**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 March                31, 2006            |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     | 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, 380,495,159 shares outstanding at April 28,                2006,                excluding 62,139,729 shares held as treasury stock.                                             |
|--------|---------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                              |                                                                                                                                                                                                                         |
|   | PPL                Energy Supply, LLC             | PPL                Corporation indirectly holds all of the membership interests in PPL                Energy                Supply, LLC.                                                                                     |
|   |                                              |                                                                                                                                                                                                                         |
|   | PPL                Electric Utilities Corporation | Common                stock, no par value, 66,368,056 shares outstanding and all held by                PPL                Corporation at April 28, 2006, excluding 90,932,326 shares held as                treasury stock. |
|   |                                              |                                                                                                                                                                                                                         |

**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 | 39 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy                Supply,                LLC and Subsidiaries | 51 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities                Corporation                and Subsidiaries | 61 |
|                                                                                                                                                                               | Item                3. Quantitative                and Qualitative                Disclosures About Market Risk                  | 65 |
|                                                                                                                                                                               | Item                4. Controls                and                Procedures                                                               | 65 |
|                                                                                                                                                                               |                                                                                                                                       |
| PART                II. OTHER INFORMATION                                                                                                                                          |                                                                                                                                       |
|                                                                                                                                                                               | Item                1.  Legal                Proceedings                                                                         | 65 |
|                                                                                                                                                                               | Item                1A. Risk Factors                                                                                                       | 65 |
|                                                                                                                                                                               | Item                2. Unregistered Sales of Equity Securities and Use of                Proceeds                                          | 65 |
|                                                                                                                                                                               | Item                6.                Exhibits                                                                                             | 66 |
|                                                                                                                                                                               |                                                                                                                                       |
| SIGNATURES                                                                                                                                                                         | 67                                                                                                                                         |
|                                                                                                                                                                               |                                                                                                                                       |
| COMPUTATION                OF RATIO OF EARNINGS TO FIXED CHARGES                                                                                                                   |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation                and                Subsidiaries | 68 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply,                LLC and Subsidiaries | 69 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities Corporation and Subsidiaries | 70 |
|                                                                                                                                                                               |                                                                                                                                       |
| CERTIFICATES                OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER                PURSUANT                TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation | 71 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply,                LLC | 73 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities                Corporation | 75 |
|                                                                                                                                                                               |                                                                                                                                       |
| CERTIFICATES                OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER                PURSUANT                TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation | 77 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy                Supply, LLC | 79 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric                Utilities Corporation | 81 |

----

**GLOSSARY      OF TERMS AND ABBREVIATIONS**

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

***Elfec***

***Hyder***

***PPL***
*** ***

***PPL      Capital Funding***

***PPL      Capital Funding Trust I***

***PPL      Development Company***

***PPL      Electric***
*** ***

***PPL      Energy Funding***

***PPL      EnergyPlus***

***PPL      Energy Supply***

***PPL      Gas Utilities***

***PPL      Generation***

***PPL      Global***

***PPL      Maine***

***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***

**£**

***2005      Form 10-K***

***AFUDC***

***APA***

***ARO***

***Bcf***

***Clean      Air Act***

***CTC***

***Customer      Choice Act***
*** ***

***DEP***

***Derivative***

| a.   | It                has (1) one or more underlyings and (2) one or more notional amounts                or                payment provisions or both. Those terms determine the amount of the                settlement or settlements, and, in some cases, whether or not a settlement                is required. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | It                requires no initial net investment or an initial net investment that                is                smaller than would be required for other types of contracts that                would be                expected to have a similar response to changes in market                factors. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Its                terms require or permit net settlement, it can readily be settled                net by a                means outside the contract, or it provides for delivery of an asset                that                puts the recipient in a position not substantially different from                net                settlement. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***DIG***
*** ***

