plant prior                to                closing is taken into account for purposes of determining and calculating                the purchaser's losses. |
| (g) |   | In                July 2006, two subsidiaries of PPL Energy Supply assigned their Enron                claims to an independent third party (claims purchaser).  In                connection with the assignment, the subsidiaries agreed to repay                a pro                rata share of the purchase price paid by the claims purchaser, plus                interest, in the event that any of the assigned claims are disallowed                under certain circumstances.  The bankruptcy court overseeing                the Enron bankruptcy approved the assigned claims prior to their                assignment to the claims purchaser.  The subsidiaries' repayment                obligations will remain in effect until the claims purchaser has                received                all distributions with respect to the assigned claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (h) |   | Neither                the expiration date nor the maximum amount of potential payments                for                certain obligations is explicitly stated in the related                agreements.  Therefore, they have been estimated based on the                types of obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (i) |   | Two                WPD unconsolidated affiliates were refinanced during                2005.  Under the terms of the refinancing, WPD has indemnified                the lender against certain tax and other liabilities.  At this                time, WPD believes that the likelihood of such liabilities arising                is                remote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (j) |   | Reflects                principal payments only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

| **11.  ** | **Related                Party Transactions** |
|---------------------|-----------------------------------------------|

**Affiliate      Trust **
*(PPL and PPL Energy Supply)*

**PLR      Contracts **
*(PPL Energy Supply and PPL Electric)*

**NUG      Purchases **
*(PPL Energy Supply and PPL Electric)*

**Allocations      of Corporate Service Costs**
** **

*(PPL      Energy      Supply and PPL Electric*

|                               |   | **Three                  Months Ended****September                  30,** |   | **Nine                  Months Ended****September                  30,** |   |
|------------------------------------|--------|---------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|
|                               |   | **2007**                                                                  |   | **2006**                                                                 |   | **2007** |   | **2006** |   |
|                               |   |                                                                      |   |                                                                     |   |   |   |   |   |   |   |   |   |
| PPL                  Energy Supply |   | $                                                                         | 52     |                                                                     | $      | 49 |   | $ | 166 |   | $ | 163 |   |
| PPL                  Electric      |   |                                                                      | 31     |                                                                     |   | 33 |   |   | 94 |   |   | 93 |   |

**Divestiture      of Bolivian Businesses **
*(*
*PPL      and PPL      Energy Supply)*

**Intercompany      Borrowings**

*(PPL      Energy Supply)*

*PPL      Electric)*

**Intercompany      Derivatives **
*(PPL Energy Supply)*

**Trademark      Royalties **
*(*
*PPL      Energy      Supply)*

| **12.  ** | **Other                Income - Net** |
|---------------------|---------------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

|                                                                                                                                  |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                                                                                                                  |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
| **PPL**                                                                                                                               |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                Income**                                                                                                       |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                        |   | $                                                                                    | 21     |                                                                                |   | $ | 9 |   |   | $ | 48 |   |   | $ | 22 |   |
| Gain                on sale of real                estate                                                                             |   |                                                                                 | 6      |                                                                                |   |   |   |   |   |   | 12 |   |   |   | 1 |   |
| Earnings                on nuclear                decommissioning trust                                                               |   |                                                                                 | 3      |                                                                                |   |   | 3 |   |   |   | 10 |   |   |   | 8 |   |
| Hyder                liquidation distributions                (Note 8)                                                                |   |                                                                                 |   |                                                                                |   |   | 3 |   |   |   | 6 |   |   |   | 27 |   |
| Gain                on transfer of international                equity investment (Note 8)                                       |   |                                                                                 |   |                                                                                |   |   | 5 |   |   |   | 5 |   |   |   | 5 |   |
| Equity                earnings                                                                                                        |   |                                                                                 | 1      |                                                                                |   |   | 1 |   |   |   | 3 |   |   |   | 3 |   |
| Gain                on sale of investment in an                unconsolidated affiliate (Note 8)                                      |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   | 3 |   |
| Miscellaneous                -                International                                                                           |   |                                                                                 |   |                                                                                |   |   | 1 |   |   |   | 3 |   |   |   | 3 |   |
| Miscellaneous                -                Domestic                                                                                |   |                                                                                 | 1      |                                                                                |   |   | 2 |   |   |   | 4 |   |   |   | 6 |   |
| Total                                                                                                                                 |   |                                                                                 | 32     |                                                                                |   |   | 24 |   |   |   | 91 |   |   |   | 78 |   |
| **Other                Deductions**                                                                                                   |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedging                activity                                                                                                       |   |                                                                                 | 4      |                                                                                |   |   |   |   |   |   | 8 |   |   |   | 3 |   |
| Charitable                contributions                                                                                               |   |                                                                                 | 1      |                                                                                |   |   | 2 |   |   |   | 3 |   |   |   | 4 |   |
| Taxes,                other than                income                                                                                |   |                                                                                 |   |                                                                                |   |   |   |   |   |   | 1 |   |   |   | 1 |   |
| Impairment                of investment in                U.K.                real estate                (Note                8) |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   | 8 |   |
| Miscellaneous                -                International                                                                           |   |                                                                                 | 1      |                                                                                |   |   | 2 |   |   |   | 2 |   |   |   | 2 |   |
| Miscellaneous                -                Domestic                                                                                |   |                                                                                 | 3      |                                                                                |   |   | 1 |   |   |   | 6 |   |   |   | 5 |   |
| **Other                Income - net**                                                                                                 |   | $                                                                                    | 23     |                                                                                |   | $ | 19 |   |   | $ | 71 |   |   | $ | 55 |   |

| **PPL                Energy                Supply**                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Other                Income**                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                        |   | $      | 17     |   |   | $      | 7      |   |   | $      | 37     |   |   | $      | 12     |   |
| Affiliated                interest income (Note                11)                                                                    |   |   | 11     |   |   |   | 5      |   |   |   | 23     |   |   |   | 16     |   |
| Earnings                on nuclear                decommissioning trust                                                               |   |   | 3      |   |   |   | 3      |   |   |   | 10     |   |   |   | 8      |   |
| Gain                (loss) on sale of real                estate                                                                      |   |   | 7      |   |   |   | (1     | )      |   |   | 8      |   |   |   |   |   |
| Hyder                liquidation distributions                (Note 8)                                                                |   |   |   |   |   |   | 3      |   |   |   | 6      |   |   |   | 27     |   |
| Gain                on transfer of international                equity investment (Note 8)                                       |   |   |   |   |   |   | 5      |   |   |   | 5      |   |   |   | 5      |   |
| Equity                earnings                                                                                                        |   |   | 1      |   |   |   | 1      |   |   |   | 3      |   |   |   | 3      |   |
| Gain                on sale of investment in an                unconsolidated affiliate (Note 8)                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3      |   |
| Miscellaneous                -                International                                                                           |   |   |   |   |   |   | 1      |   |   |   | 3      |   |   |   | 3      |   |
| Miscellaneous                -                Domestic                                                                                |   |   |   |   |   |   | 1      |   |   |   | 2      |   |   |   | 4      |   |
| Total                                                                                                                                 |   |   | 39     |   |   |   | 25     |   |   |   | 97     |   |   |   | 81     |   |
| **Other                Deductions**                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hedging                activity                                                                                                       |   |   | 4      |   |   |   |   |   |   |   | 8      |   |   |   | 3      |   |
| Taxes,                other than                income                                                                                |   |   |   |   |   |   |   |   |   |   | 1      |   |   |   | 1      |   |
| Impairment                of investment in                U.K.                real estate                (Note                8) |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 8      |   |
| Miscellaneous                -                International                                                                           |   |   | 1      |   |   |   | 2      |   |   |   | 2      |   |   |   | 2      |   |
| Miscellaneous                -                Domestic                                                                                |   |   | 2      |   |   |   | 2      |   |   |   | 6      |   |   |   | 5      |   |
| **Other                Income - net**                                                                                                 |   | $      | 32     |   |   | $      | 21     |   |   | $      | 80     |   |   | $      | 62     |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| **PPL                Electric**                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Other                Income**                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affiliated                interest income (Note                11) |   | $      | 5      |   |   | $      | 5      |   |   | $      | 14     |   |   | $      | 15     |   |
| Interest                income                                     |   |   | 2      |   |   |   | 3      |   |   |   | 7      |   |   |   | 8      |   |
| Gain                on sale of real                estate          |   |   |   |   |   |   |   |   |   |   | 4      |   |   |   | 1      |   |
| Miscellaneous                                                      |   |   | 1      |   |   |   |   |   |   |   | 2      |   |   |   |   |   |
| Total                                                              |   |   | 8      |   |   |   | 8      |   |   |   | 27     |   |   |   | 24     |   |
| **Other                Deductions**                                |   |   | 1      |   |   |   | 1      |   |   |   | 1      |   |   |   | 1      |   |
| **Other                Income - net**                              |   | $      | 7      |   |   | $      | 7      |   |   | $      | 26     |   |   | $      | 23     |   |

| **13.  ** | **Derivative                Instruments and Hedging                Activities** |
|---------------------|---------------------------------------------------------------------------------|

*(PPL      and PPL Energy Supply)*

**Fair      Value Hedges**

**Cash      Flow Hedges**

|                                                                                                 |   | **Three                Months                Ended****September                30,** |   | **Nine                Months                Ended****September                30,** |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                                                                                 |   | **2007**                                                                             |   | **2006**                                                                            |   | **2007** |   | **2006** |
| **PPL**                                                                                              |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning                accumulated derivative                loss                                  |   | $                                                                                    | (137   | )                                                                                   |   | $ | (120 | ) |   | $ | (51 | ) |   | $ | (246 | ) |
| Net                change associated with current                period hedging activities and other |   |                                                                                 | 10     |                                                                                |   |   | 5 |   |   |   | (82 | ) |   |   | 51 |   |
| Net                change from reclassification                into earnings                (a)      |   |                                                                                 | 12     |                                                                                |   |   | 38 |   |   |   | 18 |   |   |   | 118 |   |
| Ending                accumulated derivative                loss                                     |   | $                                                                                    | (115   | )                                                                                   |   | $ | (77 | ) |   | $ | (115 | ) |   | $ | (77 | ) |
|                                                                                                 |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL                Energy Supply**                                                                 |   |                                                                                 |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning                accumulated derivative                loss                                  |   | $                                                                                    | (143   | )                                                                                   |   | $ | (129 | ) |   | $ | (52 | ) |   | $ | (237 | ) |
| Net                change associated with current                period hedging activities and other |   |                                                                                 | 18     |                                                                                |   |   | 16 |   |   |   | (77 | ) |   |   | 47 |   |
| Net                change from reclassification                into earnings                (a)      |   |                                                                                 | 10     |                                                                                |   |   | 37 |   |   |   | 14 |   |   |   | 114 |   |
| Ending                accumulated derivative                loss                                     |   | $                                                                                    | (115   | )                                                                                   |   | $ | (76 | ) |   | $ | (115 | ) |   | $ | (76 | ) |

| (a) |   | The                nine months ended September 30,                2006, include $7                million for the                acceleration of unrealized gains associated with the Griffith                plant that have been recorded in                Discontinued Operations.  See Note 8 for additional                information. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Normal      Purchase/Normal Sale Exception**

|                                            |   | **(Losses)                Gains**        |
|-------------------------------------------------|--------|------------------------------------------|
|                                            |   | **September                30,****2007** |   | **December                31,****2006** |
|                                            |   |                                     |   |   |   |   |   |   |
| PPL                                             |   | $                                        | (29 | ) |   | $ | 146 |   |
| PPL                Energy                Supply |   |                                     | (26 | ) |   |   | 154 |   |