***DOE***

***EITF***

***EMF***

***EPA***

***EPS***

***FASB***
** **

***FERC***

***FIN***

***Fitch***

***FSP***

***FTR***

***GWh***

***IRS***
*** ***

***ISO***

***ITC***

***LIBOR***
** **
** **

***Montana      Power***

***Moody's***

***MW***

***MWh***

***NorthWestern***

***NRC***

***NUGs***
* *

***NYMEX***

***Ofgem***

***PCB***

***PEPS      Units***

***PJM***
*** ***

***PLR***

***PP&E***
*** ***

***PUC***
*** ***

***PUC      Final Order***

***PUHCA***

***PURPA***
*** ***

***Regulation      S-X***

***Sarbanes-Oxley      404***
** **

***SEC***

***SFAS***

***S&P***

***Superfund***

***Synfuel      projects***

***Tolling      agreement***
*** ***

----

**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;                                                                                                                                                                                                                 |
| · | 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                allowance 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; |
| · | 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;                                                                                                                                                                                                   |
| · | any                impact of 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                CO****NSOLIDATED                STATEMENTS OF INCOME**                                                                                                     |
| **PPL                Corporation and Subsidiaries**                                                                                                                                   |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars, except per share data)*                                                                                                                         |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
| **Operating                Revenues**                                                                                                                                                 |   |   |   |   |   |   |
| Utility                                                                                                                                                                               |   | **$** | **1,232** |   |   | $ | 1,151 |   |
| Unregulated                retail electric                                                                                                                                            |   |   | **25** |   |   |   | 25 |   |
| Wholesale                energy marketing                                                                                                                                             |   |   | **337** |   |   |   | 268 |   |
| Net                energy trading margins                                                                                                                                             |   |   | **10** |   |   |   | 16 |   |
| Energy-related                businesses                                                                                                                                              |   |   | **179** |   |   |   | 140 |   |
| Total                                                                                                                                                                                 |   |   | **1,783** |   |   |   | 1,600 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                                  |   |   | **240** |   |   |   | 244 |   |
| Energy                purchases                                                                                                                                                       |   |   | **309** |   |   |   | 266 |   |
| Other                operation and maintenance                                                                                                                                        |   |   | **332** |   |   |   | 364 |   |
| Amortization                of recoverable transition costs                                                                                                                           |   |   | **72** |   |   |   | 69 |   |
| Depreciation                                                                                                                                                                          |   |   | **108** |   |   |   | 103 |   |
| Taxes,                other than income                                                                                                                                               |   |   | **71** |   |   |   | 73 |   |
| Energy-related                businesses                                                                                                                                              |   |   | **163** |   |   |   | 146 |   |
| Total                                                                                                                                                                                 |   |   | **1,295** |   |   |   | 1,265 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                                   |   |   | **488** |   |   |   | 335 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                                     |   |   | **9** |   |   |   | 7 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                       |   |   | **119** |   |   |   | 135 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations Before Income Taxes, Minority Interest                and                Dividends on Preferred Stock**                            |   |   | **378** |   |   |   | 207 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                           |   |   | **95** |   |   |   | 34 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Minority                Interest                                                                                                                                                      |   |   | **2** |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Dividends                on Preferred Stock                                                                                                                                           |   |   | **1** |   |   |   | 1 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations**                                                                                                                                  |   |   | **280** |   |   |   | 170 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Loss                from Discontinued Operations (net of income taxes)                                                                                                                |   |   |   |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Income**                                                                                                                                                         |   | **$** | **280** |   |   | $ | 168 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Earnings                Per Share of Common Stock: (a)**                                                                                                                            |   |   |   |   |   |   |   |   |
| Income                from Continuing Operations:                                                                                                                                     |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                 |   | **$** | **0.74** |   |   | $ | 0.45 |   |
| Diluted                                                                                                                                                                               |   | **$** | **0.73** |   |   | $ | 0.45 |   |
| Net                income:                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                 |   | **$** | **0.74** |   |   | $ | 0.45 |   |
| Diluted                                                                                                                                                                               |   | **$** | **0.73** |   |   | $ | 0.44 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Dividends                Declared Per Share of Common Stock (a)**                                                                                                                   |   | **$** | **0.275** |   |   | $ | 0.23 |   |
|                                                                                                                                                                                  |
| (a)                                                                                                                                                                                   |   | Data                for 2005 have been adjusted to reflect PPL's 2-for-1 common stock                split                completed in August 2005. See Note 4 to the Financial Statements                for                additional information. |
|                                                                                                                                                                                  |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
| **Cash                Flows from Operating Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                             |   | **$** | **280** |   |   | $ | 168 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities                                                                        |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                          |   |   | **108** |   |   |   | 105 |   |
| Stock                compensation expense                                                                                                                                             |   |   | **16** |   |   |   | 22 |   |
| Amortizations                - recoverable transition costs and other                                                                                                                 |   |   | **77** |   |   |   | 69 |   |
| Pension                expense                                                                                                                                                        |   |   | **10** |   |   |   | 7 |   |
| Pension                funding                                                                                                                                                        |   |   | **(22** | **)** |   |   | (10 | ) |
| Deferred                income tax benefits and investment tax credits                                                                                                                |   |   | **(48** | **)** |   |   | (22 | ) |
| Accrual                for PJM billing dispute                                                                                                                                        |   |   |   |   |   |   | 47 |   |
| Unrealized                gain on derivatives and other hedging activities                                                                                                            |   |   | **(40** | **)** |   |   | (2 | ) |
| Other                                                                                                                                                                                 |   |   | **(10** | **)** |   |   | 4 |   |
| Change                in current assets and current liabilities                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                    |   |   | **(99** | **)** |   |   | (116 | ) |
| Accounts                payable                                                                                                                                                       |   |   | **(15** | **)** |   |   | (1 | ) |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **(20** | **)** |   |   | 42 |   |
| Other                                                                                                                                                                                 |   |   | **52** |   |   |   | 23 |   |
| Other                operating activities                                                                                                                                             |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                           |   |   | **(15** | **)** |   |   | 5 |   |
| Other                liabilities                                                                                                                                                      |   |   | **23** |   |   |   | (34 | ) |
| Net                cash provided by operating activities                                                                                                                              |   |   | **297** |   |   |   | 307 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Expenditures                for property, plant and equipment                                                                                                                         |   |   | **(198** | **)** |   |   | (169 | ) |
| Purchases                of emission allowances                                                                                                                                       |   |   | **(53** | **)** |   |   | (27 | ) |
| Proceeds                from the sale of emission allowances                                                                                                                          |   |   | **29** |   |   |   | 32 |   |
| Purchases                of nuclear decommissioning trust investments                                                                                                                 |   |   | **(73** | **)** |   |   | (62 | ) |
| Proceeds                from the sale of nuclear decommissioning trust investments                                                                                                    |   |   | **69** |   |   |   | 59 |   |
| Purchases                of other marketable securities                                                                                                                               |   |   | **(39** | **)** |   |   |   |   |
| Proceeds                from the sale of other marketable securities                                                                                                                  |   |   | **97** |   |   |   | 66 |   |
| Net                (increase) decrease in restricted cash                                                                                                                             |   |   | **(6** | **)** |   |   | 16 |   |
| Other                investing activities                                                                                                                                             |   |   | **15** |   |   |   | (8 | ) |
| Net                cash used in investing activities                                                                                                                                  |   |   | **(159** | **)** |   |   | (93 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Issuance                of long-term debt                                                                                                                                             |   |   |   |   |   |   | 116 |   |
| Retirement                of long-term debt                                                                                                                                           |   |   | **(225** | **)** |   |   | (396 | ) |
| Issuance                of common stock                                                                                                                                               |   |   | **2** |   |   |   | 24 |   |
| Payment                of common dividends                                                                                                                                            |   |   | **(95** | **)** |   |   | (77 | ) |
| Net                (decrease) increase in short-term debt                                                                                                                             |   |   | **(36** | **)** |   |   | 265 |   |
| Other                financing activities                                                                                                                                             |   |   | **(1** | **)** |   |   | (10 | ) |
| Net                cash used in financing activities                                                                                                                                  |   |   | **(355** | **)** |   |   | (78 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Effect                of Exchange Rates on Cash and Cash Equivalents**                                                                                                              |   |   |   |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                (Decrease) Increase in Cash and Cash Equivalents**                                                                                                               |   |   | **(217** | **)** |   |   | 138 |   |
| Cash                and Cash Equivalents at Beginning of Period                                                                                                                       |   |   | **555** |   |   |   | 616 |   |
| Cash                and Cash Equivalents at End of Period                                                                                                                             |   | **$** | **338** |   |   | $ | 754 |   |
|                                                                                                                                                                                  |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **338** |   |   | $ | 555 |   |
| Restricted                cash                                                                                                                                                        |   |   | **100** |   |   |   | 93 |   |
| Accounts                receivable (less reserve: 2006, $72; 2005, $87)                                                                                                               |   |   | **644** |   |   |   | 544 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **414** |   |   |   | 479 |   |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **366** |   |   |   | 346 |   |
| Prepayments                                                                                                                                                                           |   |   | **150** |   |   |   | 53 |   |
| Deferred                income taxes                                                                                                                                                  |   |   | **191** |   |   |   | 192 |   |
| Price                risk management assets                                                                                                                                           |   |   | **425** |   |   |   | 488 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **154** |   |   |   | 50 |   |
| Other                                                                                                                                                                                 |   |   | **46** |   |   |   | 110 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **2,828** |   |   |   | 2,910 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Investment                in unconsolidated affiliates - at equity                                                                                                                    |   |   | **47** |   |   |   | 56 |   |
| Nuclear                plant decommissioning trust funds                                                                                                                              |   |   | **463** |   |   |   | 444 |   |
| Other                                                                                                                                                                                 |   |   | **8** |   |   |   | 8 |   |
| Total                Investments                                                                                                                                                      |   |   | **518** |   |   |   | 508 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **8,101** |   |   |   | 7,984 |   |
| Generation                                                                                                                                                                            |   |   | **8,794** |   |   |   | 8,761 |   |
| General                                                                                                                                                                               |   |   | **648** |   |   |   | 646 |   |
|                                                                                                                                                                                  |   |   | **17,543** |   |   |   | 17,391 |   |
| Construction                work in progress                                                                                                                                          |   |   | **295** |   |   |   | 259 |   |
| Nuclear                fuel                                                                                                                                                           |   |   | **353** |   |   |   | 327 |   |
| Electric                plant                                                                                                                                                         |   |   | **18,191** |   |   |   | 17,977 |   |
| Gas                and oil plant                                                                                                                                                      |   |   | **353** |   |   |   | 349 |   |
| Other                property                                                                                                                                                         |   |   | **295** |   |   |   | 289 |   |
|                                                                                                                                                                                  |   |   | **18,839** |   |   |   | 18,615 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **7,805** |   |   |   | 7,699 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **11,034** |   |   |   | 10,916 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Regulatory                and Other Noncurrent Assets**                                                                                                                             |   |   |   |   |   |   |   |   |
| Recoverable                transition costs                                                                                                                                           |   |   | **1,093** |   |   |   | 1,165 |   |
| Goodwill                                                                                                                                                                              |   |   | **1,065** |   |   |   | 1,070 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **346** |   |   |   | 412 |   |
| Price                risk management assets                                                                                                                                           |   |   | **148** |   |   |   | 84 |   |
| Other                                                                                                                                                                                 |   |   | **860** |   |   |   | 861 |   |
| Total                Regulatory and Other Noncurrent Assets                                                                                                                           |   |   | **3,512** |   |   |   | 3,592 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **17,892** |   |   | $ | 17,926 |   |
|                                                                                                                                                                                  |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Liabilities                and Equity**                                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                                                                                                                |   |   |   |   |   |   |   |   |
| Short-term                debt                                                                                                                                                        |   | **$** | **179** |   |   | $ | 214 |   |
| Long-term                debt                                                                                                                                                         |   |   | **985** |   |   |   | 1,126 |   |
| Accounts                payable                                                                                                                                                       |   |   | **529** |   |   |   | 542 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **69** |   |   |   | 70 |   |
| Taxes                                                                                                                                                                                 |   |   | **290** |   |   |   | 168 |   |
| Interest                                                                                                                                                                              |   |   | **111** |   |   |   | 112 |   |
| Dividends                                                                                                                                                                             |   |   | **106** |   |   |   | 96 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **482** |   |   |   | 533 |   |
| Other                                                                                                                                                                                 |   |   | **428** |   |   |   | 479 |   |
| Total                Current Liabilities                                                                                                                                              |   |   | **3,179** |   |   |   | 3,340 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                                                                                                                     |   |   | **5,865** |   |   |   | 5,955 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt with Affiliate Trust**                                                                                                                                |   |   | **89** |   |   |   | 89 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                                                                                                                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **2,227** |   |   |   | 2,197 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **416** |   |   |   | 541 |   |
| Accrued                pension obligations                                                                                                                                            |   |   | **366** |   |   |   | 374 |   |
| Asset                retirement obligations                                                                                                                                           |   |   | **303** |   |   |   | 298 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **119** |   |   |   | 136 |   |
| Other                                                                                                                                                                                 |   |   | **498** |   |   |   | 471 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                                                                                                                |   |   | **3,929** |   |   |   | 4,017 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities**                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Minority                Interest**                                                                                                                                                  |   |   | **57** |   |   |   | 56 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Preferred                Stock**                                                                                                                                                    |   |   | **51** |   |   |   | 51 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Shareowners'                Common Equity**                                                                                                                                         |   |   |   |   |   |   |   |   |
| Common                stock - $0.01 par value (a)                                                                                                                                     |   |   | **4** |   |   |   | 4 |   |
| Capital                in excess of par value                                                                                                                                         |   |   | **3,622** |   |   |   | 3,602 |   |
| Treasury                stock (a)                                                                                                                                                     |   |   | **(839** | **)** |   |   | (838 | ) |
| Earnings                reinvested                                                                                                                                                    |   |   | **2,357** |   |   |   | 2,182 |   |
| Accumulated                other comprehensive loss                                                                                                                                   |   |   | **(422** | **)** |   |   | (532 | ) |
| Total                Shareowners' Common Equity                                                                                                                                       |   |   | **4,722** |   |   |   | 4,418 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                                                                                                                       |   | **$** | **17,892** |   |   | $ | 17,926 |   |
|                                                                                                                                                                                  |
| (a)                                                                                                                                                                                   |   | 780                million shares authorized; 380 million shares outstanding, excluding                62                million shares held as treasury stock, at March 31, 2006 and December                31,                2005. |
|                                                                                                                                                                                  |
| *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****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
| **Operating                Revenues**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Wholesale                energy marketing                                                                                                                                             |   | **$** | **337** |   |   | $ | 268 |   |
| Wholesale                energy marketing to affiliate                                                                                                                                |   |   | **446** |   |   |   | 415 |   |
| Utility                                                                                                                                                                               |   |   | **323** |   |   |   | 293 |   |
| Unregulated                retail electric                                                                                                                                            |   |   | **25** |   |   |   | 25 |   |
| Net                energy trading margins                                                                                                                                             |   |   | **10** |   |   |   | 16 |   |
| Energy-related                businesses                                                                                                                                              |   |   | **171** |   |   |   | 134 |   |
| Total                                                                                                                                                                                 |   |   | **1,312** |   |   |   | 1,151 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                                  |   |   | **168** |   |   |   | 192 |   |
| Energy                purchases                                                                                                                                                       |   |   | **253** |   |   |   | 176 |   |
| Energy                purchases from affiliate                                                                                                                                        |   |   | **39** |   |   |   | 38 |   |
| Other                operation and maintenance                                                                                                                                        |   |   | **245** |   |   |   | 261 |   |
| Depreciation                                                                                                                                                                          |   |   | **75** |   |   |   | 71 |   |
| Taxes,                other than income                                                                                                                                               |   |   | **21** |   |   |   | 24 |   |
| Energy-related                businesses                                                                                                                                              |   |   | **156** |   |   |   | 138 |   |
| Total                                                                                                                                                                                 |   |   | **957** |   |   |   | 900 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                                   |   |   | **355** |   |   |   | 251 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                                     |   |   | **10** |   |   |   | 8 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                       |   |   | **61** |   |   |   | 65 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense with Affiliates                                                                                                                                       |   |   | **3** |   |   |   | 7 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations Before Income Taxes and Minority                Interest**                                                                         |   |   | **301** |   |   |   | 187 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                           |   |   | **69** |   |   |   | 28 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Minority                Interest                                                                                                                                                      |   |   | **2** |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations**                                                                                                                                  |   |   | **230** |   |   |   | 157 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Loss                from Discontinued Operations (net of income taxes)                                                                                                                |   |   |   |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Income**                                                                                                                                                         |   | **$** | **230** |   |   | $ | 155 |   |
|                                                                                                                                                                                  |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
| **Cash                Flows from Operating Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                             |   | **$** | **230** |   |   | $ | 155 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities                                                                        |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                          |   |   | **75** |   |   |   | 74 |   |
| Stock                compensation expense                                                                                                                                             |   |   | **12** |   |   |   | 15 |   |
| Amortizations                - energy commitments and other                                                                                                                           |   |   | **(2** | **)** |   |   | (7 | ) |
| Pension                expense                                                                                                                                                        |   |   | **6** |   |   |   | 5 |   |
| Pension                funding                                                                                                                                                        |   |   | **(22** | **)** |   |   | (10 | ) |
| Deferred                income taxes (benefits) and investment tax credits                                                                                                            |   |   | **(1** | **)** |   |   | 30 |   |
| Unrealized                gain on derivatives and other hedging activities                                                                                                            |   |   | **(42** | **)** |   |   | (1 | ) |
| Other                                                                                                                                                                                 |   |   | **(10** | **)** |   |   | 3 |   |
| Change                in current assets and current liabilities                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                    |   |   | **(64** | **)** |   |   | (32 | ) |
| Accounts                payable                                                                                                                                                       |   |   | **(1** | **)** |   |   | 20 |   |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **(36** | **)** |   |   | 27 |   |
| Other                                                                                                                                                                                 |   |   | **85** |   |   |   | 44 |   |
| Other                operating activities                                                                                                                                             |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                           |   |   | **(11** | **)** |   |   | 6 |   |
| Other                liabilities                                                                                                                                                      |   |   | **6** |   |   |   | (32 | ) |
| Net                cash provided by operating activities                                                                                                                              |   |   | **225** |   |   |   | 297 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Expenditures                for property, plant and equipment                                                                                                                         |   |   | **(147** | **)** |   |   | (123 | ) |
| Purchases                of emission allowances                                                                                                                                       |   |   | **(53** | **)** |   |   | (27 | ) |
| Proceeds                from the sale of emission allowances                                                                                                                          |   |   | **29** |   |   |   | 32 |   |
| Purchases                of nuclear decommissioning trust investments                                                                                                                 |   |   | **(73** | **)** |   |   | (62 | ) |
| Proceeds                from the sale of nuclear decommissioning trust investments                                                                                                    |   |   | **69** |   |   |   | 59 |   |
| Proceeds                from the sale of other marketable securities                                                                                                                  |   |   | **33** |   |   |   | 51 |   |
| Net                (increase) decrease in restricted cash                                                                                                                             |   |   | **(7** | **)** |   |   | 17 |   |
| Other                investing activities                                                                                                                                             |   |   | **13** |   |   |   | (8 | ) |
| Net                cash used in investing activities                                                                                                                                  |   |   | **(136** | **)** |   |   | (61 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Retirement                of long-term debt                                                                                                                                           |   |   | **(3** | **)** |   |   | (208 | ) |
| Contributions                from Member                                                                                                                                              |   |   | **15** |   |   |   |   |   |
| Distributions                to Member                                                                                                                                                |   |   | **(58** | **)** |   |   | (58 | ) |
| Net                (decrease) increase in short-term debt                                                                                                                             |   |   | **(136** | **)** |   |   | 165 |   |
| Net                decrease in note payable to affiliate                                                                                                                              |   |   | **(1** | **)** |   |   |   |   |
| Other                financing activities                                                                                                                                             |   |   | **(1** | **)** |   |   |   |   |
| Net                cash used in financing activities                                                                                                                                  |   |   | **(184** | **)** |   |   | (101 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Effect                of Exchange Rates on Cash and Cash Equivalents**                                                                                                              |   |   |   |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                (Decrease) Increase in Cash and Cash Equivalents**                                                                                                               |   |   | **(95** | **)** |   |   | 137 |   |
| Cash                and Cash Equivalents at Beginning of Period                                                                                                                       |   |   | **227** |   |   |   | 357 |   |
| Cash                and Cash Equivalents at End of Period                                                                                                                             |   | **$** | **132** |   |   | $ | 494 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED****CONSOLIDATED                BALANCE SHEETS**                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **132** |   |   | $ | 227 |   |
| Restricted                cash                                                                                                                                                        |   |   | **45** |   |   |   | 39 |   |
| Accounts                receivable (less reserve: 2006, $49; 2005, $65)                                                                                                               |   |   | **354** |   |   |   | 291 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **258** |   |   |   | 300 |   |
| Accounts                receivable from affiliates                                                                                                                                    |   |   | **151** |   |   |   | 149 |   |
| Collateral                on PLR energy supply to affiliate                                                                                                                           |   |   | **300** |   |   |   | 300 |   |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **331** |   |   |   | 295 |   |
| Prepayments                                                                                                                                                                           |   |   | **36** |   |   |   | 39 |   |
| Deferred                income taxes                                                                                                                                                  |   |   | **153** |   |   |   | 166 |   |
| Price                risk management assets                                                                                                                                           |   |   | **424** |   |   |   | 487 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **154** |   |   |   | 50 |   |
| Other                                                                                                                                                                                 |   |   | **9** |   |   |   | 41 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **2,347** |   |   |   | 2,384 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Investment                in unconsolidated affiliates - at equity                                                                                                                    |   |   | **47** |   |   |   | 56 |   |
| Nuclear                plant decommissioning trust funds                                                                                                                              |   |   | **463** |   |   |   | 444 |   |
| Other                                                                                                                                                                                 |   |   | **4** |   |   |   | 3 |   |
| Total                Investments                                                                                                                                                      |   |   | **514** |   |   |   | 503 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **4,033** |   |   |   | 3,950 |   |
| Generation                                                                                                                                                                            |   |   | **8,794** |   |   |   | 8,761 |   |
| General                                                                                                                                                                               |   |   | **262** |   |   |   | 272 |   |
|                                                                                                                                                                                  |   |   | **13,089** |   |   |   | 12,983 |   |
| Construction                work in progress                                                                                                                                          |   |   | **249** |   |   |   | 210 |   |
| Nuclear                fuel                                                                                                                                                           |   |   | **353** |   |   |   | 327 |   |
| Electric                plant                                                                                                                                                         |   |   | **13,691** |   |   |   | 13,520 |   |
| Gas                and oil plant                                                                                                                                                      |   |   | **64** |   |   |   | 64 |   |
| Other                property                                                                                                                                                         |   |   | **203** |   |   |   | 198 |   |
|                                                                                                                                                                                  |   |   | **13,958** |   |   |   | 13,782 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **5,949** |   |   |   | 5,871 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **8,009** |   |   |   | 7,911 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Other                Noncurrent Assets**                                                                                                                                            |   |   |   |   |   |   |   |   |
| Goodwill                                                                                                                                                                              |   |   | **1,010** |   |   |   | 1,015 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **214** |   |   |   | 283 |   |
| Price                risk management assets                                                                                                                                           |   |   | **133** |   |   |   | 80 |   |
| Other                                                                                                                                                                                 |   |   | **484** |   |   |   | 488 |   |
| Total                Other Noncurrent Assets                                                                                                                                          |   |   | **1,841** |   |   |   | 1,866 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **12,711** |   |   | $ | 12,664 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED****CONSOLIDATED                BALANCE SHEETS**                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Liabilities                and Equity**                                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                                                                                                                |   |   |   |   |   |   |   |   |
| Short-term                debt                                                                                                                                                        |   | **$** | **37** |   |   | $ | 172 |   |
| Note                payable to affiliate                                                                                                                                              |   |   | **7** |   |   |   | 8 |   |
| Long-term                debt                                                                                                                                                         |   |   | **445** |   |   |   | 445 |   |
| Accounts                payable                                                                                                                                                       |   |   | **465** |   |   |   | 445 |   |
| Accounts                payable to affiliates                                                                                                                                         |   |   | **20** |   |   |   | 27 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **69** |   |   |   | 70 |   |
| Taxes                                                                                                                                                                                 |   |   | **143** |   |   |   | 72 |   |
| Interest                                                                                                                                                                              |   |   | **87** |   |   |   | 79 |   |
| Deferred                revenue on PLR energy supply to affiliate                                                                                                                     |   |   | **12** |   |   |   | 12 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **458** |   |   |   | 519 |   |
| Other                                                                                                                                                                                 |   |   | **273** |   |   |   | 313 |   |
| Total                Current Liabilities                                                                                                                                              |   |   | **2,016** |   |   |   | 2,162 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                                                                                                                     |   |   | **3,508** |   |   |   | 3,506 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt with Affiliate Trust**                                                                                                                                |   |   | **89** |   |   |   | 89 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                                                                                                                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **1,215** |   |   |   | 1,157 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **387** |   |   |   | 523 |   |
| Accrued                pension obligations                                                                                                                                            |   |   | **218** |   |   |   | 232 |   |
| Asset                retirement obligations                                                                                                                                           |   |   | **303** |   |   |   | 298 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **119** |   |   |   | 136 |   |
| Deferred                revenue on PLR energy supply to affiliate                                                                                                                     |   |   | **32** |   |   |   | 35 |   |
| Other                                                                                                                                                                                 |   |   | **330** |   |   |   | 321 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                                                                                                                |   |   | **2,604** |   |   |   | 2,702 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities**                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Minority                Interest**                                                                                                                                                  |   |   | **57** |   |   |   | 56 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Member's                Equity**                                                                                                                                                    |   |   | **4,437** |   |   |   | 4,149 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                                                                                                                       |   | **$** | **12,711** |   |   | $ | 12,664 |   |
|                                                                                                                                                                                  |
| *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****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
| **Operating                Revenues**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Retail                electric                                                                                                                                                        |   | **$** | **812** |   |   | $ | 780 |   |
| Wholesale                electric                                                                                                                                                     |   |   | **1** |   |   |   | 1 |   |
| Wholesale                electric to affiliate                                                                                                                                        |   |   | **39** |   |   |   | 38 |   |
| Total                                                                                                                                                                                 |   |   | **852** |   |   |   | 819 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Energy                purchases                                                                                                                                                       |   |   | **56** |   |   |   | 91 |   |
| Energy                purchases from affiliate                                                                                                                                        |   |   | **446** |   |   |   | 415 |   |
| Other                operation and maintenance                                                                                                                                        |   |   | **87** |   |   |   | 101 |   |
| Amortization                of recoverable transition costs                                                                                                                           |   |   | **72** |   |   |   | 69 |   |
| Depreciation                                                                                                                                                                          |   |   | **28** |   |   |   | 28 |   |
| Taxes,                other than income                                                                                                                                               |   |   | **49** |   |   |   | 47 |   |
| Total                                                                                                                                                                                 |   |   | **738** |   |   |   | 751 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                                   |   |   | **114** |   |   |   | 68 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                                     |   |   | **9** |   |   |   | 4 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                       |   |   | **38** |   |   |   | 51 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense with Affiliate                                                                                                                                        |   |   | **4** |   |   |   | 2 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                Before Income Taxes**                                                                                                                                         |   |   | **81** |   |   |   | 19 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                           |   |   | **29** |   |   |   | 3 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                Before Dividends on Preferred Stock**                                                                                                                         |   |   | **52** |   |   |   | 16 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Dividends                on Preferred Stock                                                                                                                                           |   |   | **1** |   |   |   | 1 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                Available to PPL Corporation**                                                                                                                                |   | **$** | **51** |   |   | $ | 15 |   |
|                                                                                                                                                                                  |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2006** |   | **2005** |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Operating Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                             |   | **$** | **51** |   |   | $ | 15 |   |
| Adjustments                to                reconcile net income to net cash provided by operating                activities                                                         |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                          |   |   | **28** |   |   |   | 28 |   |
| Stock                compensation expense                                                                                                                                             |   |   | **3** |   |   |   | 6 |   |
| Amortizations                - recoverable transition costs and other                                                                                                                 |   |   | **78** |   |   |   | 74 |   |
| Deferred                income tax benefits and investment tax credits                                                                                                                |   |   | **(3** | **)** |   |   | (11 | ) |
| Accrual                for PJM billing dispute                                                                                                                                        |   |   |   |   |   |   | 47 |   |
| Change                in current assets and current liabilities                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                    |   |   | **(27** | **)** |   |   | (44 | ) |
| Accounts                payable                                                                                                                                                       |   |   | **(35** | **)** |   |   | (23 | ) |
| Other                                                                                                                                                                                 |   |   | **(84** | **)** |   |   | (97 | ) |
| Other                operating activities                                                                                                                                             |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                           |   |   | **(6** | **)** |   |   | (2 | ) |
| Other                liabilities                                                                                                                                                      |   |   | **10** |   |   |   | 11 |   |
| Net                cash provided by operating activities                                                                                                                              |   |   | **15** |   |   |   | 4 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Expenditures                for property, plant and equipment                                                                                                                         |   |   | **(43** | **)** |   |   | (40 | ) |
| Purchases                of other marketable securities                                                                                                                               |   |   | **(39** | **)** |   |   |   |   |
| Proceeds                from the sale of other marketable securities                                                                                                                  |   |   | **64** |   |   |   | 10 |   |
| Net                increase in note receivable from affiliate                                                                                                                         |   |   | **(100** | **)** |   |   |   |   |
| Net                decrease in restricted cash                                                                                                                                        |   |   | **2** |   |   |   | 2 |   |
| Other                investing activities                                                                                                                                             |   |   | **3** |   |   |   |   |   |
| Net                cash used in investing activities                                                                                                                                  |   |   | **(113** | **)** |   |   | (28 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Issuance                of long-term debt                                                                                                                                             |   |   |   |   |   |   | 116 |   |
| Retirement                of long-term debt                                                                                                                                           |   |   | **(222** | **)** |   |   | (188 | ) |
| Payment                of common dividends to PPL Corporation                                                                                                                         |   |   | **(38** | **)** |   |   | (16 | ) |
| Net                increase in short-term debt                                                                                                                                        |   |   | **100** |   |   |   | 100 |   |
| Other                financing activities                                                                                                                                             |   |   | **(1** | **)** |   |   | (6 | ) |
| Net                cash (used in) provided by financing activities                                                                                                                    |   |   | **(161** | **)** |   |   | 6 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Decrease in Cash and Cash Equivalents**                                                                                                                          |   |   | **(259** | **)** |   |   | (18 | ) |
| Cash                and Cash Equivalents at Beginning of Period                                                                                                                       |   |   | **298** |   |   |   | 151 |   |
| Cash                and Cash Equivalents at End of Period                                                                                                                             |   | **$** | **39** |   |   | $ | 133 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| *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)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **39** |   |   | $ | 298 |   |
| Restricted                cash                                                                                                                                                        |   |   | **42** |   |   |   | 42 |   |
| Accounts                receivable (less reserve: 2006, $21; 2005, $20)                                                                                                               |   |   | **250** |   |   |   | 224 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **152** |   |   |   | 174 |   |
| Accounts                receivable from affiliates                                                                                                                                    |   |   | **9** |   |   |   | 10 |   |
| Note                receivable from affiliate                                                                                                                                         |   |   | **400** |   |   |   | 300 |   |
| Prepayments                                                                                                                                                                           |   |   | **105** |   |   |   | 4 |   |
| Prepayment                on PLR energy supply from affiliate                                                                                                                         |   |   | **12** |   |   |   | 12 |   |
| Other                                                                                                                                                                                 |   |   | **70** |   |   |   | 87 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **1,079** |   |   |   | 1,151 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **4,069** |   |   |   | 4,034 |   |
| General                                                                                                                                                                               |   |   | **361** |   |   |   | 356 |   |
|                                                                                                                                                                                  |   |   | **4,430** |   |   |   | 4,390 |   |
| Construction                work in progress                                                                                                                                          |   |   | **41** |   |   |   | 43 |   |
| Electric                plant                                                                                                                                                         |   |   | **4,471** |   |   |   | 4,433 |   |
| Other                property                                                                                                                                                         |   |   | **3** |   |   |   | 3 |   |
|                                                                                                                                                                                  |   |   | **4,474** |   |   |   | 4,436 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **1,744** |   |   |   | 1,720 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **2,730** |   |   |   | 2,716 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Regulatory                and Other Noncurrent Assets**                                                                                                                             |   |   |   |   |   |   |   |   |
| Recoverable                transition costs                                                                                                                                           |   |   | **1,093** |   |   |   | 1,165 |   |
| Acquired                intangibles                                                                                                                                                   |   |   | **113** |   |   |   | 114 |   |
| Prepayment                on PLR energy supply from affiliate                                                                                                                         |   |   | **32** |   |   |   | 35 |   |
| Other                                                                                                                                                                                 |   |   | **356** |   |   |   | 356 |   |
| Total                Regulatory and Other Noncurrent Assets                                                                                                                           |   |   | **1,594** |   |   |   | 1,670 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **5,403** |   |   | $ | 5,537 |   |
|                                                                                                                                                                                  |
| *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)*                                                |
|                                                                                  |   | **March                31,****2006** |   | **December                31,****2005** |
| **Liabilities                and Equity**                                             |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                |   |   |   |   |   |   |   |   |
| Short-term                debt                                                        |   | **$** | **142** |   |   | $ | 42 |   |
| Long-term                debt                                                         |   |   | **292** |   |   |   | 434 |   |
| Accounts                payable                                                       |   |   | **32** |   |   |   | 42 |   |
| Accounts                payable to affiliates                                         |   |   | **159** |   |   |   | 183 |   |
| Taxes                                                                                 |   |   | **89** |   |   |   | 76 |   |
| Collateral                on PLR energy supply from affiliate                         |   |   | **300** |   |   |   | 300 |   |
| Other                                                                                 |   |   | **129** |   |   |   | 147 |   |
| Total                Current Liabilities                                              |   |   | **1,143** |   |   |   | 1,224 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                     |   |   | **1,897** |   |   |   | 1,977 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                       |   |   | **774** |   |   |   | 771 |   |
| Other                                                                                 |   |   | **200** |   |   |   | 190 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                |   |   | **974** |   |   |   | 961 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities**                             |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Preferred                Stock**                                                    |   |   | **51** |   |   |   | 51 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Shareowner's                Common Equity**                                         |   |   |   |   |   |   |   |   |
| Common                stock - no par value (a)                                        |   |   | **1,476** |   |   |   | 1,476 |   |
| Additional                paid-in capital                                             |   |   | **354** |   |   |   | 354 |   |
| Treasury                stock (a)                                                     |   |   | **(912** | **)** |   |   | (912 | ) |
| Earnings                reinvested                                                    |   |   | **420** |   |   |   | 406 |   |
| Total                Shareowner's Common Equity                                       |   |   | **1,338** |   |   |   | 1,324 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                       |   | **$** | **5,403** |   |   | $ | 5,537 |   |