**Economic      Activity**

**Credit      Concentration**

*(PPL      and PPL Energy Supply)*

*(PPL      Electric)*

| **14.  ** | **Restricted                Cash** |
|---------------------|------------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

|                                                                             |   | **September                30,                2007** |
|----------------------------------------------------------------------------------|--------|------------------------------------------------------|
|                                                                             |   | **PPL**                                              |   | **PPL                Energy                Supply** |   | **PPL                Electric** |
| **Current:**                                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Collateral                for letters of credit                (a)               |   | $                                                    | 41 |   |   |   |   |   |   | $ | 41 |   |
| Deposits                for trading purposes with                NYMEX broker    |   |                                                 | 61 |   |   | $ | 61 |   |   |   |   |   |
| Counterparty                collateral                                           |   |                                                 | 26 |   |   |   | 18 |   |   |   | 8 |   |
| Client                deposits                                                   |   |                                                 | 6 |   |   |   |   |   |   |   |   |   |
| Miscellaneous                                                                    |   |                                                 | 1 |   |   |   |   |   |   |   | 1 |   |
| Restricted                cash -                current                          |   |                                                 | 135 |   |   |   | 79 |   |   |   | 50 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent:**                                                                  |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Required                deposits                of WPD (b)                       |   |                                                 | 19 |   |   |   | 19 |   |   |   |   |   |
| PPL                Transition Bond Company                Indenture reserves (c) |   |                                                 | 36 |   |   |   |   |   |   |   | 36 |   |
| Restricted                cash -                noncurrent                       |   |                                                 | 55 |   |   |   | 19 |   |   |   | 36 |   |
| Total                restricted                cash                              |   | $                                                    | 190 |   |   | $ | 98 |   |   | $ | 86 |   |

|                                                                             |   | **December                31,                2006** |
|----------------------------------------------------------------------------------|--------|-----------------------------------------------------|
|                                                                             |   | **PPL**                                             |   | **PPL                Energy                Supply** |   | **PPL                Electric** |
| **Current:**                                                                     |   |                                                |   |   |   |   |   |   |   |   |   |   |
| Collateral                for letters of credit                (a)               |   | $                                                   | 42 |   |   |   |   |   |   | $ | 42 |   |
| Deposits                for trading purposes with                NYMEX broker    |   |                                                | 42 |   |   | $ | 42 |   |   |   |   |   |
| Counterparty                collateral                                           |   |                                                | 6 |   |   |   | 6 |   |   |   |   |   |
| Client                deposits                                                   |   |                                                | 9 |   |   |   |   |   |   |   |   |   |
| Miscellaneous                                                                    |   |                                                | 3 |   |   |   | 3 |   |   |   | 1 |   |
| Restricted                cash -                current                          |   |                                                | 102 |   |   |   | 51 |   |   |   | 43 |   |
|                                                                             |   |                                                |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent:**                                                                  |   |                                                |   |   |   |   |   |   |   |   |   |   |
| Required                deposits                of WPD (b)                       |   |                                                | 20 |   |   |   | 20 |   |   |   |   |   |
| PPL                Transition Bond Company                Indenture reserves (c) |   |                                                | 33 |   |   |   |   |   |   |   | 33 |   |
| Restricted                cash -                noncurrent                       |   |                                                | 53 |   |   |   | 20 |   |   |   | 33 |   |
| Total                restricted                cash                              |   | $                                                   | 155 |   |   | $ | 71 |   |   | $ | 76 |   |

| (a) |   | A                deposit with a financial institution of funds from the asset-backed                commercial paper program to fully collateralize letters of                credit.  See Note 7 for further discussion on the asset-backed                commercial paper program. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Includes                insurance reserves of $18 million and $19 million at September 30,                2007 and December 31, 2006.                                                                                                                                                      |
| (c) |   | Credit                enhancement for PPL Transition Bond Company's $2.4 billion Series                1999-1                Bonds to protect against losses or delays in scheduled                payments.                                                                                    |

| **15.  ** | **Goodwill** |
|---------------------|--------------|

*(PPL      and PPL Energy Supply)*

|                                                                    |   | **PPL                Energy                Supply** |   |                      |   | **PPL**   |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------|--------|---------------------------|--------|-----------|
|                                                                    |   | **Supply**                                          |   | **InternationalDelivery** |   | **Total** |   | **Pennsylvania                Delivery** |   | **Total** |
|                                                                    |   |                                                |   |                      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at December 31,                2006         |   | $                                                   | 94     |                      |   | $         | 1,005 |   |   | $ | 1,099 |   |   | $ | 55 |   |   | $ | 1,154 |   |
| Effect                of foreign currency                exchange rates |   |                                                |   |                      |   |      | 18 |   |   |   | 18 |   |   |   |   |   |   |   | 18 |   |
| Reclassification                (a)                                     |   |                                                |   |                      |   |      | (144 | ) |   |   | (144 | ) |   |   | (55 | ) |   |   | (199 | ) |
| Other                                                                   |   |                                                |   |                      |   |      | 1 |   |   |   | 1 |   |   |   |   |   |   |   | 1 |   |
| Balance                at September 30,                2007        |   | $                                                   | 94     |                      |   | $         | 880 |   |   | $ | 974 |   |   | $ |   |   |   | $ | 974 |   |

| (a) |   | The                International Delivery amount relates to Latin American businesses                and has                been transferred to "Assets held for sale" on the Balance Sheet as                a                result of the anticipated sale of these businesses, of which $9 million                relates to the El Salvadoran business sold in May 2007.  The                Pennsylvania Delivery amount relates to the natural gas distribution                and                propane businesses and has been transferred to "Assets held for sale"                on                the Balance Sheet as a result of the anticipated sale of these                businesses.  See Note 8 for additional                information. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **16.  ** | **Asset                Retirement Obligations** |
|---------------------|-------------------------------------------------|

*(PPL      and PPL Energy Supply)*

| AROs                at December 31, 2006                                |   | $      | 336 |   |   |
|-------------------------------------------------------------------------|--------|--------|-----|--------|--------|
| Liabilities                incurred                                     |   |   | 8   |   |   |
| Changes                in                estimates                      |   |   | 10  |   |   |
| Accretion                expense                                        |   |   | 20  |   |   |
| Liabilities                settled                                      |   |   | (5  | )      |   |
| AROs                at September                30,                2007 |   | $      | 369 |   |   |

| **17.  ** | **New                Accounting Standards** |
|---------------------|---------------------------------------------|

*(PPL,      PPL Energy Supply and PPL Electric)*

**FIN      48**

**SFAS      155**

**SFAS      157**

**SFAS      159**

----

**PPL      CORPORATION AND SUBSIDIARIES**

**Item      2.  Management's Discussion and Analysis of Financial Condition and      Results of Operations**

**Overview**

**Results      of Operations**

**Earnings**

|                                        |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                        |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                        |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                   |   | $                                                                     | 322    |                                                                 |   | $ | 226 |   |   | $ | 870 |   |   | $ | 687 |   |
| EPS                - basic                  |   | $                                                                     | 0.85   |                                                                 |   | $ | 0.59 |   |   | $ | 2.27 |   |   | $ | 1.81 |   |
| EPS                -                diluted |   | $                                                                     | 0.84   |                                                                 |   | $ | 0.58 |   |   | $ | 2.25 |   |   | $ | 1.78 |   |

**Segment      Results**

|                                  |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                  |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                  |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                |   | $                                                                     | 205    |                                                                 |   | $ | 120 |   |   | $ | 454 |   |   | $ | 337 |   |
| International                Delivery |   |                                                                  | 108    |                                                                 |   |   | 59 |   |   |   | 319 |   |   |   | 219 |   |
| Pennsylvania                Delivery  |   |                                                                  | 9      |                                                                 |   |   | 47 |   |   |   | 97 |   |   |   | 131 |   |
| Total                                 |   | $                                                                     | 322    |                                                                 |   | $ | 226 |   |   | $ | 870 |   |   | $ | 687 |   |

|                                                            |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                            |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
| Energy                revenues                                  |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| External                                                        |   | $                                                                     | 555    |                                                                 |   | $ | 483 |   |   | $ | 1,240 |   |   | $ | 1,258 |   |
| Intersegment                                                    |   |                                                                  | 453    |                                                                 |   |   | 445 |   |   |   | 1,356 |   |   |   | 1,286 |   |
| Energy-related                businesses                        |   |                                                                  | 185    |                                                                 |   |   | 125 |   |   |   | 536 |   |   |   | 426 |   |
| Total                operating                revenues          |   |                                                                  | 1,193  |                                                                 |   |   | 1,053 |   |   |   | 3,132 |   |   |   | 2,970 |   |
| Fuel                and energy                purchases         |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| External                                                        |   |                                                                  | 425    |                                                                 |   |   | 466 |   |   |   | 1,069 |   |   |   | 1,170 |   |
| Intersegment                                                    |   |                                                                  | 44     |                                                                 |   |   | 41 |   |   |   | 119 |   |   |   | 121 |   |
| Other                operation and                maintenance   |   |                                                                  | 163    |                                                                 |   |   | 172 |   |   |   | 517 |   |   |   | 513 |   |
| Depreciation                                                    |   |                                                                  | 42     |                                                                 |   |   | 41 |   |   |   | 124 |   |   |   | 117 |   |
| Taxes,                other than                income          |   |                                                                  | 6      |                                                                 |   |   | 10 |   |   |   | 24 |   |   |   | 29 |   |
| Energy-related                businesses                        |   |                                                                  | 174    |                                                                 |   |   | 152 |   |   |   | 568 |   |   |   | 441 |   |
| Total                operating                expenses          |   |                                                                  | 854    |                                                                 |   |   | 882 |   |   |   | 2,421 |   |   |   | 2,391 |   |
| Other                Income                - net                |   |                                                                  | 15     |                                                                 |   |   | 5 |   |   |   | 27 |   |   |   | 5 |   |
| Interest                Expense                                 |   |                                                                  | 38     |                                                                 |   |   | 32 |   |   |   | 113 |   |   |   | 88 |   |
| Income                Taxes                                     |   |                                                                  | 110    |                                                                 |   |   | 23 |   |   |   | 169 |   |   |   | 137 |   |
| Minority                Interest                                |   |                                                                  | 1      |                                                                 |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
| Loss                from Discontinued                Operations |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (20 | ) |
| Net                Income                                       |   | $                                                                     | 205    |                                                                 |   | $ | 120 |   |   | $ | 454 |   |   | $ | 337 |   |

|                                                           |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|----------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                           |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                           |   |                                                                               |   |   |   |   |   |   |
| Eastern                U.S. non-trading                margins |   | $                                                                                  | 36 |   |   | $ | 56 |   |
| Western                U.S. non-trading                margins |   |                                                                               | 14 |   |   |   | 10 |   |
| Net                energy trading                margins       |   |                                                                               | (3 | ) |   |   | (2 | ) |
| Other                operation and                maintenance  |   |                                                                               | 2 |   |   |   | (5 | ) |
| Depreciation                                                   |   |                                                                               | (1 | ) |   |   | (4 | ) |
| Earningsfrom                synfuel                projects    |   |                                                                               | 4 |   |   |   | 17 |   |
| Financing                costs                                 |   |                                                                               | (2 | ) |   |   | (9 | ) |
| Energy-related                businesses                       |   |                                                                               |   |   |   |   | 2 |   |
| Taxes,                other than                income         |   |                                                                               | 2 |   |   |   | 3 |   |
| Other                income -                net               |   |                                                                               | 3 |   |   |   | 5 |   |
| Certain                income tax                adjustments   |   |                                                                               | 4 |   |   |   | 7 |   |
| Other                                                          |   |                                                                               | 1 |   |   |   |   |   |
| Special                items                                   |   |                                                                               | 25 |   |   |   | 37 |   |
|                                                           |   | $                                                                                  | 85 |   |   | $ | 117 |   |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | The                  improved earnings contribution from synfuel projects for the three                  and                  nine months ended September 30, 2007, was primarily due to higher                  net                  gains on options purchased to hedge the risk associated with the                  phase-out                  of synthetic fuel tax credits and increased                  production. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | Financing                costs were higher for both periods primarily due to higher interest                expense on long-term debt.                                                                                                                                                                                                                                                                                      |

|                                                                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Mark-to-market                adjustments from                certain economic, non-trading hedges                |   | $                                                                     | (6     | )                                                                    |   | $ | (13 | ) |   | $ | 20 |   |   | $ | (14 | ) |
| Loss                related to sale of interest                in the Griffith                plant (Note 8) |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (17 | ) |
| Impairment                of certain transmission                rights (Note 10)                                 |   |                                                                  | (12    | )                                                                    |   |   |   |   |   |   | (12 | ) |   |   |   |   |
| Settlement                of Wallingford                cost-based rates (Note                10)                 |   |                                                                  | 33     |                                                                 |   |   |   |   |   |   | 33 |   |   |   |   |   |
| Sale                of telecommunication operations                (Note 8)                                       |   |                                                                  | (3     | )                                                                    |   |   |   |   |   |   | (23 | ) |   |   |   |   |
| Reduction                in Enron reserve (Note                10)                                                |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | 11 |   |
| Off-site                remediation of ash basin                leak (Note 10)                               |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | 6 |   |
| Impairment                of synfuel-related                assets (Note 10)                                      |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (6 | ) |
| PJM                billing dispute                (Note                10)                                        |   |                                                                  |   |                                                                 |   |   |   |   |   |   | (1 | ) |   |   |   |   |
| Total                                                                                                             |   | $                                                                     | 12     |                                                                 |   | $ | (13 | ) |   | $ | 17 |   |   | $ | (20 | ) |

*Outlook*

|                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility                revenues                                   |   | $                                                                     | 204    |                                                                 |   | $ | 174 |   |   | $ | 638 |   |   | $ | 562 |   |
| Energy-related                businesses                          |   |                                                                  | 8      |                                                                 |   |   | 7 |   |   |   | 27 |   |   |   | 27 |   |
| Total                operating                revenues            |   |                                                                  | 212    |                                                                 |   |   | 181 |   |   |   | 665 |   |   |   | 589 |   |
| Other                operation and                maintenance     |   |                                                                  | 57     |                                                                 |   |   | 45 |   |   |   | 182 |   |   |   | 132 |   |
| Depreciation                                                      |   |                                                                  | 33     |                                                                 |   |   | 36 |   |   |   | 111 |   |   |   | 105 |   |
| Taxes,                other than                income            |   |                                                                  | 17     |                                                                 |   |   | 15 |   |   |   | 49 |   |   |   | 41 |   |
| Energy-related                businesses                          |   |                                                                  | 4      |                                                                 |   |   | 4 |   |   |   | 13 |   |   |   | 12 |   |
| Total                operating                expenses            |   |                                                                  | 111    |                                                                 |   |   | 100 |   |   |   | 355 |   |   |   | 290 |   |
| Other                Income -                net                  |   |                                                                  | 2      |                                                                 |   |   | 7 |   |   |   | 19 |   |   |   | 27 |   |
| Interest                Expense                                   |   |                                                                  | 47     |                                                                 |   |   | 44 |   |   |   | 141 |   |   |   | 130 |   |
| Income                Taxes                                       |   |                                                                  | (39    | )                                                                    |   |   | (1 | ) |   |   | (42 | ) |   |   | 11 |   |
| Income                from Discontinued                Operations |   |                                                                  | 13     |                                                                 |   |   | 14 |   |   |   | 89 |   |   |   | 34 |   |
| Net                Income                                         |   | $                                                                     | 108    |                                                                 |   | $ | 59 |   |   | $ | 319 |   |   | $ | 219 |   |

|                                                                                                              |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                              |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| U.K.                                                                                                              |   |                                                                               |   |   |   |   |   |   |
| Delivery                margins                                                                                   |   | $                                                                                  | 8 |   |   | $ | 2 |   |
| Other                operating expenses                                                                           |   |                                                                               | (2 | ) |   |   | (13 | ) |
| Depreciation                                                                                                      |   |                                                                               | 4 |   |   |   | 3 |   |
| Interest                expense                                                                                   |   |                                                                               | (2 | ) |   |   | (5 | ) |
| Income                taxes                                                                                       |   |                                                                               | (1 | ) |   |   | (23 | ) |
| Foreign                currency exchange                rates                                                     |   |                                                                               | 4 |   |   |   | 17 |   |
| Impairment                of investment in                U.K.                real estate (Note                8) |   |                                                                               |   |   |   |   | 6 |   |
| Gain                on transfer of                equity investment (Note                8)                       |   |                                                                               | (5 | ) |   |   |   |   |
| Hyder                liquidation distributions                (Note 8)                                            |   |                                                                               | (2 | ) |   |   | (21 | ) |
| Other                                                                                                             |   |                                                                               | 2 |   |   |   | 5 |   |
| Latin                American                operations                                                           |   |                                                                               | (14 | ) |   |   | 1 |   |
| Change                in tax reserves (Note                5)                                                     |   |                                                                               |   |   |   |   | 31 |   |
| Other                                                                                                             |   |                                                                               |   |   |   |   | (2 | ) |
| Special                items                                                                                      |   |                                                                               | 57 |   |   |   | 99 |   |
|                                                                                                              |   | $                                                                                  | 49 |   |   | $ | 100 |   |

| · | Higher                U.K. delivery margins, for both periods, were primarily due to an                increase                in prices effective April 1, 2007 and favorable customer mix                changes.  The increase for the nine months ended September 30,                2007, was primarily offset by a 4% decrease in sales volume, partially                due                to milder weather in 2007. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Higher                U.K. other operating expenses for the nine months ended September                30,                2007, were partially due to higher pension costs and a greater insurance                adjustment in 2006 compared with 2007.                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Higher                U.K. income taxes for the nine months ended September 30, 2007, were                primarily due to the transfer of WPD tax items in the first quarter                of                2006.  See Note 5 to the Financial Statements for additional                information.                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Changes                in foreign exchange rates increased the U.K.'s portion of revenue                and                expense line items by 9% and 12% for the three and nine months ended                September 30, 2007, compared with the same periods in                2006.                                                                                                                                              |

|                                                                                 |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                 |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                 |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Divestiture                of Latin American                businesses (Note 8) |   | $                                                                     | 3      |                                                                 |   |   |   |   |   | $ | 46 |   |   |   |   |   |
| Change                in U.K. tax rate (Note                5)                       |   |                                                                  | 54     |                                                                 |   |   |   |   |   |   | 54 |   |   |   |   |   |
| Reduction                in Enron                reserve                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   | $ | 1 |   |
| Total                                                                                |   | $                                                                     | 57     |                                                                 |   |   |   |   |   | $ | 100 |   |   | $ | 1 |   |

*Outlook*

** **

|                                                                       |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|----------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                       |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
| Operating                revenues                                          |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| External                                                                   |   | $                                                                     | 811    |                                                                 |   | $ | 799 |   |   | $ | 2,436 |   |   | $ | 2,330 |   |
| Intersegment                                                               |   |                                                                  | 44     |                                                                 |   |   | 41 |   |   |   | 119 |   |   |   | 121 |   |
| Energy-related                businesses                                   |   |                                                                  |   |                                                                 |   |   | 1 |   |   |   |   |   |   |   | 1 |   |
| Total                operating                revenues                     |   |                                                                  | 855    |                                                                 |   |   | 841 |   |   |   | 2,555 |   |   |   | 2,452 |   |
| Fuel                and energy                purchases                    |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| External                                                                   |   |                                                                  | 56     |                                                                 |   |   | 54 |   |   |   | 157 |   |   |   | 156 |   |
| Intersegment                                                               |   |                                                                  | 453    |                                                                 |   |   | 445 |   |   |   | 1,356 |   |   |   | 1,286 |   |
| Other                operation and                maintenance              |   |                                                                  | 104    |                                                                 |   |   | 82 |   |   |   | 297 |   |   |   | 269 |   |
| Amortization                of recoverable                transition costs |   |                                                                  | 78     |                                                                 |   |   | 75 |   |   |   | 229 |   |   |   | 210 |   |
| Depreciation                                                               |   |                                                                  | 33     |                                                                 |   |   | 28 |   |   |   | 99 |   |   |   | 86 |   |
| Taxes,                other than                income                     |   |                                                                  | 50     |                                                                 |   |   | 49 |   |   |   | 150 |   |   |   | 143 |   |
| Total                operating                expenses                     |   |                                                                  | 774    |                                                                 |   |   | 733 |   |   |   | 2,288 |   |   |   | 2,150 |   |
| Other                Income -                net                           |   |                                                                  | 6      |                                                                 |   |   | 7 |   |   |   | 25 |   |   |   | 23 |   |
| Interest                Expense                                            |   |                                                                  | 32     |                                                                 |   |   | 38 |   |   |   | 103 |   |   |   | 120 |   |
| Income                Taxes                                                |   |                                                                  | 17     |                                                                 |   |   | 22 |   |   |   | 61 |   |   |   | 66 |   |
| Dividends                on Preferred                Securities            |   |                                                                  | 5      |                                                                 |   |   | 5 |   |   |   | 14 |   |   |   | 10 |   |
| Income                (Loss) from Discontinued                Operations   |   |                                                                  | (24    | )                                                                    |   |   | (3 | ) |   |   | (17 | ) |   |   | 2 |   |
| Net                Income                                                  |   | $                                                                     | 9      |                                                                 |   | $ | 47 |   |   | $ | 97 |   |   | $ | 131 |   |

|                                                                                                                                                     |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                                                                     |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                                                                     |   |                                                                               |   |   |   |   |   |   |
| Delivery                revenues (net of CTC/ITC                amortization, interest expense on transition bonds and ancillary                charges) |   | $                                                                                  | 1 |   |   | $ | 11 |   |
| Other                operation and                maintenance                                                                                            |   |                                                                               | 2 |   |   |   | (2 | ) |
| Depreciation                                                                                                                                             |   |                                                                               | (3 | ) |   |   | (8 | ) |
| Other                                                                                                                                                    |   |                                                                               | (1 | ) |   |   | 2 |   |
| Special                items                                                                                                                             |   |                                                                               | (37 | ) |   |   | (37 | ) |
|                                                                                                                                                     |   | $                                                                                  | (38 | ) |   | $ | (34 | ) |

| · | Higher                delivery revenues for the nine months ended September 30, 2007, were                primarily attributable to a 3% increase in sales volume, due in part                to                the impact of favorable weather in 2007 on residential and commercial                sales and to normal load growth.               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                     |
| · | Depreciation                expense was higher for the three and nine months ended September                30, 2007,                primarily due to plant additions.  The increase in the nine                month period was also impacted by the purchase in September 2006                of                equipment previously leased. |

|                                                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Sale                of gas and propane operations                (Note 8)                    |   | $                                                                     | (23    | )                                                                    |   |   |   |   |   | $ | (23 | ) |   |   |   |   |
| Write-off                of the Hurricane Isabel                regulatory asset (Note 2)         |   |                                                                  |   |                                                                 |   | $ | (7 | ) |   |   |   |   |   | $ | (7 | ) |
| Realization                of benefits related to                Black Lung Trust assets (Note 9) |   |                                                                  |   |                                                                 |   |   | 21 |   |   |   |   |   |   |   | 21 |   |
| Total                                                                                             |   | $                                                                     | (23    | )                                                                    |   | $ | 14 |   |   | $ | (23 | ) |   | $ | 14 |   |