| (a)                                                                                                                                                                                   |   | 170                million shares authorized; 78 million shares outstanding, excluding                79                million shares held as treasury stock, at March 31, 2006 and December                31,                2005. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                  |
| *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 Electric)*

*(PPL        and PPL Energy Supply)*

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

**Allowance      for Doubtful Accounts **
*(PPL      and PPL Energy Supply)*

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

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

*(PPL      and PPL Energy Supply)*

|                                            |   | **Three                Months Ended March 31,** |
|-------------------------------------------------|--------|-------------------------------------------------|
|                                            |   |                                            |
|                                            |   | **PPL**                                         |   | **PPL                Energy Supply** |
|                                            |   |                                            |   |   |   |   |   |   |
|                                            |   | **2006**                                        |   | **2005** |   | **2006** |   | **2005** |
| **Income                Statement Data**        |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                from external customers |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                          |   | $                                               | 530 |   |   | $ | 431 |   |   | $ | 968 |   |   | $ | 840 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| International                Delivery           |   |                                            | 344 |   |   |   | 311 |   |   |   | 344 |   |   |   | 311 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                Delivery            |   |                                            | 909 |   |   |   | 858 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            | 1,783 |   |   |   | 1,600 |   |   |   | 1,312 |   |   |   | 1,151 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intersegment                revenues            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                          |   |                                            | 446 |   |   |   | 416 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                Delivery            |   |                                            | 41 |   |   |   | 38 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                (a)                       |   |                                            | 143 |   |   |   | 86 |   |   |   | 149 |   |   |   | 93 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| International                Delivery           |   |                                            | 81 |   |   |   | 62 |   |   |   | 81 |   |   |   | 62 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                Delivery            |   |                                            | 56 |   |   |   | 20 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | $                                               | 280 |   |   | $ | 168 |   |   | $ | 230 |   |   | $ | 155 |   |

|                                  |   | **PPL**                              |   | **PPL                Energy Supply**    |
|---------------------------------------|--------|--------------------------------------|--------|-----------------------------------------|
|                                  |   |                                 |   |                                    |
|                                  |   | **March                31,****2006** |   | **December                31,****2005** |   | **March                31,****2006** |   | **December                31,****2005** |
| **Balance                Sheet Data** |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                assets           |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                |   | $                                    | 7,159  |                                    |   | $ | 7,118 |   |   | $ | 7,567 |   |   | $ | 7,575 |   |
|                                  |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| International                Delivery |   |                                 | 5,144  |                                    |   |   | 5,089 |   |   |   | 5,144 |   |   |   | 5,089 |   |
|                                  |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Pennsylvania                Delivery  |   |                                 | 5,589  |                                    |   |   | 5,719 |   |   |   |   |   |   |   |   |   |
|                                  |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   | $                                    | 17,892 |                                    |   | $ | 17,926 |   |   | $ | 12,711 |   |   | $ | 12,664 |   |

| (a) |   | 2005                includes the operating results of the Sundance plant recorded in                "Loss                from Discontinued Operations." |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| **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                March 31,** |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                        |   |                                                              |
|                                                                        |   | **2006**                                                          |   | **2005** |
| **Income                (Numerator)**                                       |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                            |   | $                                                                 | 280 |   |   | $ | 170 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Loss                from discontinued operations (net of income taxes)      |   |                                                              |   |   |   |   | 2 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Net                Income                                                   |   | $                                                                 | 280 |   |   | $ | 168 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| **Shares                (Denominator)**                                     |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Shares                for Basic EPS                                         |   |                                                              | 379,838 |   |   |   | 378,119 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Add incremental                shares:                                 |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Convertible                Senior Notes                                     |   |                                                              | 2,980 |   |   |   | 1,169 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Restricted                stock, stock options and other share-based awards |   |                                                              | 2,787 |   |   |   | 2,062 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Shares                for Diluted EPS                                       |   |                                                              | 385,605 |   |   |   | 381,350 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| **Basic                EPS**                                                |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                            |   | $                                                                 | 0.74 |   |   | $ | 0.45 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Loss                from discontinued operations (net of income taxes)      |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Net                Income                                                   |   | $                                                                 | 0.74 |   |   | $ | 0.45 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| **Diluted                EPS**                                              |   |                                                              |   |   |   |   |   |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                            |   | $                                                                 | 0.73 |   |   | $ | 0.45 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Loss                from discontinued operations (net of income taxes)      |   |                                                              |   |   |   |   | 0.01 |   |
|                                                                        |   |                                                              |   |   |   |   |   |   |
| Net                Income                                                   |   | $                                                                 | 0.73 |   |   | $ | 0.44 |   |

|                                      |   | **Three                Months****Ended                March 31,** |   |
|-------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                      |   |                                                              |   |
| *(Thousands                of Shares)*    |   | **2006**                                                          |   |   | **2005** |   |
|                                      |   |                                                              |   |   |   |   |
| Antidilutive                stock options |   | 1,335                                                             |   |   | 1,608 |   |

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

*(PPL      and PPL Energy Supply)*

|                                                                                                                                                                                                                              |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                                                                                                                                              |   |                                                              |
| **PPL**                                                                                                                                                                                                                           |   | **2006**                                                          |   | **2005** |
|                                                                                                                                                                                                                              |   |                                                              |   |   |
| **Reconciliation                of Income Tax Expense**                                                                                                                                                                           |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Indicated                federal income tax on Income from Continuing Operations Before Income                Taxes, Minority Interest and Dividends on Preferred Stock at statutory                tax                rate - 35% |   | $                                                                 | 132 |   |   | $ | 72 |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Increase                (decrease) due to:                                                                                                                                                                                        |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                                                                                                                                                 |   |                                                              | 9 |   |   |   | (2 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Amortization                of investment tax credit                                                                                                                                                                              |   |                                                              | (3 | ) |   |   | (3 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Difference                related to income recognition of foreign affiliates (net of foreign                income                taxes)                                                                                         |   |                                                              | (3 | ) |   |   | (10 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Transfer                of WPD tax items                                                                                                                                                                                          |   |                                                              | (20 | ) |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Stranded                cost securitization                                                                                                                                                                                       |   |                                                              | (1 | ) |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Federal                income tax credits                                                                                                                                                                                         |   |                                                              | (16 | ) |   |   | (24 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Other                                                                                                                                                                                                                             |   |                                                              | (3 | ) |   |   | 1 |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              | (37 | ) |   |   | (38 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **Total                income tax expense**                                                                                                                                                                                       |   | $                                                                 | 95 |   |   | $ | 34 |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **Effective                income tax rate**                                                                                                                                                                                      |   |                                                              | 25.1% |   |   |   | 16.4% |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **PPL                Energy Supply**                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **Reconciliation                of Income Tax Expense**                                                                                                                                                                           |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Indicated                federal income tax on Income from Continuing Operations Before Income                Taxes and Minority Interest at statutory tax rate - 35%                                                             |   | $                                                                 | 105 |   |   | $ | 65 |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Increase                (decrease) due to:                                                                                                                                                                                        |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                                                                                                                                                 |   |                                                              | 8 |   |   |   | (1 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Amortization                of investment tax credit                                                                                                                                                                              |   |                                                              | (2 | ) |   |   | (2 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Difference                related to income recognition of foreign affiliates (net of foreign                income                taxes)                                                                                         |   |                                                              | (3 | ) |   |   | (10 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Transfer                of WPD tax items                                                                                                                                                                                          |   |                                                              | (20 | ) |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Federal                income tax credits                                                                                                                                                                                         |   |                                                              | (16 | ) |   |   | (24 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Other                                                                                                                                                                                                                             |   |                                                              | (3 | ) |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                                                                                                              |   |                                                              | (36 | ) |   |   | (37 | ) |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **Total                income tax expense**                                                                                                                                                                                       |   | $                                                                 | 69 |   |   | $ | 28 |   |
|                                                                                                                                                                                                                              |   |                                                              |   |   |   |   |   |   |
| **Effective                income tax rate**                                                                                                                                                                                      |   |                                                              | 22.9% |   |   |   | 15.0% |   |

*(PPL      Electric)*

|                                                                                                                                |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                                                |   |                                                              |
|                                                                                                                                |   | **2006**                                                          |   | **2005** |
|                                                                                                                                |   |                                                              |   |   |
| **Reconciliation                of Income Tax Expense**                                                                             |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Indicated                federal income tax on Income Before Income Taxes at statutory tax                rate -                35% |   | $                                                                 | 28 |   |   | $ | 6 |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Increase                (decrease) due to:                                                                                          |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                                                   |   |                                                              | 2 |   |   |   |   |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Amortization                of investment tax credit                                                                                |   |                                                              | (1 | ) |   |   | (1 | ) |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Stranded                cost securitization                                                                                         |   |                                                              | (1 | ) |   |   |   |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Deficiency                reserves                                                                                                  |   |                                                              |   |   |   |   | (2 | ) |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| Other                                                                                                                               |   |                                                              | 1 |   |   |   |   |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
|                                                                                                                                |   |                                                              | 1 |   |   |   | (3 | ) |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| **Total                income tax expense**                                                                                         |   | $                                                                 | 29 |   |   | $ | 3 |   |
|                                                                                                                                |   |                                                              |   |   |   |   |   |   |
| **Effective                income tax rate**                                                                                        |   |                                                              | 35.8% |   |   |   | 15.8% |   |