*Outlook*

**Statement      of Income Analysis --**

**Domestic      Gross Energy Margins**

|                                                        |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                        |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                        |   |                                                                               |   |   |   |   |
| Utility                                                     |   | $                                                                                  | 44 |   |   | $ | 182 |   |
| Unregulated                retail                electric   |   |                                                                               | 5 |   |   |   | 5 |   |
| Wholesale                energy                marketing    |   |                                                                               | 70 |   |   |   | (20 | ) |
| Net                energy trading                margins    |   |                                                                               | (5 | ) |   |   | (3 | ) |
| Other                revenue adjustments                (a) |   |                                                                               | (55 | ) |   |   | (94 | ) |
| Total                revenues                               |   |                                                                               | 59 |   |   |   | 70 |   |
| Fuel                                                        |   |                                                                               | 21 |   |   |   | 104 |   |
| Energy                purchases                             |   |                                                                               | (60 | ) |   |   | (204 | ) |
| Other                cost adjustments                (a)    |   |                                                                               | 5 |   |   |   | 14 |   |
| Total                cost of                sales           |   |                                                                               | (34 | ) |   |   | (86 | ) |
| Domestic                gross energy                margins |   | $                                                                                  | 93 |   |   | $ | 156 |   |

| (a) |   | Adjusted                to exclude the impact of any revenues and costs not associated with                domestic gross energy margins, consistent with the way management                reviews                domestic gross energy margins internally.  These exclusions                include revenues and energy costs related to the international operations                of PPL Global, domestic delivery operations of PPL Electric and revenues                prior to 2007 associated with the settlement of Wallingford cost-based                rates (see Note 10 to the Financial Statements for additional                information).  Also adjusted to include the margins of the                Griffith plant prior to its sale in June 2006, which are included                in                Discontinued Operations, and gains or losses on sales of emission                allowances, which are included in "Other operation and maintenance"                expenses on the Statements of                Income. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------|------------------------------------------------------------------------------------|
|                                                        | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| Non-trading                                                 |                                                                               |   |   |   |   |   |   |
| Eastern                U.S.                                 | $                                                                                  | 72 |   |   | $ | 152 |   |
| Western                U.S.                                 |                                                                               | 25 |   |   |   | 19 |   |
| Net                energy                trading            |                                                                               | (4 | ) |   |   | (15 | ) |
| Domestic                gross energy                margins | $                                                                                  | 93 |   |   | $ | 156 |   |

*Eastern      U.S.*

*Western      U.S.*

*Net      Energy Trading*

|   |   | **Three                Months Ended****Sept.                30,** |   | **Nine                Months Ended****Sept.                30,** |
|--------|--------|-------------------------------------------------------------------|--------|------------------------------------------------------------------|
|   |   | **2007**                                                          |   | **2006**                                                         |   | **2007** |   | **2006** |
|   |   |                                                              |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| GWh    |   |                                                              | 4,034  |                                                             |   |   | 1,730 |   |   |   | 9,381 |   |   |   | 5,509 |   |
| Bcf    |   |                                                              | 2.8    |                                                             |   |   | 5.1 |   |   |   | 11.0 |   |   |   | 14.5 |   |

**Utility      Revenues**

|                                                                              |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                              |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| **Domestic:**                                                                     |   |                                                                               |   |   |   |   |   |   |
| Retail                electric revenue (PPL                Electric)              |   |                                                                               |   |   |   |   |   |   |
| PLR                electric delivery                                              |   | $                                                                                  | 10 |   |   | $ | 76 |   |
| Electric                delivery                                                  |   |                                                                               | 2 |   |   |   | 31 |   |
| Other                                                                             |   |                                                                               | 2 |   |   |   | (1 | ) |
| **International:**                                                                |   |                                                                               |   |   |   |   |   |   |
| U.K.                retail electric                delivery                       |   |                                                                               | 14 |   |   |   | 17 |   |
| U.K.                foreign currency                exchange                rates |   |                                                                               | 16 |   |   |   | 59 |   |
|                                                                              |   | $                                                                                  | 44 |   |   | $ | 182 |   |

| · | higher                PLR revenues and electric delivery revenues for the nine months ended                September 30, 2007, primarily attributable to a 3% increase in sales                volume, due in part to the impact of favorable weather in 2007 on                residential and commercial sales and to normal load growth;                and                                                                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | higher                U.K. utility revenues, for both periods, primarily due to an increase                in                prices effective April 1, 2007, favorable customer mix changes and                an                increase in engineering services performed for third                parties.  The increase for the nine months ended September 30,                2007, was primarily offset by a 4% decrease in sales volume, partially                due                to milder weather in 2007. |

**Energy-related      Businesses**

| · | a                $54 million net gain on options purchased to hedge the risk associated                with the phase-out of the synthetic fuel tax credits; partially offset                by |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | $10                million of higher operating losses from synfuel projects due to higher                production levels; and                                                                 |
| · | a                $5 million impairment of telecommunication assets that were sold                in August                2007 (see Note 8 to the Financial                Statements).         |

| · | a                $21 million net gain on options purchased to hedge the risk                associated with the phase-out of the synthetic fuel tax credits;                and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | an                impairment charge of $10 million on the synfuel-related assets in                2006;                partially offset by                                          |
| · | $15                million of higher operating losses due to higher production                levels.                                                                                |

**Other      Operation and Maintenance**

|                                                                                                          |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                          |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                          |   |                                                                               |   |   |   |   |
| Realization                of benefits related to                Black Lung Trust assets in 2006 (Note 9)     |   | $                                                                                  | 36 |   |   | $ | 36 |   |
| Impairment                of certain transmission                rights (Note 10)                             |   |                                                                               | 21 |   |   |   | 21 |   |
| Reduction                in Enron reserve                in 2006 (Note 10)                               |   |                                                                               |   |   |   |   | 19 |   |
| WPD                recoverable engineering                services performed for third parties                |   |                                                                               | 5 |   |   |   | 19 |   |
| Martins                Creek ash basin                remediation adjustment in 2006 (Note                10) |   |                                                                               |   |   |   |   | 11 |   |
| U.K.                foreign currency exchange                rates                                            |   |                                                                               | 4 |   |   |   | 14 |   |
| Pension                and other postretirement                benefits                                       |   |                                                                               | 2 |   |   |   | 10 |   |
| Environmental                remediation                                                                      |   |                                                                               |   |   |   |   | 6 |   |
| Stock-based                compensation                                                                       |   |                                                                               | 1 |   |   |   | 5 |   |
| WPD                insurance                adjustment                                                        |   |                                                                               |   |   |   |   | 5 |   |
| Eastern                U.S. fossil/hydro                station                outages                        |   |                                                                               | (5 | ) |   |   | 5 |   |
| Susquehannanuclear                station                outages                                              |   |                                                                               | (4 | ) |   |   | 4 |   |
| WPD                distribution                costs                                                          |   |                                                                               | 1 |   |   |   | 2 |   |
| Advertising                                                                                                   |   |                                                                               |   |   |   |   | 3 |   |
| Reversal                in 2006 of cost recovery                - Hurricane Isabel (Note 2)                   |   |                                                                               | (11 | ) |   |   | (11 | ) |
| Gains                on sale of emission                allowances                                            |   |                                                                               | (25 | ) |   |   | (62 | ) |
| Other                                                                                                         |   |                                                                               |   |   |   |   | (5 | ) |
|                                                                                                          |   | $                                                                                  | 25 |   |   | $ | 82 |   |

**Depreciation**

|                                                                                                                         |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                                         |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                                         |   |                                                                               |   |   |   |   |
| Additions                to                PP&E                                                                          |   | $                                                                                  | 11 |   |   | $ | 24 |   |
| U.K.                foreign currency                exchange                rates                                            |   |                                                                               | 2 |   |   |   | 10 |   |
| Purchase                in September 2006 of                equipment previously leased                                      |   |                                                                               | 1 |   |   |   | 9 |   |
| Impact                of not depreciating held                for sale telecommunication assets (Note 8)                     |   |                                                                               | (3 | ) |   |   | (7 | ) |
| Extension                of useful lives of                certain WPD                network                assets (Note 2) |   |                                                                               | (7 | ) |   |   | (11 | ) |
| Other                                                                                                                        |   |                                                                               | (1 | ) |   |   | 1 |   |
|                                                                                                                         |   | $                                                                                  | 3 |   |   | $ | 26 |   |

**Taxes,      Other Than Income**

| · | an                $8 million increase in domestic gross receipts tax expense resulting                from                a 3% increase in sales volume;                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | a                $4 million increase from changes in U.K. foreign currency exchange                rates;                and                                                  |
| · | a                $3 million increase in WPD property taxes, due to the 2006 period                including a refund credit of $2 million; partially offset                by |
| · | a                $4 million decrease in domestic capital stock tax                expense.                                                                                    |

**Other      Income - net**

**Financing      Costs**

|                                                                                                             |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                             |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                             |   |                                                                               |   |   |   |   |
| Long-term                debt interest                expense                                                    |   | $                                                                                  | 11 |   |   | $ | 36 |   |
| U.K.                foreign currency exchange                rates                                               |   |                                                                               | 3 |   |   |   | 11 |   |
| Dividends                on 6.25% Series                Preference Stock                                         |   |                                                                               |   |   |   |   | 4 |   |
| Hedging                activities                                                                                |   |                                                                               | (1 | ) |   |   | (2 | ) |
| Redemption                of 8.23% Subordinated                Debentures due 2027 with affiliate (Note 11) |   |                                                                               | (3 | ) |   |   | (5 | ) |
| Capitalized                interest                                                                              |   |                                                                               | (9 | ) |   |   | (24 | ) |
| Other                                                                                                            |   |                                                                               | 2 |   |   |   | 3 |   |
|                                                                                                             |   | $                                                                                  | 3 |   |   | $ | 23 |   |

**Income      Taxes**

|                                                                                                  |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                  |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                  |   |                                                                               |   |   |   |   |
| Higher                pre-tax book income                                                             |   | $                                                                                  | 65 |   |   | $ | 47 |   |
| Transfer                of WPD tax items                in 2006                                       |   |                                                                               |   |   |   |   | 20 |   |
| Increase                in tax expense on foreign                earnings                             |   |                                                                               | 9 |   |   |   | 7 |   |
| Change in                tax benefits related to                nonconventional fuel tax credits |   |                                                                               | 21 |   |   |   | (17 | ) |
| Change                in tax                reserves                                                  |   |                                                                               | 6 |   |   |   | (26 | ) |
| U.K.                tax rate                change                                                    |   |                                                                               | (54 | ) |   |   | (54 | ) |
| Other                                                                                                 |   |                                                                               | (3 | ) |   |   | (3 | ) |
|                                                                                                  |   | $                                                                                  | 44 |   |   | $ | (26 | ) |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources**

|                                                    |   | **September                30,****2007** |   |            | **December                31,****2006** |   |
|---------------------------------------------------------|--------|------------------------------------------|--------|-----------------|-----------------------------------------|--------|
|                                                    |   |                                     |   |            |                                    |   |   |   |
| Cash                and cash                equivalents |   | $                                        | 439    | (a)   |                                    | $      | 794 |   |
| Short-term                investments                   |   |                                     | 308    |            |                                    |   | 359 |   |
|                                                    |   | $                                        | 747    |            |                                    | $      | 1,153 |   |
| Short-term                debt                          |   | $                                        | 181    |            |                                    | $      | 42 |   |

| (a) |   | Excludes                $13 million of cash related to a Latin American business that is                included                in "Assets held for sale" on the Balance                Sheet. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | $1.1                billion of capital                expenditures;                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | the                retirement of $904 million of                long-term debt (which includes the payment of $29 million to settle                related cross-currency swaps); |
| · | the                repurchase of common stock for                $565 million;                                                                                                    |
| · | the                payment of $343 million of                common stock dividends;                                                                                              |
| · | an                increase of $35 million in                restricted cash;                                                                                                      |
| · | the                classification of $13 million                of cash related to a Latin American business as held for                sale;                                     |
| · | $1.3                billion of cash provided by                operating activities;                                                                                              |
| · | proceeds                of $855 million from the                issuance of long-term debt;                                                                                       |
| · | $191                million of proceeds from the                sale of the El Salvadoran and Bolivian electricity delivery                businesses;                            |
| · | a                net increase in short-term debt                of $150 million (including $11 million related to Latin American                businesses);                      |
| · | net                proceeds of $62 million from                the sale of emission allowances;                                                                                   |
| · | $47                million of proceeds from the                sale of telecommunication operations; and                                                                          |
| · | proceeds                of $25 million from the                issuance of common stock.                                                                                          |

| · | In                connection with PPL Capital Funding's issuance in March 2007 of the                2007                Series A Junior Subordinated Notes due 2067, Moody's, S&P and Fitch                assigned ratings of Baa3, BB+ and BBB- to the junior subordinated                debt of                PPL Capital Funding. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Also                in March 2007, Fitch affirmed its BBB rating of PPL Montana's 8.903%                Pass                Through Certificates due 2020.                                                                                                                                                                                   |
| · | In                August 2007, Fitch affirmed its AAA rating for the Transition Bonds                of PPL                Transition Bond Company.                                                                                                                                                                                          |

|                                                                   |   | **Projected** |   |
|------------------------------------------------------------------------|--------|---------------|--------|
|                                                                   |   | **2007**      |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   |
| Construction                expenditures                (a)            |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Generating                facilities                                   |   | $             | 361    |   | $ | 384 |   | $ | 446 |   | $ | 472 |   | $ | 346 |   |
| Transmission                and distribution                facilities |   |          | 602    |   |   | 561 |   |   | 601 |   |   | 696 |   |   | 796 |   |
| Environmental                                                          |   |          | 612    |   |   | 460 |   |   | 169 |   |   | 56 |   |   | 128 |   |
| Other                                                                  |   |          | 91     |   |   | 114 |   |   | 68 |   |   | 71 |   |   | 64 |   |
| Total                Construction                Expenditures          |   |          | 1,666  |   |   | 1,519 |   |   | 1,284 |   |   | 1,295 |   |   | 1,334 |   |
| Nuclear                fuel                                            |   |          | 81     |   |   | 102 |   |   | 162 |   |   | 173 |   |   | 171 |   |
| Total                Capital                Expenditures               |   | $             | 1,747  |   | $ | 1,621 |   | $ | 1,446 |   | $ | 1,468 |   | $ | 1,505 |   |

| (a) |   | Construction                expenditures include AFUDC and capitalized interest, which are expected                to                be $283 million for the 2007-2011                period. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the                PJM-approved regional transmission expansion project;                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | a                reduction due to the sales of the Latin American businesses and the                gas                and propane operations;                |
| · | estimated                costs to submit a COLA with the NRC for a possible third nuclear                generating unit adjacent to the Susquehanna station; |
| · | increased                expenditures for the addition of two hydro units at PPL                Holtwood;                                                     |
| · | a                hydro expansion at PPL Montana;                                                                                                              |
| · | increased                pollution control expenditures; and                                                                                                  |
| · | increased                nuclear fuel prices for the Susquehanna                station.                                                                      |

**Risk      Management - Energy Marketing & Trading and Other**

*Commodity      Price Risk (Non-trading)*

|                                                                                             |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts                outstanding at the beginning of the period |   | $                                                                     | (244   | )                                                                    |   | $ | (99 | ) |   | $ | (111 | ) |   | $ | (284 | ) |
| Contracts                realized or otherwise                settled during the period          |   |                                                                  | (28    | )                                                                    |   |   | (1 | ) |   |   | (42 | ) |   |   | 11 |   |
| Fair                value of new contracts at                inception                           |   |                                                                  | 10     |                                                                 |   |   | (27 | ) |   |   | 29 |   |   |   | (27 | ) |
| Other                changes in fair                values                                       |   |                                                                  | 87     |                                                                 |   |   | 20 |   |   |   | (51 | ) |   |   | 193 |   |
| Fair                value of contracts                outstanding at the end of the period       |   | $                                                                     | (175   | )                                                                    |   | $ | (107 | ) |   | $ | (175 | ) |   | $ | (107 | ) |

|                                                                                       |   | **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                                       |   | $                                                                                                        | 3 |   |   | $ | (33 | ) |   | $ | (3 | ) |   |   |   |   |   | $ | (33 | ) |
| Prices                provided by other external                sources                    |   |                                                                                                     | (110 | ) |   |   | (180 | ) |   |   | (23 | ) |   | $ | (18) |   |   |   | (331 | ) |
| Prices                based on models and other                valuation methods           |   |                                                                                                     | 84 |   |   |   | 10 |   |   |   | 10 |   |   |   | 85 |   |   |   | 189 |   |
| Fair                value of contracts                outstanding at the end of the period |   | $                                                                                                        | (23 | ) |   | $ | (203 | ) |   | $ | (16 | ) |   | $ | 67 |   |   | $ | (175 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                             |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts                outstanding at the beginning of the period |   | $                                                                     | 48     |                                                                 |   | $ | 19 |   |   | $ | 41 |   |   | $ | 5 |   |
| Contracts                realized or otherwise                settled during the period          |   |                                                                  | (6     | )                                                                    |   |   | 20 |   |   |   | (33 | ) |   |   | 2 |   |
| Fair                value of new contracts at                inception                           |   |                                                                  | 10     |                                                                 |   |   | (16 | ) |   |   | 26 |   |   |   | (13 | ) |
| Other                changes in fair                values                                       |   |                                                                  | 14     |                                                                 |   |   | 6 |   |   |   | 32 |   |   |   | 35 |   |
| Fair                value of contracts                outstanding at the end of the period       |   | $                                                                     | 66     |                                                                 |   | $ | 29 |   |   | $ | 66 |   |   | $ | 29 |   |

|                                                                                       |   | **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                                       |   | $                                                                                                        | 2 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 2 |   |
| Prices                provided by other external                sources                    |   |                                                                                                     | 7 |   |   | $ | 21 |   |   | $ | 1 |   |   |   |   |   |   |   | 29 |   |
| Prices                based on models and other                valuation methods           |   |                                                                                                     | 17 |   |   |   | 17 |   |   |   | 1 |   |   |   |   |   |   |   | 35 |   |
| Fair                value of contracts                outstanding at the end of the period |   | $                                                                                                        | 26 |   |   | $ | 38 |   |   | $ | 2 |   |   |   |   |   |   | $ | 66 |   |

*Synthetic      Fuel Tax Credit Risk*

*Commodity      Price Risk Summary*

*Interest      Rate Risk*

*Foreign      Currency Risk*

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

**Related      Party Transactions**

**Acquisitions,      Development and Divestitures**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      ENERGY SUPPLY, LLC AND SUBSIDIARIES**

**Item      2.  Management's Discussion and Analysis of Financial Condition and      Results of Operations**

**Overview**

**Results      of Operations**

**Earnings**

|   |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|   |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|   |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   | $                                                                     | 323    |                                                                 |   | $ | 182 |   |   | $ | 790 |   |   | $ | 570 |   |

**Segment      Results**

|                                  |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                  |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                  |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                |   | $                                                                     | 215    |                                                                 |   | $ | 123 |   |   | $ | 471 |   |   | $ | 351 |   |
| International                Delivery |   |                                                                  | 108    |                                                                 |   |   | 59 |   |   |   | 319 |   |   |   | 219 |   |
| Total                                 |   | $                                                                     | 323    |                                                                 |   | $ | 182 |   |   | $ | 790 |   |   | $ | 570 |   |

|                                                            |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                            |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                            |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Energy                revenues                                  |   | $                                                                     | 1,007  |                                                                 |   | $ | 929 |   |   | $ | 2,596 |   |   | $ | 2,544 |   |
| Energy-related                businesses                        |   |                                                                  | 183    |                                                                 |   |   | 122 |   |   |   | 530 |   |   |   | 407 |   |
| Total                operating                revenues          |   |                                                                  | 1,190  |                                                                 |   |   | 1,051 |   |   |   | 3,126 |   |   |   | 2,951 |   |
| Fuel                and energy                purchases         |   |                                                                  | 467    |                                                                 |   |   | 508 |   |   |   | 1,186 |   |   |   | 1,291 |   |
| Other                operation and                maintenance   |   |                                                                  | 181    |                                                                 |   |   | 184 |   |   |   | 561 |   |   |   | 549 |   |
| Depreciation                                                    |   |                                                                  | 39     |                                                                 |   |   | 38 |   |   |   | 116 |   |   |   | 107 |   |
| Taxes,                other than                income          |   |                                                                  | 7      |                                                                 |   |   | 10 |   |   |   | 25 |   |   |   | 29 |   |
| Energy-related                businesses                        |   |                                                                  | 173    |                                                                 |   |   | 150 |   |   |   | 565 |   |   |   | 425 |   |
| Total                operating                expenses          |   |                                                                  | 867    |                                                                 |   |   | 890 |   |   |   | 2,453 |   |   |   | 2,401 |   |
| OtherIncome                -                net                 |   |                                                                  | 30     |                                                                 |   |   | 14 |   |   |   | 61 |   |   |   | 35 |   |
| Interest                Expense                                 |   |                                                                  | 26     |                                                                 |   |   | 24 |   |   |   | 80 |   |   |   | 59 |   |
| Income                Taxes                                     |   |                                                                  | 111    |                                                                 |   |   | 27 |   |   |   | 181 |   |   |   | 153 |   |
| Minority                Interest                                |   |                                                                  | 1      |                                                                 |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
| Loss                from Discontinued                Operations |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (20 | ) |
| Net                Income                                       |   | $                                                                     | 215    |                                                                 |   | $ | 123 |   |   | $ | 471 |   |   | $ | 351 |   |

|                                                           |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|----------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                           |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                           |   |                                                                               |   |   |   |   |   |   |
| Eastern                U.S. non-trading                margins |   | $                                                                                  | 36 |   |   | $ | 56 |   |
| Western                U.S. non-trading                margins |   |                                                                               | 14 |   |   |   | 10 |   |
| Net                energy trading                margins       |   |                                                                               | (3 | ) |   |   | (2 | ) |
| Other                operation and                maintenance  |   |                                                                               | (3 | ) |   |   | (16 | ) |
| Depreciation                                                   |   |                                                                               |   |   |   |   | (5 | ) |
| Financing                costs                                 |   |                                                                               |   |   |   |   | (6 | ) |
| Earningsfrom                synfuel                projects    |   |                                                                               | 4 |   |   |   | 17 |   |
| Other                income -                net               |   |                                                                               | 6 |   |   |   | 8 |   |
| Taxes,                other than                income         |   |                                                                               | 2 |   |   |   | 2 |   |
| Certain                income tax                adjustments   |   |                                                                               | 9 |   |   |   | 11 |   |
| Other                                                          |   |                                                                               | 2 |   |   |   | 8 |   |
| Special                items                                   |   |                                                                               | 25 |   |   |   | 37 |   |
|                                                           |   | $                                                                                  | 92 |   |   | $ | 120 |   |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | The                  improved earnings contribution from synfuel projects for the three                  and                  nine months ended September 30, 2007, was primarily due to higher                  net                  gains on options purchased to hedge the risk associated with the                  phase-out                  of synthetic fuel tax credits and increased                  production. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | Other                operation and maintenance expenses were higher for the nine months                ended                September 30, 2007, primarily due to increased outage costs at the                Eastern                U.S. fossil/hydro stations and the Susquehanna nuclear                station.                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |

| · | Financing                costs were higher for the nine months ended September 30, 2007, primarily                due to higher interest expense on long-term                debt. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Mark-to-market                adjustments from                certain economic, non-trading hedges                |   | $                                                                     | (6     | )                                                                    |   | $ | (13 | ) |   | $ | 20 |   |   | $ | (14 | ) |
| Loss                related to sale of interest                in the Griffith                plant (Note 8) |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (17 | ) |
| Impairment                of certain transmission                rights (Note 10)                            |   |                                                                  | (12    | )                                                                    |   |   |   |   |   |   | (12 | ) |   |   |   |   |
| Settlement                of Wallingford                cost-based rates (Note                10)                 |   |                                                                  | 33     |                                                                 |   |   |   |   |   |   | 33 |   |   |   |   |   |
| Sale                of telecommunication operations                (Note 8)                                       |   |                                                                  | (3     | )                                                                    |   |   |   |   |   |   | (23 | ) |   |   |   |   |
| Reduction                in Enron reserve (Note                10)                                                |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | 11 |   |
| Off-site                remediation of ash basin                leak (Note 10)                               |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | 6 |   |
| Impairment                of synfuel-related                assets (Note 10)                                      |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   | (6 | ) |
| PJM                billing dispute                (Note                10)                                        |   |                                                                  |   |                                                                 |   |   |   |   |   |   | (1 | ) |   |   |   |   |
| Total                                                                                                             |   | $                                                                     | 12     |                                                                 |   | $ | (13 | ) |   | $ | 17 |   |   | $ | (20 | ) |