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

*(PPL      and PPL Energy Supply)*

|                                                                |   | **Three                Months Ended March 31,** |
|---------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                |   |                                            |
|                                                                |   | **PPL**                                         |   | **PPL                Energy Supply** |
|                                                                |   |                                            |   |   |
|                                                                |   | **2006**                                        |   | **2005** |   | **2006** |   | **2005** |
|                                                                |   |                                            |   |   |   |   |   |   |
| Net                Income                                           |   | $                                               | 280 |   |   | $ | 168 |   |   | $ | 230 |   |   | $ | 155 |   |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                comprehensive income (loss):                   |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation adjustments             |   |                                            | 12 |   |   |   | 16 |   |   |   | 12 |   |   |   | 16 |   |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized loss on available-for-sale securities |   |                                            | (5 | ) |   |   | (5 | ) |   |   | (5 | ) |   |   | (5 | ) |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                unrealized gain (loss) on qualifying derivatives |   |                                            | 102 |   |   |   | (66 | ) |   |   | 94 |   |   |   | (66 | ) |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                other comprehensive income (loss)              |   |                                            | 109 |   |   |   | (55 | ) |   |   | 101 |   |   |   | (55 | ) |
|                                                                |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                Income                                 |   | $                                               | 389 |   |   | $ | 113 |   |   | $ | 331 |   |   | $ | 100 |   |

*(PPL      Electric)*

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

**Credit      Arrangements**

*(PPL      and PPL Electric)*

*(PPL      and PPL Energy Supply)*

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

**Financing      Activities**

*(PPL      and PPL Electric)*

*(PPL      and PPL Energy Supply)*

**Dividends      **
*(PPL)*

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

*(PPL      and PPL Energy Supply)*

**International      Energy Projects**

**Discontinued      Operations **

**Other      **

| **9.  ** | **Stock-Based                Compensation** |
|--------------------|---------------------------------------------|

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

**Restricted      Stock and Restricted Stock Units**

|                                        |   | **Restricted****Shares** |      | **Weighted-****Average****Grant****Date****Fair****Value** |
|---------------------------------------------|--------|--------------------------|-----------|------------------------------------------------------------|
| **PPL**                                     |   |                     |      |                                                       |   |   |   |   |
| Nonvested                at January 1, 2006 |   |                     | 1,557,123 |                                                       |   |   | $20.81 |   |
| Granted                                     |   |                     | 777,380   |                                                       |   |   | 30.84 |   |
| Vested                                      |   |                     | (312,656  | )                                                          |   |   | 18.11 |   |
| Forfeited                                   |   |                     | (2,392    | )                                                          |   |   | 26.19 |   |
| Nonvested                at March 31, 2006  |   |                     | 2,019,455 |                                                       |   |   | $25.38 |   |
|                                        |   |                     |      |                                                       |   |   |   |   |
| **PPL                Energy Supply**        |   |                     |      |                                                       |   |   |   |   |
| Nonvested                at January 1, 2006 |   |                     | 671,901   |                                                       |   |   | $18.69 |   |
| Granted                                     |   |                     | 295,780   |                                                       |   |   | 31.14 |   |
| Vested                                      |   |                     | (125,626  | )                                                          |   |   | 17.57 |   |
| Nonvested                at March 31, 2006  |   |                     | 842,055   |                                                       |   |   | $23.99 |   |
|                                        |   |                     |      |                                                       |   |   |   |   |
| **PPL                Electric**             |   |                     |      |                                                       |   |   |   |   |
| Nonvested                at January 1, 2006 |   |                     | 116,260   |                                                       |   |   | $23.09 |   |
| Granted                                     |   |                     | 58,550    |                                                       |   |   | 31.17 |   |
| Vested                                      |   |                     | (32,420   | )                                                          |   |   | 17.53 |   |
| Nonvested                at March 31, 2006  |   |                     | 142,390   |                                                       |   |   | $27.65 |   |

|                             |   | **Unrecognized****Compensation                Cost** |   | **Weighted-Average****Period                for Recognition** |
|----------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------------------------|
|                             |   |                                                 |   |                                                          |   |   |   |   |
| PPL                              |   | $                                                    | 16     |                                                          |   |   | 3.7                years |   |
|                             |   |                                                 |   |                                                          |   |   |   |   |
| PPL                Energy Supply |   |                                                 | 13     |                                                          |   |   | 3.4                years |   |
|                             |   |                                                 |   |                                                          |   |   |   |   |
| PPL                Electric      |   |                                                 | 2      |                                                          |   |   | 1.8                years |   |

|                             |   | **March                31,****2006** |   | **March                31,****2005** |   |
|----------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
|                             |   |                                 |   |                                 |   |   |   |   |
| PPL                              |   | $                                    | 10     |                                 |   | $ | 8 |   |
|                             |   |                                 |   |                                 |   |   |   |   |
| PPL                Energy Supply |   |                                 | 4      |                                 |   |   | 2 |   |
|                             |   |                                 |   |                                 |   |   |   |   |
| PPL                Electric      |   |                                 | 1      |                                 |   |   | 1 |   |

**Stock      Options**

|                                                          |      | **Number                of Options** |      | **Weighted-Average                Exercise Price** |   | **Weighted-Average                Remaining Contractual Term** |   | **Aggregate                Intrinsic Value** |
|---------------------------------------------------------------|-----------|--------------------------------------|-----------|----------------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------|
| **PPL**                                                       |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at January 1, 2006                 |      |                                 | 5,586,072 |                                               |   | $                                                              | 21.81  |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          | Granted   |                                 |      | 1,335,420                                          |   |                                                           |   | 30.14                                        |   |   |   |   |   |   |   |   |   |
|                                                          | Exercised |                                 |      | (129,956                                           | )      |                                                           |   | 19.20                                        |   |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at March 31, 2006                  |      |                                 | 6,791,536 |                                               |   |                                                           | 23.49  |                                         |   |   | 7.6                years |   |   | $ | 41 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Options                exercisable at March 31, 2006          |      |                                 | 4,018,514 |                                               |   |                                                           | 20.57  |                                         |   |   | 6.5                years |   |   |   | 36 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Weighted-average                fair value of options granted |      | $                                    | 4.86      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| **PPL                Energy Supply**                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at January 1, 2006                 |      |                                 | 1,225,502 |                                               |   | $                                                              | 21.72  |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          | Granted   |                                 |      | 494,660                                            |   |                                                           |   | 30.14                                        |   |   |   |   |   |   |   |   |   |
|                                                          | Exercised |                                 |      | (112,440                                           | )      |                                                           |   | 19.37                                        |   |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at March 31, 2006                  |      |                                 | 1,607,722 |                                               |   |                                                           | 24.48  |                                         |   |   | 8.0                years |   |   | $ | 8 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Options                exercisable at March 31, 2006          |      |                                 | 743,499   |                                               |   |                                                           | 20.15  |                                         |   |   | 6.4                years |   |   |   | 7 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Weighted-average                fair value of options granted |      | $                                    | 4.86      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| **PPL                Electric**                               |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at January 1, 2006                 |      |                                 | 285,372   |                                               |   | $                                                              | 22.95  |                                         |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
|                                                          | Granted   |                                 |      | 88,540                                             |   |                                                           |   | 30.14                                        |   |   |   |   |   |   |   |   |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Outstanding                at March 31, 2006                  |      |                                 | 373,912   |                                               |   |                                                           | 24.65  |                                         |   |   | 7.6                years |   |   | $ | 2 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Options                exercisable at March 31, 2006          |      |                                 | 204,000   |                                               |   |                                                           | 21.95  |                                         |   |   | 6.3                years |   |   |   | 2 |   |
|                                                          |      |                                 |      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |
| Weighted-average                fair value of options granted |      | $                                    | 4.86      |                                               |   |                                                           |   |                                         |   |   |   |   |   |   |   |   |

|                             |   | **March                31,****2006** |   |   | **March                31,****2005** |
|----------------------------------|--------|--------------------------------------|--------|--------|--------------------------------------|
|                             |   |                                 |   |   |                                 |   |   |   |
| PPL                              |   | $                                    | 1      |   |                                 | $ | 13 |   |
|                             |   |                                 |   |   |                                 |   |   |   |
| PPL                Energy Supply |   |                                 | 1      |   |                                 |   | 2 |   |
|                             |   |                                 |   |   |                                 |   |   |   |
| PPL                Electric      |   |                                 |   |   |                                 |   | 1 |   |

|                                     |   | **Unrecognized****Compensation                Cost** |   | **Weighted-****Average****Period                for Recognition** |
|------------------------------------------|--------|------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                     |   |                                                 |   |                                                              |   |   |   |   |
| PPL                and PPL Energy Supply |   | $                                                    | 3      |                                                              |   |   | 2.3                years |   |

|                                     |   | **2006**                 |   | **2005**                 |   |
|------------------------------------------|--------|--------------------------|--------|--------------------------|--------|
|                                     |   |                     |   |                     |   |
| Risk-free                interest rate   |   | 4.06%                    |   | 4.09%                    |   |
|                                     |   |                     |   |                     |   |
| Expected                option life      |   | 6.25                yrs. |   | 7.00                yrs. |   |
|                                     |   |                     |   |                     |   |
| Expected                stock volatility |   | 19.86%                   |   | 18.09%                   |   |
|                                     |   |                     |   |                     |   |
| Dividend                yield            |   | 3.76%                    |   | 3.88%                    |   |

**Directors      Stock Units**
*(PPL)*

**Stock      Appreciation Rights**
*(PPL      and PPL Energy Supply)*

| **10.  ** | **Pension                and Other Postretirement                Benefits** |
|---------------------|-----------------------------------------------------------------------------|

*(PPL      and PPL Energy Supply)*

|                                                                                                                                                     |   | **Three                Months Ended March 31,** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                                                                                     |   |                                            |   |   |
|                                                                                                                                                     |   | **Pension                Benefits**             |   | **Other                Postretirement****Benefits** |
|                                                                                                                                                     |   |                                            |   |   |
|                                                                                                                                                     |   | **Domestic**                                    |   | **International** |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   | **2006**                                        |   | **2005** |   | **2006** |   | **2005** |   | **2006** |   | **2005** |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL**                                                                                                                                                  |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                                                                                              |   | $                                               | 16 |   |   | $ | 14 |   |   | $ | 5 |   |   | $ | 4 |   |   | $ | 2 |   |   | $ | 2 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                cost                                                                                                                             |   |                                            | 31 |   |   |   | 29 |   |   |   | 34 |   |   |   | 38 |   |   |   | 7 |   |   |   | 7 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expected                return on plan assets                                                                                                            |   |                                            | (41 | ) |   |   | (40 | ) |   |   | (48 | ) |   |   | (52 | ) |   |   | (5 | ) |   |   | (5 | ) |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of transition obligation                                                                                                     |   |                                            | (1 | ) |   |   | (1 | ) |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   | 2 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of prior service cost                                                                                                        |   |                                            | 4 |   |   |   | 4 |   |   |   | 1 |   |   |   | 1 |   |   |   | 2 |   |   |   | 1 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of loss                                                                                                                      |   |                                            |   |   |   |   |   |   |   |   | 11 |   |   |   | 6 |   |   |   | 2 |   |   |   | 2 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension and other postretirement benefit costs (credits)                prior to                special termination benefits |   |                                            | 9 |   |   |   | 6 |   |   |   | 3 |   |   |   | (3 | ) |   |   | 10 |   |   |   | 9 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Special                termination benefits (a)                                                                                                          |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | 5 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension and other postretirement benefit costs                                                                               |   | $                                               | 9 |   |   | $ | 6 |   |   | $ | 3 |   |   | $ | 2 |   |   | $ | 10 |   |   | $ | 9 |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL                Energy Supply**                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                                                                                              |   | $                                               | 1 |   |   | $ | 1 |   |   | $ | 5 |   |   | $ | 4 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                cost                                                                                                                             |   |                                            | 1 |   |   |   | 1 |   |   |   | 34 |   |   |   | 38 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expected                return on plan assets                                                                                                            |   |                                            | (1 | ) |   |   | (1 | ) |   |   | (48 | ) |   |   | (52 | ) |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of prior service cost                                                                                                        |   |                                            |   |   |   |   |   |   |   |   | 1 |   |   |   | 1 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                of loss                                                                                                                      |   |                                            |   |   |   |   |   |   |   |   | 11 |   |   |   | 6 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension and other postretirement benefit costs (credits)                prior to                special termination benefits |   |                                            | 1 |   |   |   | 1 |   |   |   | 3 |   |   |   | (3 | ) |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Special                termination benefits (a)                                                                                                          |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | 5 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                periodic pension and other postretirement benefit costs                                                                               |   | $                                               | 1 |   |   | $ | 1 |   |   | $ | 3 |   |   | $ | 2 |   |   |   |   |   |   |   |   |   |

| (a) |   | The                  $5 million cost of special termination benefits for 2005 was related                  to                  the WPD-approved staff reduction plan as a result of the merger                  of its two                  control rooms, metering reorganization and other staff efficiencies.                  Additional pension costs were recognized due to early retirement                  and                  pension enhancement provisions granted to the                  employees. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **11.  ** | **Commitments                and Contingent Liabilities** |
|---------------------|-----------------------------------------------------------|