*Outlook*

|                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility                revenues                                   |   | $                                                                     | 204    |                                                                 |   | $ | 174 |   |   | $ | 638 |   |   | $ | 562 |   |
| Energy-related                businesses                          |   |                                                                  | 8      |                                                                 |   |   | 7 |   |   |   | 27 |   |   |   | 27 |   |
| Total                operating                revenues            |   |                                                                  | 212    |                                                                 |   |   | 181 |   |   |   | 665 |   |   |   | 589 |   |
| Other                operation and                maintenance     |   |                                                                  | 57     |                                                                 |   |   | 45 |   |   |   | 182 |   |   |   | 132 |   |
| Depreciation                                                      |   |                                                                  | 33     |                                                                 |   |   | 36 |   |   |   | 111 |   |   |   | 105 |   |
| Taxes,                other than                income            |   |                                                                  | 17     |                                                                 |   |   | 15 |   |   |   | 49 |   |   |   | 41 |   |
| Energy-related                businesses                          |   |                                                                  | 4      |                                                                 |   |   | 4 |   |   |   | 13 |   |   |   | 12 |   |
| Total                operating                expenses            |   |                                                                  | 111    |                                                                 |   |   | 100 |   |   |   | 355 |   |   |   | 290 |   |
| Other                Income -                net                  |   |                                                                  | 2      |                                                                 |   |   | 7 |   |   |   | 19 |   |   |   | 27 |   |
| Interest                Expense                                   |   |                                                                  | 47     |                                                                 |   |   | 44 |   |   |   | 141 |   |   |   | 130 |   |
| Income                Taxes                                       |   |                                                                  | (39    | )                                                                    |   |   | (1 | ) |   |   | (42 | ) |   |   | 11 |   |
| Income                from Discontinued                Operations |   |                                                                  | 13     |                                                                 |   |   | 14 |   |   |   | 89 |   |   |   | 34 |   |
| Net                Income                                         |   | $                                                                     | 108    |                                                                 |   | $ | 59 |   |   | $ | 319 |   |   | $ | 219 |   |

|                                                                                                              |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                              |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| U.K.                                                                                                              |   |                                                                               |   |   |   |   |   |   |
| Delivery                margins                                                                                   |   | $                                                                                  | 8 |   |   | $ | 2 |   |
| Other                operating expenses                                                                           |   |                                                                               | (2 | ) |   |   | (13 | ) |
| Depreciation                                                                                                      |   |                                                                               | 4 |   |   |   | 3 |   |
| Interest                expense                                                                                   |   |                                                                               | (2 | ) |   |   | (5 | ) |
| Income                taxes                                                                                       |   |                                                                               | (1 | ) |   |   | (23 | ) |
| Foreign                currency exchange                rates                                                     |   |                                                                               | 4 |   |   |   | 17 |   |
| Impairment                of investment in                U.K.                real estate (Note                8) |   |                                                                               |   |   |   |   | 6 |   |
| Gain                on transfer of                equity investment (Note                8)                       |   |                                                                               | (5 | ) |   |   |   |   |
| Hyder                liquidation distributions                (Note 8)                                            |   |                                                                               | (2 | ) |   |   | (21 | ) |
| Other                                                                                                             |   |                                                                               | 2 |   |   |   | 5 |   |
| Latin                American                operations                                                           |   |                                                                               | (14 | ) |   |   | 1 |   |
| Change                in tax reserves (Note                5)                                                     |   |                                                                               |   |   |   |   | 31 |   |
| Other                                                                                                             |   |                                                                               |   |   |   |   | (2 | ) |
| Special                items                                                                                      |   |                                                                               | 57 |   |   |   | 99 |   |
|                                                                                                              |   | $                                                                                  | 49 |   |   | $ | 100 |   |

| · | Higher                U.K. delivery margins, for both periods, were primarily due to an                increase                in prices effective April 1, 2007 and favorable customer mix                changes.  The increase for the nine months ended September 30,                2007, was primarily offset by a 4% decrease in sales volume, partially                due                to milder weather in 2007. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Higher                U.K. other operating expenses for the nine months ended September                30,                2007, were partially due to higher pension costs and a greater insurance                adjustment in 2006 compared with 2007.                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Higher                U.K. income taxes for the nine months ended September 30, 2007, were                primarily due to the transfer of WPD tax items in the first quarter                of                2006.  See Note 5 to the Financial Statements for additional                information.                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | Changes                in foreign exchange rates increased the U.K.'s portion of revenue                and                expense line items by 9% and 12% for the three and nine months ended                September 30, 2007, compared with the same periods in                2006.                                                                                                                                              |

|                                                                                 |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                 |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                 |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Divestiture                of Latin American                businesses (Note 8) |   | $                                                                     | 3      |                                                                 |   |   |   |   |   | $ | 46 |   |   |   |   |   |
| Change                in U.K. tax rate (Note                5)                       |   |                                                                  | 54     |                                                                 |   |   |   |   |   |   | 54 |   |   |   |   |   |
| Reduction                in Enron                reserve                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   | $ | 1 |   |
| Total                                                                                |   | $                                                                     | 57     |                                                                 |   |   |   |   |   | $ | 100 |   |   | $ | 1 |   |

*Outlook*

** **

**Statement      of Income Analysis --**

**Domestic      Gross Energy Margins**

|                                                                  |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                  |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                  |   |                                                                               |   |   |   |   |
| Wholesale                energy                marketing              |   | $                                                                                  | 70 |   |   | $ | (20 | ) |
| Wholesale                energy marketing to                affiliate |   |                                                                               | 8 |   |   |   | 70 |   |
| Unregulated                retail                electric             |   |                                                                               | 5 |   |   |   | 5 |   |
| Net                energy trading                margins              |   |                                                                               | (5 | ) |   |   | (3 | ) |
| Other                revenue adjustments                (a)           |   |                                                                               | (19 | ) |   |   | 18 |   |
| Total                revenues                                         |   |                                                                               | 59 |   |   |   | 70 |   |
| Fuel                                                                  |   |                                                                               | 21 |   |   |   | 104 |   |
| Energy                purchases                                       |   |                                                                               | (64 | ) |   |   | (207 | ) |
| Energy                purchases from                affiliate         |   |                                                                               | 2 |   |   |   | (2 | ) |
| Other                cost adjustments                (a)              |   |                                                                               | 7 |   |   |   | 19 |   |
| Total                cost of                sales                     |   |                                                                               | (34 | ) |   |   | (86 | ) |
| Domestic                gross energy                margins           |   | $                                                                                  | 93 |   |   | $ | 156 |   |

| (a) |   | Adjusted                to exclude the impact of                any revenues and costs not associated with domestic gross energy                margins, consistent                with the way management reviews domestic gross energy margins                internally.  These exclusions include revenues and                energy costs related                to the international operations of PPL Global and revenues                prior to 2007                associated with the settlement of Wallingford cost-based rates (see                Note 10 to the Financial Statements for additional                information).  Also adjusted to include the margins of the                Griffith plant prior to its sale in June 2006, which are included                in                Discontinued Operations, and gains or losses on sales of emission                allowances, which are included in "Other operation and maintenance"                expenses on the Statements of                Income. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-------------------------------------------------------------|------------------------------------------------------------------------------------|
|                                                        | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| Non-trading                                                 |                                                                               |   |   |   |   |   |   |
| Eastern                U.S.                                 | $                                                                                  | 72 |   |   |  $ | 152 |   |
| Western                U.S.                                 |                                                                               | 25 |   |   |   | 19 |   |
| Net                energy                trading            |                                                                               | (4 | ) |   |   | (15 | ) |
| Domestic                gross energy                margins | $                                                                                  | 93 |   |   |  $ | 156 |   |

*Eastern      U.S.*

*Western      U.S.*

*Net      Energy Trading*

|   |   | **Three                Months Ended****Sept.                30,** |   | **Nine                Months Ended****Sept.                30,** |
|--------|--------|-------------------------------------------------------------------|--------|------------------------------------------------------------------|
|   |   | **2007**                                                          |   | **2006**                                                         |   | **2007** |   | **2006** |
|   |   |                                                              |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| GWh    |   |                                                              | 4,034  |                                                             |   |   | 1,730 |   |   |   | 9,381 |   |   |   | 5,509 |   |
| Bcf    |   |                                                              | 2.8    |                                                             |   |   | 5.1 |   |   |   | 11.0 |   |   |   | 14.5 |   |

**Utility      Revenues**

|                                                                              |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                              |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
| **International:**                                                                |   |                                                                               |   |   |   |   |   |   |
| U.K.                retail electric                delivery                       |   | $                                                                                  | 14 |   |   | $ | 17 |   |
| U.K.                foreign currency                exchange                rates |   |                                                                               | 16 |   |   |   | 59 |   |
|                                                                              |   | $                                                                                  | 30 |   |   | $ | 76 |   |

**Energy-related      Businesses**

| · | a                $54 million net gain on options purchased to hedge the risk associated                with the phase-out of the synthetic fuel tax credits; partially offset                by |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | $10                million of higher operating losses from synfuel projects due to higher                production levels; and                                                                 |
| · | a                $5 million impairment of telecommunication assets that were sold                in August                2007 (see Note 8 to the Financial                Statements).         |

| · | a                $21 million net gain on options purchased to hedge the risk associated                with the phase-out of the synthetic fuel tax credits;                and |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | an                impairment charge of $10 million on the synfuel-related assets in                2006;                partially offset by                                     |
| · | $15                million of higher operating losses due to higher production                levels.                                                                           |

**Other      Operation and Maintenance**

|                                                                                           |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                           |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                           |   |                                                                               |   |   |   |   |
| Impairment                of certain transmission                rights (Note 10)              |   | $                                                                                  | 21 |   |   | $ | 21 |   |
| Reduction                in Enron reserve                in 2006 (Note 10)                |   |                                                                               |   |   |   |   | 19 |   |
| WPD                recoverable engineering                services performed for third parties |   |                                                                               | 5 |   |   |   | 19 |   |
| Martins                Creek ash basin                remediation adjustment in 2006 (Note10)  |   |                                                                               |   |   |   |   | 11 |   |
| U.K.                foreign currency exchange                rates                             |   |                                                                               | 4 |   |   |   | 14 |   |
| Pension                and other postretirementbenefits                                        |   |                                                                               | 1 |   |   |   | 7 |   |
| Salary                expense                                                                  |   |                                                                               | 4 |   |   |   | 7 |   |
| Eastern                U.S. fossil/hydro                station                outages         |   |                                                                               | (5 | ) |   |   | 5 |   |
| WPD                insurance                adjustment                                         |   |                                                                               |   |   |   |   | 5 |   |
| Susquehannanuclear                station                outages                               |   |                                                                               | (4 | ) |   |   | 4 |   |
| WPD                distribution                costs                                           |   |                                                                               | 1 |   |   |   | 2 |   |
| Insurance                premiums                                                              |   |                                                                               | 3 |   |   |   | 3 |   |
| Allocations                of corporate service                costs (Note 11)            |   |                                                                               | 2 |   |   |   | 3 |   |
| Stock-based                compensation                                                        |   |                                                                               |   |   |   |   | 3 |   |
| Gains                on sale of emission                allowances                             |   |                                                                               | (25 | ) |   |   | (62 | ) |
| Other                                                                                          |   |                                                                               | 2 |   |   |   | 1 |   |
|                                                                                           |   | $                                                                                  | 9 |   |   | $ | 62 |   |

**Depreciation**

|                                                                                                                         |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                                         |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                                         |   |                                                                               |   |   |   |   |
| Additions                to                PP&E                                                                          |   | $                                                                                  | 7 |   |   | $ | 17 |   |
| U.K.                foreign currency                exchange                rates                                            |   |                                                                               | 2 |   |   |   | 10 |   |
| Purchase                in September 2006 of                equipment previously leased                                      |   |                                                                               |   |   |   |   | 1 |   |
| Impact                of not depreciating held                for sale telecommunication assets (Note 8)                     |   |                                                                               | (3 | ) |   |   | (3 | ) |
| Extension                of useful lives of                certain WPD network                assets                (Note 2) |   |                                                                               | (7 | ) |   |   | (11 | ) |
| Other                                                                                                                        |   |                                                                               | (1 | ) |   |   | 1 |   |
|                                                                                                                         |   | $                                                                                  | (2 | ) |   | $ | 15 |   |

**Taxes,      Other Than Income**

| · | a                $4 million increase from changes in U.K. foreign currency exchange                rates;                and                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | a                $3 million increase in WPD property taxes, due to the 2006 period                including a refund credit of $2 million; partially offset                by |
| · | a                $3 million decrease in domestic capital stock tax                expense.                                                                                    |

**Other      Income - net**

**Interest      Expense**

|                                                                                                             |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                             |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                             |   |                                                                               |   |   |   |   |
| Long-term                debt interest                expense                                                    |   | $                                                                                  | 12 |   |   | $ | 47 |   |
| U.K.                foreign currency                exchange                rates                                |   |                                                                               | 3 |   |   |   | 11 |   |
| Redemption                of 8.23% Subordinated                Debentures due 2027 with affiliate (Note 11) |   |                                                                               | (3 | ) |   |   | (5 | ) |
| Capitalized                interest                                                                              |   |                                                                               | (8 | ) |   |   | (23 | ) |
| Other                                                                                                            |   |                                                                               | 1 |   |   |   | 2 |   |
|                                                                                                             |   | $                                                                                  | 5 |   |   | $ | 32 |   |

**Income      Taxes**

|                                                                                             |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|--------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                             |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                             |   |                                                                               |   |   |   |   |
| Higher                pre-tax book                income                                         |   | $                                                                                  | 73 |   |   | $ | 53 |   |
| Transfer                of WPD tax items in                2006                                  |   |                                                                               |   |   |   |   | 20 |   |
| Increase                in tax expense on foreign                earnings                        |   |                                                                               | 9 |   |   |   | 7 |   |
| Change                in tax benefits related to                nonconventional fuel tax credits |   |                                                                               | 17 |   |   |   | (20 | ) |
| Change                in tax                reserves                                             |   |                                                                               | 4 |   |   |   | (27 | ) |
| U.K.                tax rate                change                                               |   |                                                                               | (54 | ) |   |   | (54 | ) |
| Other                                                                                            |   |                                                                               | (3 | ) |   |   | (4 | ) |
|                                                                                             |   | $                                                                                  | 46 |   |   | $ | (25 | ) |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources**

|                                                    |   | **September                30,****2007** |   |      | **December                31,****2006** |   |
|---------------------------------------------------------|--------|------------------------------------------|--------|-----------|-----------------------------------------|--------|
|                                                    |   |                                     |   |      |                                    |   |   |   |
| Cash                and cash                equivalents |   | $                                        | 221    |  (a) |                                    | $      | 524 |   |
| Short-term                investments                   |   |                                     | 303    |      |                                    |   | 328 |   |
|                                                    |   | $                                        | 524    |      |                                    | $      | 852 |   |
| Short-term                debt                          |   | $                                        | 100    |      |                                    | $      |   |   |

| (a) |   | Excludes                $13 million of cash related to a Latin American business that is                included                in "Assets held for sale" on the Balance                Sheet. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | distributions                to Member of $1.3                billion;                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | $884                million of capital                expenditures;                                                                                                               |
| · | the                retirement of $141 million of                long-term debt (which includes the payment of $29 million to settle                related cross-currency swaps); |
| · | an                increase of $27 million in                restricted cash;                                                                                                      |
| · | the                classification of $13 million                of cash related to a Latin American business as held for                sale;                                     |
| · | $894                million of cash provided by                operating activities;                                                                                              |
| · | $700                million of contributions from                Member;                                                                                                          |
| · | $191                million of proceeds from the                sale of the El Salvadoran and Bolivian electricity delivery                businesses;                            |
| · | a                net increase in short-term debt                of $111 million (including $11 million related to Latin American                businesses);                      |
| · | net                proceeds of $62 million from                the sale of emission allowances; and                                                                               |
| · | $47                million of proceeds from the                sale of telecommunication                operations.                                                               |

|                                                                   |   | **Projected** |   |
|------------------------------------------------------------------------|--------|---------------|--------|
|                                                                   |   | **2007**      |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   |
| Construction                expenditures                (a)            |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Generating                facilities                                   |   | $             | 361    |   | $ | 384 |   | $ | 446 |   | $ | 472 |   | $ | 346 |   |
| Transmission                and distribution                facilities |   |          | 311    |   |   | 303 |   |   | 327 |   |   | 336 |   |   | 342 |   |
| Environmental                                                          |   |          | 612    |   |   | 460 |   |   | 169 |   |   | 56 |   |   | 128 |   |
| Other                                                                  |   |          | 41     |   |   | 67 |   |   | 30 |   |   | 30 |   |   | 29 |   |
| Total                Construction                Expenditures          |   |          | 1,325  |   |   | 1,214 |   |   | 972 |   |   | 894 |   |   | 845 |   |
| Nuclear                fuel                                            |   |          | 81     |   |   | 102 |   |   | 162 |   |   | 173 |   |   | 171 |   |
| Total                Capital                Expenditures               |   | $             | 1,406  |   | $ | 1,316 |   | $ | 1,134 |   | $ | 1,067 |   | $ | 1,016 |   |

| (a) |   | Construction                expenditures include AFUDC and capitalized interest, which are expected                to                be $274 million for the 2007-2011                period. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | a                reduction due to the sales of the Latin American                businesses;                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | estimated                costs to submit a COLA with the NRC for a possible third nuclear                generating unit adjacent to the Susquehanna station; |
| · | increased                expenditures for the addition of two hydro units at PPL                Holtwood;                                                     |
| · | a                hydro expansion at PPL Montana;                                                                                                              |
| · | increased                pollution control expenditures; and                                                                                                  |
| · | increased                nuclear fuel prices for the Susquehanna                station.                                                                      |

**Risk      Management - Energy Marketing & Trading and Other**

*Commodity      Price Risk (Non-Trading)*

|                                                                                             |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts                outstanding at the beginning of the period |   | $                                                                     | (245   | )                                                                    |   | $ | (95 | ) |   | $ | (111 | ) |   | $ | (278 | ) |
| Contracts                realized or otherwise                settled during the period          |   |                                                                  | (30    | )                                                                    |   |   | (5 | ) |   |   | (50 | ) |   |   |   |   |
| Fair                value of new contracts at                inception                           |   |                                                                  | 10     |                                                                 |   |   | (27 | ) |   |   | 29 |   |   |   | (27 | ) |
| Other                changes in fair                values                                       |   |                                                                  | 90     |                                                                 |   |   | 21 |   |   |   | (43 | ) |   |   | 199 |   |
| Fair                value of contracts                outstanding at the end of the period       |   | $                                                                     | (175   | )                                                                    |   | $ | (106 | ) |   | $ | (175 | ) |   | $ | (106 | ) |

|                                                                                       |   | **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                                       |   | $                                                                                                        | 3 |   |   | $ | (33 | ) |   | $ | (3 | ) |   |   |   |   |   | $ | (33 | ) |
| Prices                provided by other external                sources                    |   |                                                                                                     | (110 | ) |   |   | (180 | ) |   |   | (23 | ) |   | $ | (18 | ) |   |   | (331 | ) |
| Prices                based on models and other                valuation methods           |   |                                                                                                     | 84 |   |   |   | 10 |   |   |   | 10 |   |   |   | 85 |   |   |   | 189 |   |
| Fair                value of contracts                outstanding at the end of the period |   | $                                                                                                        | (23 | ) |   | $ | (203 | ) |   | $ | (16 | ) |   | $ | 67 |   |   | $ | (175 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                             |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                             |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts                outstanding at the beginning of the period |   | $                                                                     | 48     |                                                                 |   | $ | 19 |   |   | $ | 41 |   |   | $ | 5 |   |
| Contracts                realized or otherwise                settled during the period          |   |                                                                  | (7     | )                                                                    |   |   | 20 |   |   |   | (34 | ) |   |   | 2 |   |
| Fair                value of new contracts at                inception                           |   |                                                                  | 10     |                                                                 |   |   | (16 | ) |   |   | 26 |   |   |   | (13 | ) |
| Other                changes in fair                values                                       |   |                                                                  | 15     |                                                                 |   |   | 6 |   |   |   | 33 |   |   |   | 35 |   |
| Fair                value of contracts                outstanding at the end of the period       |   | $                                                                     | 66     |                                                                 |   | $ | 29 |   |   | $ | 66 |   |   | $ | 29 |   |

|                                                                                       |   | **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                                       |   | $                                                                                                        | 2 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 2 |   |
| Prices                provided by other external                sources                    |   |                                                                                                     | 7 |   |   | $ | 21 |   |   | $ | 1 |   |   |   |   |   |   |   | 29 |   |
| Prices                based on models and other                valuation methods           |   |                                                                                                     | 17 |   |   |   | 17 |   |   |   | 1 |   |   |   |   |   |   |   | 35 |   |
| Fair                value of contracts                outstanding at the end of the period |   | $                                                                                                        | 26 |   |   | $ | 38 |   |   | $ | 2 |   |   |   |   |   |   | $ | 66 |   |

*Synthetic      Fuel Tax Credit Risk*

*Commodity      Price Risk Summary*

*Interest      Rate Risk*

*Foreign      Currency Risk*

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

**Related      Party Transactions**

**Acquisitions,      Development and Divestitures**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      ELECTRIC UTILITIES CORPORATION AND      SUBSIDIARIES**

**Item      2.  Management's Discussion and Analysis of Financial Condition and      Results of Operations**

**Overview**

**Results      of Operations**

**Earnings**

|   |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|--------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|   |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|   |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   | $                                                                     | 35     |                                                                 |   | $ | 50 |   |   | $ | 117 |   |   | $ | 131 |   |

|                                                                                                                                                     |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                                                                     |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                                                                     |   |                                                                               |   |   |   |   |   |   |
| Delivery                revenues (net of CTC/ITC                amortization, interest expense on transition bonds and ancillary                charges) |   | $                                                                                  | 1 |   |   | $ | 11 |   |
| Other                operation and                maintenance                                                                                            |   |                                                                               | 2 |   |   |   | (2 | ) |
| Depreciation                                                                                                                                             |   |                                                                               | (3 | ) |   |   | (8 | ) |
| Other                                                                                                                                                    |   |                                                                               | (1 | ) |   |   | (1 | ) |
| Special                items                                                                                                                             |   |                                                                               | (14 | ) |   |   | (14 | ) |
|                                                                                                                                                     |   | $                                                                                  | (15 | ) |   | $ | (14 | ) |

| · | Higher                delivery revenues for the nine months ended September 30, 2007, were                primarily attributable to a 3% increase in sales volume, due in part                to                the impact of favorable weather in 2007 on residential and commercial                sales and normal load growth.                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                             |
| · | Higher                depreciation expense for the three and nine months ended September                30,                2007, was primarily attributable to plant additions.  The                increase in the nine month period was also impacted by the purchase                in                September 2006 of equipment previously                leased. |

|                                                                                              |   | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                                                                              |   | **2007**                                                              |   | **2006**                                                             |   | **2007** |   | **2006** |
|                                                                                              |   |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Write-off                of the Hurricane Isabel                regulatory asset (Note 2)         |   |                                                                  |   |                                                                 |   | $ | (7 | ) |   |   |   |   |   | $ | (7 | ) |
| Realization                of benefits related to                Black Lung Trust assets (Note 9) |   |                                                                  |   |                                                                 |   |   | 21 |   |   |   |   |   |   |   | 21 |   |
| Total                                                                                             |   |                                                                  |   |                                                                 |   | $ | 14 |   |   |   |   |   |   | $ | 14 |   |