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

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

*(PPL      and PPL Energy Supply)*

** **
*(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,      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 will appoint and oversee an electric reliability organization                to                establish and enforce mandatory reliability rules regarding the bulk                power                system.                                                         |
| · | 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, will                be                extended by twenty years 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)*

*      (PPL      and PPL Energy Supply)*

*      (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,      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**       |   |                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------|--------|--------------------------------------|--------|---------------------------------------|
|                                                                                                                                    |   |   | **March                31, 2006**        |   | **December                31, 2005** |   | **March                31, 2006 (a)** |   | **Expiration                Date** |
| **PPL**                                                                                                                                 |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Residual                value guarantees of leased equipment                                                                            |   |   |                                     |   |                                 |   |                                  | $ | 8 |   |   | 2007 | (b) |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| **PPL                Energy Supply**                (c)                                                                                 |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| WPD                LLP guarantee of obligations under SIUK Capital Trust I preferred                securities                          |   |   |                                     |   |                                 |   |                                  |   | 82 |  (d) |   | 2027 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Letters                of credit issued on behalf of affiliates                                                                         |   |   |                                     |   |                                 |   |                                  |   | 7 |  (e) |   | 2007 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Support                agreements to guarantee partnerships' obligations for the sale of                coal                            |   |   |                                     |   |                                 |   |                                  |   | 9 |   |   | 2007 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Retroactive                premiums under nuclear insurance programs                                                                    |   |   |                                     |   |                                 |   |                                  |   | 38 |   |   |   |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Nuclear                claims under The Price-Anderson Act Amendments under The Energy Policy                Act                of 2005 |   |   |                                     |   |                                 |   |                                  |   | 201 |  (f) |   |   |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Contingent                purchase price payments to former owners of synfuel                projects                                   |   |   |                                     |   |                                 |   |                                  |   | 31 |   |   | 2007 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Residual                value guarantees of leased equipment                                                                            |   |   |                                     |   |                                 |   |                                  |   | 2 |   |   | 2007 | (b) |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Indemnifications                for entities in liquidation                                                                             |   |   |                                     |   |                                 |   |                                  |   | 274 |   |   | 2008                to 2012 |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| WPD                guarantee of pension and other obligations of unconsolidated                entities                (g)              |   | $      | 4                                        |   | $                                    | 4      |                                  |   | 40 |   |   | 2017 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| WPD                guarantee of an unconsolidated entity's lease obligations                                                            |   |   |                                     |   |                                 |   |                                  |   | 1 |   |   | 2008 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Tax                indemnification related to unconsolidated WPD affiliates                                                             |   |   |                                     |   |                                 |   |                                  |   | 9 |   |   | 2012 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Indemnifications                related to the sale of the Sundance plant                                                               |   |   | 1                                        |   |                                 | 1      |                                  |   |   | (h) |   |   | (h) |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| **PPL                Electric**** **(c)                                                                                            |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Guarantee                of a portion of an unconsolidated entity's debt                                                                |   |   |                                     |   |                                 |   |                                  |   | 7 |  (d) |   | 2008 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Residual                value guarantees of leased equipment                                                                            |   |   |                                     |   |                                 |   |                                  |   | 73 |   |   | 2007 | (b) |

| (a) |   | Represents                the estimated maximum potential amount of future payments that could                be                required to be made under the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Although                the expiration date noted is 2007, equipment of similar value is                generally                leased and guaranteed on an on-going basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (c) |   | Other                than the exceptions noted in (e) below, all guarantees of PPL Energy                Supply and PPL Electric also apply to PPL on a consolidated                basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (d) |   | Reflects                principal payments only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (e) |   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (f) |   | Amount                is per incident.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (g) |   | Neither                the expiration date nor the maximum amount of potential payments                for                certain obligations is explicitly stated in the related agreements                and,                therefore, have been estimated based on the types of                obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (h) |   | PPL                Energy Supply's maximum exposure with respect to these 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.                Certain                of the indemnifications 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 survive for a period of only 24 months after the                May 13,                2005, transaction closing. 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. |

| **12.  ** | **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 March 31,** |   |
|--------------------------------|-------------------------------------------------|--------|
|                           |                                            |   |
|                           | **PPL                Energy Supply**            |   | **PPL                Electric** |   |
|                           |                                            |   |   |   |
|                           | **2006**                                        |   | **2005** |   | **2006** |   | **2005** |   |
|                           |                                            |   |   |   |   |   |   |   |
| Direct                expenses | $                                               | 30     |   | $ | 25 |   | $ | 14 |   | $ | 14 |   |
|                           |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Overhead                costs  |                                            | 27     |   |   | 19 |   |   | 9 |   |   | 12 |   |

**Intercompany      Borrowings**

*(PPL      Energy Supply)*

*PPL      Electric)*

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

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

| **13.  ** | **Other                Income - Net** |
|---------------------|---------------------------------------|

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

|                                                                                             | **Three                Months Ended****March                31,** |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
|                                                                                             |                                                              |
| **PPL**                                                                                          | **2006**                                                          |   | **2005** |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other****Income**                                                                              |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Interest                income                                                                   | $                                                                 | 8 |   |   | $ | 6 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Equity                earnings                                                                   |                                                              | 1 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Realized                earnings on nuclear decommissioning trust                                |                                                              | 3 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Gain                on sale of investment in an unconsolidated affiliate (Note                8) |                                                              | 4 |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - International                                                     |                                                              | 2 |   |   |   | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - Domestic                                                          |                                                              | 4 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Total                                                                                            |                                                              | 22 |   |   |   | 11 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Deductions**                                                              |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Impairment                of investment in U.K. real estate (Note 8)                             |                                                              | 8 |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Charitable                contributions                                                          |                                                              | 2 |   |   |   | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - Domestic                                                          |                                                              | 3 |   |   |   | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Income - net**                                                            | $                                                                 | 9 |   |   | $ | 7 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **PPL                Energy Supply**                                                             |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other****Income**                                                                              |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Interest                income                                                                   | $                                                                 | 4 |   |   | $ | 4 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Affiliated                interest income                                                        |                                                              | 5 |   |   |   | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Equity                earnings                                                                   |                                                              | 1 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Realized                earnings on nuclear decommissioning trust                                |                                                              | 3 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Gain                on sale of investment in an unconsolidated affiliate (Note                8) |                                                              | 4 |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - International                                                     |                                                              | 2 |   |   |   | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - Domestic                                                          |                                                              | 2 |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Total                                                                                            |                                                              | 21 |   |   |   | 11 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Deductions**                                                              |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Impairment                of investment in U.K. real estate (Note 8)                             |                                                              | 8 |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                - Domestic                                                          |                                                              | 3 |   |   |   | 3 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Income - net**                                                            | $                                                                 | 10 |   |   | $ | 8 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **PPL                Electric**                                                                  |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other****Income**                                                                              |                                                              |   |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Interest                income                                                                   | $                                                                 | 3 |   |   | $ | 2 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Affiliated                interest income                                                        |                                                              | 5 |   |   |   | 3 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Miscellaneous                                                                                    |                                                              | 1 |   |   |   |   |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| Total                                                                                            |                                                              | 9 |   |   |   | 5 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Deductions**                                                              |                                                              |   |   |   |   | 1 |   |
|                                                                                             |                                                              |   |   |   |   |   |   |
| **Other                Income - net**                                                            | $                                                                 | 9 |   |   | $ | 4 |   |

| **14.  ** | **Derivative                Instruments and Hedging                Activities** |
|---------------------|---------------------------------------------------------------------------------|

*(PPL      and PPL Energy Supply)*

**Fair      Value Hedges**

**Cash      Flow Hedges**

|                                                                                                 |   | **Three                Months Ended****March                31,** |
|------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                 |   |                                                              |
|                                                                                                 |   | **2006**                                                          |   | **2005** |
| **PPL**                                                                                              |   |                                                              |   |   |   |   |   |   |
| Beginning                accumulated derivative loss                                                 |   | $                                                                 | (246) |   |   | $ | (63 | ) |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Net                change associated with current period hedging activities and                other |   |                                                              | 77 |   |   |   | (79 | ) |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Net                change from reclassification into earnings                                        |   |                                                              | 25 |   |   |   | 13 |   |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Ending                accumulated derivative loss                                                    |   | $                                                                 | (144 | ) |   | $ | (129 | ) |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| **PPL                Energy Supply**                                                                 |   |                                                              |   |   |   |   |   |   |
| Beginning                accumulated derivative loss                                                 |   | $                                                                 | (237 | ) |   | $ | (45 | ) |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Net                change associated with current period hedging activities and                other |   |                                                              | 70 |   |   |   | (78 | ) |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Net                change from reclassification into earnings                                        |   |                                                              | 24 |   |   |   | 12 |   |
|                                                                                                 |   |                                                              |   |   |   |   |   |   |
| Ending                accumulated derivative loss                                                    |   | $                                                                 | (143 | ) |   | $ | (111 | ) |

**Credit      Concentration**

*(PPL      and PPL Energy Supply)*

*(PPL      Electric)*

| **15.  ** | **Restricted                Cash** |
|---------------------|------------------------------------|

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

|                                                              |                                        | **March                31, 2006**    |
|-------------------------------------------------------------------|---------------------------------------------|--------------------------------------|
|                                                              |                                        |                                 |   |   |   |   |
|                                                              |                                        | **PPL**                              |   | **PPL                Energy Supply** |   | **PPL                Electric** |
| **Current:**                                                      |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Collateral                for letters of credit (a)               |                                        | $                                    | 42 |   |   |   |   |   |   | $ | 42 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Deposits                for trading purposes with NYMEX broker    |                                        |                                 | 39 |   |   | $ | 39 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Counterparty                collateral                            |                                        |                                 | 4 |   |   |   | 4 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Client                deposits                                    |                                        |                                 | 13 |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Miscellaneous                                                     |                                        |                                 | 2 |   |   |   | 2 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                              | Restricted                cash - current    |                                 |   | 100 |   |   |   | 45 |   |   |   | 42 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent:**                                                   |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Required                deposits of WPD (b)                       |                                        |                                 | 17 |   |   |   | 17 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| PPL                Transition Bond Company Indenture reserves (c) |                                        |                                 | 30 |   |   |   |   |   |   |   | 30 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                              | Restricted                cash - noncurrent |                                 |   | 47 |   |   |   | 17 |   |   |   | 30 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        | Total                restricted cash |   | $ | 147 |   |   | $ | 62 |   |   | $ | 72 |   |

|                                                              |                                        | **December                31, 2005** |
|-------------------------------------------------------------------|---------------------------------------------|--------------------------------------|
|                                                              |                                        |                                 |   |   |   |   |
|                                                              |                                        | **PPL**                              |   | **PPL                Energy Supply** |   | **PPL                Electric** |
| **Current:**                                                      |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Collateral                for letters of credit (a)               |                                        | $                                    | 42 |   |   |   |   |   |   | $ | 42 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Deposits                for trading purposes with NYMEX broker    |                                        |                                 | 29 |   |   | $ | 29 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Counterparty                collateral                            |                                        |                                 | 9 |   |   |   | 9 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Client                deposits                                    |                                        |                                 | 12 |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Miscellaneous                                                     |                                        |                                 | 1 |   |   |   | 1 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                              | Restricted                cash - current    |                                 |   | 93 |   |   |   | 39 |   |   |   | 42 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent:**                                                   |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| Required                deposits of WPD (b)                       |                                        |                                 | 16 |   |   |   | 16 |   |   |   |   |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |
| PPL                Transition Bond Company Indenture reserves (c) |                                        |                                 | 32 |   |   |   |   |   |   |   | 32 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |
|                                                              | Restricted                cash - noncurrent |                                 |   | 48 |   |   |   | 16 |   |   |   | 32 |   |
|                                                              |                                        |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |                                        | Total                restricted cash |   | $ | 141 |   |   | $ | 55 |   |   | $ | 74 |   |