*Outlook*

**Statement      of Income Analysis --**

**Operating      Revenues**

**Retail      Electric**

|                                 |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|--------------------------------------|--------|------------------------------------------------------------------------------------|
|                                 |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                 |   |                                                                               |   |   |   |   |   |   |
| PLR                electric delivery |   | $                                                                                  | 10 |   |   | $ | 76 |   |
| Electric                delivery     |   |                                                                               | 2 |   |   |   | 31 |   |
| Other                                |   |                                                                               |   |   |   |   | (2 | ) |
|                                 |   | $                                                                                  | 12 |   |   | $ | 105 |   |

**Energy      Purchases from Affiliate**

**Other      Operation and Maintenance**

|                                                                                                      |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                      |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                      |   |                                                                               |   |   |   |   |   |   |
| Realization                of benefits related to                Black Lung Trust assets in 2006 (Note 9) |   | $                                                                                  | 36 |   |   | $ | 36 |   |
| Advertising                                                                                               |   |                                                                               |   |   |   |   | 3 |   |
| Reversal                in 2006 of cost recovery                - Hurricane Isabel (Note 2)               |   |                                                                               | (11 | ) |   |   | (11 | ) |
| Other                                                                                                     |   |                                                                               | (2 | ) |   |   | 1 |   |
|                                                                                                      |   | $                                                                                  | 23 |   |   | $ | 29 |   |

**Depreciation**

**Taxes,      Other Than Income**

**Other      Income - net**

**Financing      Costs**

|                                                                                                                                           |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                                                                                                           |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                                                                                                           |   |                                                                               |   |   |   |   |
| Long-term                debt interest                expense primarily                due                to the repayment of transition bonds |   | $                                                                                  | (5 | ) |   | $ | (17 | ) |
| Dividends                on 6.25% Series                Preference Stock                                                                       |   |                                                                               |   |   |   |   | 4 |   |
| Other                                                                                                                                          |   |                                                                               |   |   |   |   | 1 |   |
|                                                                                                                                           |   | $                                                                                  | (5 | ) |   | $ | (12 | ) |

**Income      Taxes**

|                                                   |   | **Sept.                30, 2007 vs. Sept.                30,                2006** |
|--------------------------------------------------------|--------|------------------------------------------------------------------------------------|
|                                                   |   | **Three                Months                Ended**                               |   | **Nine                Months                Ended** |
|                                                   |   |                                                                               |   |   |   |   |
| Lowerpre-tax                book                income |   | $                                                                                  | (9 | ) |   | $ | (7 | ) |
| Increase                in tax                reserves |   |                                                                               | 2 |   |   |   | 1 |   |
|                                                   |   | $                                                                                  | (7 | ) |   | $ | (6 | ) |

**Financial      Condition**

**Liquidity      and Capital Resources**

|                                                    |   | **September                30,****2007** |   | **December                31,****2006** |
|---------------------------------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
|                                                    |   |                                     |   |                                    |   |   |   |   |
| Cash                and cash                equivalents |   | $                                        | 15     |                                    |   | $ | 150 |   |
| Short-term                investments                   |   |                                     |   |                                    |   |   | 26 |   |
|                                                    |   | $                                        | 15     |                                    |   | $ | 176 |   |
| Short-term                debt                          |   | $                                        | 81     |                                    |   | $ | 42 |   |

| · | the                retirement of $483 million of                long-term debt;                 |
|--------|-------------------------------------------------------------------------------------------------|
| · | $210                million of capital                expenditures;                             |
| · | the                payment of $95 million of                common stock dividends to PPL;      |
| · | an                increase in restricted cash of                $10 million;                    |
| · | $359                million of cash provided by                operating activities;            |
| · | proceeds                of $250 million from the                issuance of long-term debt; and |
| · | anet                increase in short-term                debt of $39                million.   |

|                                                        |                                                                   | **Projected** |   |
|-------------------------------------------------------------|------------------------------------------------------------------------|---------------|--------|
|                                                        |                                                                   | **2007**      |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   |
| Construction                expenditures                (a) |                                                                   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Transmission                and distribution                facilities |          | $      | 272 |   | $ | 240 |   | $ | 274 |   | $ | 360 |   | $ | 454 |   |
| Other                                                       |                                                                   |          | 24     |   |   | 24 |   |   | 23 |   |   | 26 |   |   | 20 |   |
|                                                        | Total                Capital                Expenditures               |          | $      | 296 |   | $ | 264 |   | $ | 297 |   | $ | 386 |   | $ | 474 |   |

| (a) |   | Construction                expenditures include AFUDC, which is expected to be $9 million for                the                2007-2011 period. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

**Risk      Management**

*Commodity      Price Risk - PLR Contracts*

*Interest      Rate Risk*

**Related      Party Transactions**

**Development**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      CORPORATION**

**PPL      ENERGY SUPPLY, LLC**

**PPL      ELECTRIC UTILITIES CORPORATION**

**Item      3. Quantitative and Qualitative Disclosures About Market      Risk**

**Item      4.  Controls and      Procedures**

| (a)    |   | Evaluation                of disclosure controls                and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | The                registrants' principal executive officers and principal financial                officers, based on their evaluation of the registrants' disclosure                controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)                of                the Securities Exchange Act of 1934) have concluded that, as of September                30, 2007, the registrants' disclosure controls and procedures are                effective to ensure that material information relating to the registrants                and their consolidated subsidiaries is recorded, processed, summarized                and                reported within the time periods specified by the SEC's rules and                forms,                particularly during the period for which this quarterly report has                been                prepared.  The aforementioned principal officers have concluded                that the disclosure controls and procedures are also effective to                ensure                that information required to be disclosed in reports filed under                the                Exchange Act is accumulated and communicated to management, including                the                principal executive and principal financial officers, to allow for                timely                decisions regarding required disclosure. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (b)    |   | Change                in internal controls over                financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | The                registrants' principal executive officers and principal financial                officers                have concluded that there were no changes in the registrants' internal                control over financial reporting during the registrants' third fiscal                quarter that have materially affected, or are reasonably likely to                materially affect, the registrants' internal control over financial                reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

**PART      II.  OTHER INFORMATION**

| **Item                1.   Legal                Proceedings**                                                                                                                                                                                                                               |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                  |
| For                additional information regarding various pending administrative and                judicial proceedings involving regulatory, environmental and other                matters, which information is incorporated by reference into this                Part II,                see: |
|                                                                                                                                                                                                                                                                                                  |   |   |
| ·                                                                                                                                                                                                                                                                                                |   | "Item                3. Legal Proceedings" in PPL's, PPL Energy Supply's and PPL Electric's                2006 Form 10-K; and |
|                                                                                                                                                                                                                                                                                                  |   |   |
| ·                                                                                                                                                                                                                                                                                                |   | Note                10 of the registrants' "Combined Notes to Condensed Consolidated                Financial                Statements" in Part I of this                report. |

| **Item                1A.  Risk                Factors**                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                 |
| There                have been no material changes in PPL's, PPL Energy Supply's and PPL                Electric's risk factors from those disclosed in "Item 1A. Risk Factors"                of                the 2006 Form 10-K. |

**Item      2.  Unregistered Sales of Equity Securities      and Use of Proceeds**

|                                             | **(a)**                                                                             | **(b)**                                                                                       | **(c)**                                                                                                                                                                                    | **(d)**                                                                                                                                                                                        |
|--------------------------------------------------|-------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                       | **Total                Number of****Shares                (or Units)****Purchased** | **Average                Price Paid****per                Share****(or                Unit)** | **Total                Number of****Shares                (or Units)****Purchased                as Part of****Publicly                Announced****Plans                or Programs (1)** | **Maximum                Number (or****Approximate                Dollar Value) of Shares (or Units) that May Yet Be Purchased Under                the                Plans or Programs (1)** |
| July                1 to July 31, 2007           |   1,884,100                                                               | $47.00                                                                                        |   1,884,100                                                                                                                                                                      | $584,112,771                                                                                                                                                                                   |
| August                1 to August 31, 2007       |   5,715,892                                                               | $47.79                                                                                        |   5,715,892                                                                                                                                                                      | $310,937,964                                                                                                                                                                                   |
| September                1 to September 30, 2007 |   2,608,200                                                               | $48.43                                                                                        |   2,608,200                                                                                                                                                                      | $184,633,360                                                                                                                                                                                   |
| Total                                            | 10,208,192                                                                          | $47.81                                                                                        | 10,208,192                                                                                                                                                                                 | $184,633,360                                                                                                                                                                                   |

| (1) |   | In                June 2007, PPL announced a program to repurchase from time to time                up to                $750 million of its common stock in open market purchases, pre-arranged                trading plans or privately negotiated                transactions. |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Item                6.  Exhibits**                                                                                                                                                                                                        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                  |   |   |
| 4(a)                                                                                                                                                                                                                                                  | - | Amendment                No. 1 to Amended and Restated Employee Stock Ownership Plan, executed                July                2, 2007 |
| 10(a)                                                                                                                                                                                                                                                 | - | Stock                Purchase Agreement, dated as of September 12, 2007, between PPL Chile                Energía Limitada and                Compañía* *General de Electricidad |
| 12(a)                                                                                                                                                                                                                                                 | - | PPL                Corporation and Subsidiaries Computation of Ratio of Earnings to                Combined                Fixed Charges and Preferred Stock Dividends |
| 12(b)                                                                                                                                                                                                                                                 | - | PPL                Energy Supply, LLC and Subsidiaries Computation of Ratio of Earnings                to                Fixed Charges |
| 12(c)                                                                                                                                                                                                                                                 | - | PPL                Electric Utilities Corporation and Subsidiaries Computation of Ratio                of                Earnings to Combined Fixed Charges and Preferred Stock                Dividends |
|                                                                                                                                                                                                                                                  |   |   |
| Certifications                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the                quarterly period ended September 30, 2007, filed by the following                officers                for the following companies: |
|                                                                                                                                                                                                                                                  |   |   |
| 31(a)                                                                                                                                                                                                                                                 | - | James                H. Miller for PPL Corporation |
| 31(b)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Corporation |
| 31(c)                                                                                                                                                                                                                                                 | - | James                H. Miller for PPL Energy Supply, LLC |
| 31(d)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Energy Supply, LLC |
| 31(e)                                                                                                                                                                                                                                                 | - | David                G. DeCampli for PPL Electric Utilities Corporation |
| 31(f)                                                                                                                                                                                                                                                 | - | J.                Matt Simmons, Jr. for PPL Electric Utilities                Corporation |

| Certifications                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the                quarterly period ended September 30, 2007, furnished by the following                officers for the following companies: |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                       |   |   |
| 32(a)                                                                                                                                                                                                                                      | - | James                H. Miller for PPL Corporation |
| 32(b)                                                                                                                                                                                                                                      | - | Paul                A. Farr for PPL Corporation |
| 32(c)                                                                                                                                                                                                                                      | - | James                H. Miller for PPL Energy Supply, LLC |
| 32(d)                                                                                                                                                                                                                                      | - | Paul                A. Farr for PPL Energy Supply, LLC |
| 32(e)                                                                                                                                                                                                                                      | - | David                G. DeCampli for PPL Electric Utilities Corporation |
| 32(f)                                                                                                                                                                                                                                      | - | J.                Matt Simmons, Jr. for PPL Electric Utilities                Corporation |

----

SIGNATURES

|                                             | **PPL                Corporation**                    |   |
|--------------------------------------------------|-------------------------------------------------------|--------|
|                                             | (Registrant)                                          |   |
|                                             |                                                  |   |
|                                             | **PPL                Energy Supply, LLC**             |   |
|                                             | (Registrant)                                          |   |
|                                             |                                                  |   |
|                                             | **PPL                Electric Utilities Corporation** |   |
|                                             | (Registrant)                                          |   |
|                                             |                                                  |   |
|                                             |                                                  |   |
|                                             |                                                  |   |
|                                             |                                                  |   |
| Date:  November                1, 2007 | /s/                J. Matt Simmons, Jr.               |   |
|                                             | J.                Matt Simmons, Jr.                   |   |
|                                             | Vice                President and Controller          |   |
|                                             | (Principal                Accounting Officer)         |   |