| (a) |   | A                deposit with a financial institution of funds from the asset-backed                commercial paper program to fully collateralize $42 million of letters                of                credit. See Note 7 for further discussion on the asset-backed commercial                paper program. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Includes                insurance reserves of $17 million and $15 million at March 31, 2006,                and December 31, 2005.                                                                                                                                                                            |
| (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.                                                                                                       |

| **16.  ** | **Goodwill** |
|---------------------|--------------|

*(PPL      and PPL Energy Supply)*

|                                                     |   | **PPL                Energy Supply** |   |                          |   | **PPL**   |
|----------------------------------------------------------|--------|--------------------------------------|--------|-------------------------------|--------|-----------|
|                                                     |   | **Supply**                           |   | **International****Delivery** |   | **Total** |   | **Pennsylvania                Delivery** |   | **Total** |
|                                                     |   |                                 |   |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at December 31, 2005         |   | $                                    | 94     |                          |   | $         | 921 |   |   | $ | 1,015 |   |   | $ | 55 |   |   | $ | 1,070 |   |
|                                                     |   |                                 |   |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect                of foreign currency exchange rates |   |                                 |   |                          |   |      | 10 |   |   |   | 10 |   |   |   |   |   |   |   | 10 |   |
|                                                     |   |                                 |   |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase                accounting adjustments (a)       |   |                                 |   |                          |   |      | (15 | ) |   |   | (15 | ) |   |   |   |   |   |   | (15 | ) |
|                                                     |   |                                 |   |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at March 31, 2006       |   | $                                    | 94     |                          |   | $         | 916 |   |   | $ | 1,010 |   |   | $ | 55 |   |   | $ | 1,065 |   |

| (a) |   | Adjustments                pursuant to EITF Issue 93-7, "Uncertainties Related to Income Taxes                in a                Purchase Business Combination." See Note 5 for a discussion of a                $12                million goodwill adjustment related to the transfer of WPD tax                items. |
|-----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **17.  ** | **Asset                Retirement Obligations** |
|---------------------|-------------------------------------------------|

*(PPL      and PPL Energy Supply)*

| AROs                at December 31, 2005             |   | $      | 298    |   |
|------------------------------------------------------|--------|--------|--------|--------|
|                                                 |   |   |   |   |
| Add:                Accretion expense                |   |   | 5      |   |
|                                                 |   |   |   |   |
| AROs                at                March 31, 2006 |   | $      | 303    |   |

| **18.  ** | **New                Accounting Standards** |
|---------------------|---------------------------------------------|

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

**FSP      No. FIN 46(R)-6**

**SFAS      123(R) **

**SFAS      155**

----

**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****March                31****,** |
|------------------------------|--------|-----------------------------------------------------------------------|
|                         |   |                                                                  |
|                         |   | **2006**                                                              |   |   | **2005** |
|                         |   |                                                                  |   |   |   |
| Net                income    |   | $                                                                     | 280 |   |   |   | $ | 168 |   |
|                         |   |                                                                  |   |   |   |   |   |   |   |
| EPS                - basic   |   | $                                                                     | 0.74 |   |   |   | $ | 0.45 |   |
|                         |   |                                                                  |   |   |   |   |   |   |   |
| EPS                - diluted |   | $                                                                     | 0.73 |   |   |   | $ | 0.44 |   |

**Segment      Results **

|                                  |   | **Three                Months****Ended                March 31,** |
|---------------------------------------|--------|-------------------------------------------------------------------|
|                                  |   |                                                              |
|                                  |   | **2006**                                                          |   | **2005** |
|                                  |   |                                                              |   |   |
| Supply                                |   | $                                                                 | 143 |   |   | $ | 86 |   |
|                                  |   |                                                              |   |   |   |   |   |   |
| International                Delivery |   |                                                              | 81 |   |   |   | 62 |   |
|                                  |   |                                                              |   |   |   |   |   |   |
| Pennsylvania                Delivery  |   |                                                              | 56 |   |   |   | 20 |   |
|                                  |   |                                                              |   |   |   |   |   |   |
| Total                                 |   | $                                                                 | 280 |   |   | $ | 168 |   |

|                                             |   | **Three                Months****Ended                March 31,** |
|--------------------------------------------------|--------|-------------------------------------------------------------------|
|                                             |   |                                                              |
|                                             |   | **2006**                                                          |   | **2005** |
| Energy                revenues                   |   |                                                              |   |   |   |   |   |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| External                                         |   | $                                                                 | 372 |   |   | $ | 309 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Intersegment                                     |   |                                                              | 446 |   |   |   | 416 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses         |   |                                                              | 158 |   |   |   | 122 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                operating revenues          |   |                                                              | 976 |   |   |   | 847 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Fuel                and energy purchases         |   |                                                              |   |   |   |   |   |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| External                                         |   |                                                              | 339 |   |   |   | 304 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Intersegment                                     |   |                                                              | 41 |   |   |   | 38 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Other                operation and maintenance   |   |                                                              | 166 |   |   |   | 191 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Depreciation                                     |   |                                                              | 37 |   |   |   | 36 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Taxes,                other than income          |   |                                                              | 9 |   |   |   | 11 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses         |   |                                                              | 154 |   |   |   | 140 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                operating expenses          |   |                                                              | 746 |   |   |   | 720 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Interest                Expense                  |   |                                                              | 27 |   |   |   | 30 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Income                Taxes                      |   |                                                              | 60 |   |   |   | 9 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Loss                from Discontinued Operations |   |                                                              |   |   |   |   | 2 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                                            |   | $                                                                 | 143 |   |   | $ | 86 |   |

|                                                 | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                 |                                                                                      |
| Eastern                U.S. non-trading margins      |                                                                                      | $ | 26 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Northwestern                U.S. non-trading margins |                                                                                      |   | 14 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Southwestern                U.S. non-trading margins |                                                                                      |   | 1 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Net                energy trading margins            |                                                                                      |   | (3 | ) |   |
|                                                 |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses    |                                                                                      |   | (8 | ) |   |
|                                                 |                                                                                      |   |   |   |   |
| Earnings                from synfuel projects        |                                                                                      |   | 3 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Energy-related                businesses             |                                                                                      |   | 2 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Taxes,                other than income              |                                                                                      |   | 1 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Other                                                |                                                                                      |   | 2 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Unusual                items                         |                                                                                      |   | 19 |   |   |
|                                                 |                                                                                      |   |   |   |   |
|                                                 |                                                                                      | $ | 57 |   |   |

|                                                                                                              |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                              |   |                                                              |
|                                                                                                              |   | **2006**                                                          |   | **2005** |
|                                                                                                              |   |                                                              |   |   |
| Reduction                in Enron reserve (Note 2)                                                                |   | $                                                                 | 9 |   |   |   |   |   |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Off-site                remediation of ash basin leak (Note                11)                                    |   |                                                              | 1 |   |   |   |   |   |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Settlement                of NorthWestern litigation                                                              |   |                                                              |   |   |   | $ | (6 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Acceleration                of stock-based compensation expense for periods prior to 2005 (Note                9) |   |                                                              |   |   |   |   | (3 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Total                                                                                                             |   | $                                                                 | 10 |   |   | $ | (9 | ) |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | Higher                operation and maintenance expenses were primarily due to the nuclear                refueling outage and inspection costs at the Susquehanna station                and                outages at the Brunner Island and Martins Creek plants in 2006. The                costs                of these outages exceeded the costs of the 2005 planned outage at                Montour                and a short-duration outage at the Susquehanna station.                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | The                improved earnings contribution from synfuel projects resulted from                an                unrealized gain on options purchased to hedge a portion of the risk                associated with the phase-out of the synthetic fuel tax credits for                2006                and 2007, partially offset by the lower recognition of synthetic                fuel tax                credits due to the anticipated phase-out of synthetic fuel tax credits                starting in 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | In                the first quarter of 2006, PPL lowered its reserve on claims related                to                the Enron bankruptcy. This adjustment increased earnings by $9 million                after-tax (or $0.03 per share). See Note 2 to the Financial                Statements for additional information.                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | In                the first quarter of 2005, PPL recognized a charge of $6 million                after tax                (or $0.02 per share) for a loss contingency related to litigation                with                NorthWestern. In September 2005, PPL and NorthWestern reached a final                agreement to settle this litigation.                                                                                                                                                                        |

*Outlook      *

|                                           |   | **Three                Months****Ended                March 31,** |
|------------------------------------------------|--------|-------------------------------------------------------------------|
|                                           |   |                                                              |
|                                           |   | **2006**                                                          |   | **2005** |
|                                           |   |                                                              |   |   |
| Utility                revenues                |   | $                                                                 | 323 |   |   | $ | 293 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses       |   |                                                              | 21 |   |   |   | 18 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                operating revenues        |   |                                                              | 344 |   |   |   | 311 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy                purchases                |   |                                                              | 81 |   |   |   | 63 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Other                operation and maintenance |   |                                                              | 67 |   |   |   | 61 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Depreciation                                   |   |                                                              | 41 |   |   |   | 38 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Taxes,                other than income        |   |                                                              | 12 |   |   |   | 14 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses       |   |                                                              | 9 |   |   |   | 6 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                operating expenses        |   |                                                              | 210 |   |   |   | 182 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Other                Income - net              |   |                                                              |   |   |   |   | 3 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Interest                Expense                |   |                                                              | 48 |   |   |   | 50 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Income                Taxes                    |   |                                                              | 3 |   |   |   | 18 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Minority                Interest               |   |                                                              | 2 |   |   |   | 2 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                                          |   | $                                                                 | 81 |   |   | $ | 62 |   |

|                                                                 | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| U.K.:                                                                |                                                                                      |   |   |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Delivery                margins                                      |                                                                                      | $ | 17 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses                    |                                                                                      |   | (7 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Income                taxes                                          |                                                                                      |   | 21 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Impact                of changes in foreign currency exchange rates  |                                                                                      |   | (7 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Impairment                of investment in U.K. real estate (Note 8) |                                                                                      |   | (6 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Other                                                                |                                                                                      |   | 4 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Latin                America                                         |                                                                                      |   | 5 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| U.S.                income taxes                                     |                                                                                      |   | (6 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Other                                                                |                                                                                      |   | (3 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Unusual                item - collection of receivable from Enron    |                                                                                      |   | 1 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
|                                                                 |                                                                                      | $ | 19 |   |   |

| · | The                U.K.'s earnings were positively impacted by higher delivery margins,                primarily due to price increases and 2.9% higher                sales volumes.                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                          |
| · | Lower                U.K. income taxes were due to the transfer of WPD tax items. See                Note 5 to                the Financial Statements for additional information.                                                                            |
|   |                                                                                                                                                                                                                                                          |
| · | Changes                in foreign exchange rates decreased WPD's portion of revenue and                expense                line items by 8% in the three months ended March 31, 2006, compared                with                the same period in 2005. |

*Outlook*

|                                                        |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                        |   |                                                              |
|                                                        |   | **2006**                                                          |   | **2005** |
| Operating                revenues                           |   |                                                              |   |   |   |   |   |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| External                                                    |   | $                                                                 | 909 |   |   | $ | 858 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Intersegment                                                |   |                                                              | 41 |   |   |   | 38 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Total                operating revenues                     |   |                                                              | 950 |   |   |   | 896 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Fuel                and energy purchases                    |   |                                                              |   |   |   |   |   |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| External                                                    |   |                                                              | 129 |   |   |   | 143 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Intersegment                                                |   |                                                              | 446 |   |   |   | 416 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Other                operation and maintenance              |   |                                                              | 99 |   |   |   | 112 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Amortization                of recoverable transition costs |   |                                                              | 72 |   |   |   | 69 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Depreciation                                                |   |                                                              | 30 |   |   |   | 29 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Taxes,                other than income                     |   |                                                              | 50 |   |   |   | 48 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Total                operating expenses                     |   |                                                              | 826 |   |   |   | 817 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Other                Income - net                           |   |                                                              | 9 |   |   |   | 4 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Interest                Expense                             |   |                                                              | 44 |   |   |   | 55 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Income                Taxes                                 |   |                                                              | 32 |   |   |   | 7 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Dividends                on Preferred Stock                 |   |                                                              | 1 |   |   |   | 1 |   |
|                                                        |   |                                                              |   |   |   |   |   |   |
| Total                                                       |   | $                                                                 | 56 |   |   | $ | 20 |   |

|                                                                                                                                      | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                                                      |                                                                                      |
| Delivery                revenues (net of CTC/ITC amortization, interest expense on transition                bonds and ancillary charges) |                                                                                      | $ | (1 | ) |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses                                                                                         |                                                                                      |   | 7 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Other                                                                                                                                     |                                                                                      |   | 1 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Unusual                items                                                                                                              |                                                                                      |   | 29 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
|                                                                                                                                      |                                                                                      | $ | 36 |   |   |

|                                                                                                              |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                              |   |                                                              |
|                                                                                                              |   | **2006**                                                          |   | **2005** |
|                                                                                                              |   |                                                              |   |   |
| PJM                billing dispute (Note 11)                                                                      |   |                                                              |   |   |   | $ | (27 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Acceleration                of stock-based compensation expense for periods prior to 2005 (Note                9) |   |                                                              |   |   |   |   | (2 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Total                                                                                                             |   |                                                              |   |   |   | $ | (29 | ) |

| · | PPL                Electric recognized an after-tax charge of $27 million (or $0.07                per                share) in the first quarter of 2005 for a loss contingency related                to the                PJM billing dispute. See Note 11 to the Financial Statements for                an update                on this matter. PPL cannot be certain of the outcome of this matter                or the                impact on PPL and its subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| · | Lower                operation and maintenance expenses in the first quarter of 2006 were                primarily due to the costs incurred in January 2005, when severe                ice                storms hit PPL Electric's service territory. The total cost of restoring                service to 238,000 customers, excluding capitalized costs and regular                payroll expenses, was $16 million (or $0.02 per share).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In                August 2005, the PUC issued an order granting PPL Electric's petition                for                authority to defer and amortize for regulatory accounting and reporting                purposes these storm costs subject to certain conditions. As a result                of                the PUC Order and in accordance with SFAS 71, "Accounting for the                Effects                of Certain Types of Regulation," in the third quarter of 2005, PPL                Electric deferred $12 million (or $0.02 per share) of its previously                expensed storm costs. The deferral was based on its assessment of                the                timing and likelihood of recovering the deferred costs in PPL Electric's                next distribution base rate case. At this time, PPL Electric cannot                be                certain that it will recover the storm costs, nor can it predict                whether                future incidents of severe weather will cause significant facility                damage                and service disruptions that would also result in significant costs. |

*Outlook*

**Statement      of Income Analysis -- **

**Domestic      Gross Energy Margins**

|                                         | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
|                                         |                                                                                      |
| Utility                                      |                                                                                      | $ | 81 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Wholesale                energy marketing    |                                                                                      |   | 69 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Net                energy trading margins    |                                                                                      |   | (6 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Other                revenue adjustments (a) |                                                                                      |   | (41 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Total                revenues                |                                                                                      |   | 103 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Fuel                                         |                                                                                      |   | (4 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Energy                purchases              |                                                                                      |   | 43 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Other                cost adjustments (a)    |                                                                                      |   | (1 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Total                cost of sales           |                                                                                      |   | 38 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Domestic                gross energy margins |                                                                                      | $ | 65 |   |   |

| (a) |   | Adjusted                to exclude the impact of any revenues and costs not associated with                domestic gross energy margins; in particular, revenues and energy                costs                related to the international operations of PPL Global, the domestic                delivery operations of PPL Electric and PPL Gas Utilities and an                accrual                for the loss contingency related to the PJM billing dispute in 2005                (see                Note 11 to the Financial Statements for additional information).                Also                adjusted to include the margins of the Sundance plant, which were                included                in "Loss from Discontinued Operations," prior to its sale in May                2005, and                gains or losses on sales of emission allowances, which are included                in                "Other operation and maintenance" expenses, on the Statement of                Income. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
| Non-trading                                  |                                                                                      |   |   |   |   |
|                                         |                                                                                      |   |   |   |   |
| Eastern                U.S.                  |                                                                                      | $ | 45 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Northwestern                U.S.             |                                                                                      |   | 24 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Southwestern                U.S.             |                                                                                      |   | 2 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Net                energy trading            |                                                                                      |   | (6 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Domestic                gross energy margins |                                                                                      | $ | 65 |   |   |

*Eastern      U.S.*

*Northwestern      U.S.*

*Net      Energy Trading*

**Utility      Revenues**

|                                                  | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------|
| **Domestic:**                                         |                                                                                      |   |   |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Retail                electric revenue (PPL Electric) |                                                                                      |   |   |   |   |
|                                                  |                                                                                      |   |   |   |   |
| PLR                electric generation supply         |                                                                                      | $ | 34 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Electric                delivery                      |                                                                                      |   | (3 | ) |   |
|                                                  |                                                                                      |   |   |   |   |
| Gas                revenue (PPL Gas Utilities)        |                                                                                      |   | 19 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Other                                                 |                                                                                      |   | 1 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| **International:**                                    |                                                                                      |   |   |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Retail                electric delivery (PPL Global)  |                                                                                      |   |   |   |   |
|                                                  |                                                                                      |   |   |   |   |
| U.K.                                                  |                                                                                      |   | 25 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Chile                                                 |                                                                                      |   | 9 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| El                Salvador                            |                                                                                      |   | 3 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Bolivia                                               |                                                                                      |   | 2 |   |   |
|                                                  |                                                                                      |   |   |   |   |
| Foreign                currency exchange rates        |                                                                                      |   | (9 | ) |   |
|                                                  |                                                                                      |   |   |   |   |
|                                                  |                                                                                      | $ | 81 |   |   |

| · | higher                PLR revenues attributable to an increase of 8.4% in prices, offset                by a                2.5% decrease in volume, due in part to milder weather in the first                quarter 2006 compared to 2005;                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | a                decrease in electric delivery revenues resulting primarily from the                impact                of milder weather on residential and commercial sales in the first                quarter                of 2006 compared to 2005; |
| · | higher                gas revenues primarily due to the increase in natural gas prices,                which                are passed through to customers;                                                                                                 |
| · | higher                U.K. revenues primarily due to a 2.9% increase in sales volumes and                increases in prices;                                                                                                                                |
| · | a                7% increase in sales volumes and higher average prices overall in                Chile;                and                                                                                                                                  |
| · | an                8% increase in sales volumes and higher average prices overall in                El                Salvador.                                                                                                                               |

**Energy-related      Businesses**

**Other      Operation and Maintenance**

|                                                                                                  | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                  |                                                                                      |
| Costs                associated with severe ice storms in January 2005                                |                                                                                      | $ | (16 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Reduction                in Enron reserve (Note 2)                                                    |                                                                                      |   | (15 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| NorthWestern                litigation accrual in March 2005                                     |                                                                                      |   | (9 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Higher                gains on sales of emission allowances                                           |                                                                                      |   | (6 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Stock-based                compensation (Note 9)                                                      |                                                                                      |   | (6 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Martins                Creek ash basin remediation adjustment (Note 11)                               |                                                                                      |   | (3 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Susquehanna                plant refueling and inspection costs                                       |                                                                                      |   | 5 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Outage                costs at Martins Creek and Brunner Island plants                                |                                                                                      |   | 4 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| PUC                reportable storm costs in 2006                                                     |                                                                                      |   | 4 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Increase                in international operation and maintenance expenses                           |                                                                                      |   | 3 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Increase                in domestic and international pension and postretirement                costs |                                                                                      |   | 3 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Other                                                                                                 |                                                                                      |   | 4 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
|                                                                                                  |                                                                                      | $ | (32 | ) |   |

**Depreciation**

|                                                                  | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                  |                                                                                      |
| Additions                to PP&E                                  |                                                                                      | $ | 6 |   |   |
|                                                                  |                                                                                      |   |   |   |   |
| Reduction                of useful lives of certain assets            |                                                                                      |   | 2 |   |   |
|                                                                  |                                                                                      |   |   |   |   |
| Foreign                currency exchange rates                        |                                                                                      |   | (2 | ) |   |
|                                                                  |                                                                                      |   |   |   |   |
| Extension                of useful lives of certain generation assets |                                                                                      |   | (1 | ) |   |
|                                                                  |                                                                                      |   |   |   |   |
|                                                                  |                                                                                      | $ | 5 |   |   |

**Other      Income - net**

**Interest      Expense**

|                                                                                                                                                                                                            | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                            |                                                                                      |
| Increase                in interest expense due to hedging activities accounted for under                SFAS                133, "Accounting for Derivative Instruments and Hedging                Activities" |                                                                                      | $ | 10 |   |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Decrease                in long-term debt interest expense                                                                                                                                                      |                                                                                      |   | (9 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Interest                accrued in 2005 for PJM billing dispute (Note 11)                                                                                                                                       |                                                                                      |   | (8 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Decrease                in foreign currency exchange rates                                                                                                                                                      |                                                                                      |   | (3 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Decrease                in short-term debt interest expense                                                                                                                                                     |                                                                                      |   | (2 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Increase                in capitalized interest                                                                                                                                                                 |                                                                                      |   | (2 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
| Other                                                                                                                                                                                                           |                                                                                      |   | (2 | ) |   |
|                                                                                                                                                                                                            |                                                                                      |   |   |   |   |
|                                                                                                                                                                                                            |                                                                                      | $ | (16 | ) |   |

**Income      Taxes**

|                                                                                                | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                |                                                                                      |
| Higher                pre-tax book income                                                           |                                                                                      | $ | 65 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Reduction                in tax benefits related to nonconventional fuel tax                credits |                                                                                      |   | 8 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Increase                in tax expense on foreign earnings                                          |                                                                                      |   | 8 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Transfer                of WPD tax items in 2006 (Note 5)                                      |                                                                                      |   | (20 | ) |   |
|                                                                                                |                                                                                      |   |   |   |   |
|                                                                                                |                                                                                      | $ | 61 |   |   |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources**

| · | the                retirement of $225 million of long-term debt;                                                                                    |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| · | a                net decrease in short-term debt of $36 million (excluding a $1 million                impact of currency translation adjustments); |
| · | the                payment of $95 million of common stock dividends; and                                                                            |
| · | $198                million of capital expenditures; offset by                                                                                      |
| · | $297                million of cash provided by operating                activities.                                                                |

*Moody's*

| · | PPL                - assigned a Baa2 issuer rating;                                                                                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | PPL                Capital Funding - upgraded the ratings of its senior unsecured debt                and                Medium Term Notes to Baa2 from Baa3 and subordinated debt to Baa3                from                Ba1; and                                                    |
| · | PPL                Electric - upgraded the issuer rating to Baa1 from Baa2 and upgraded                the                ratings of its First Mortgage Bonds and Senior Secured Bonds to A3                from                Baa1 and preferred stock to Baa3 from                Ba1. |

*S&P*

*Fitch*

| · | WPDH                Limited IDR of BBB- and senior unsecured rating to BBB from                BBB-;                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| · | WPD                LLP IDR of BBB, senior unsecured rating to BBB+ from BBB and preferred                stock rating to BBB from BBB-; and       |
| · | WPD                (South Wales) and WPD (South West) IDR of BBB+ and senior unsecured                debt                rating to A- from BBB+. |

|                                                        |                                                    | **Projected**                                  |   |
|-------------------------------------------------------------|---------------------------------------------------------|------------------------------------------------|--------|
|                                                        |                                                    |                                           |   |
|                                                        |                                                    | **2006**                                       |   | **2007** |   | **2008** |   | **2009** |   | **2010** |   |
| Construction                expenditures                (a) |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Generating                facilities                    |                                           | $      | 256 |   | $ | 216 |   | $ | 167 |   | $ | 200 |   | $ | 174 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Transmission                and distribution facilities |                                           |   | 511 |   |   | 526 |   |   | 511 |   |   | 552 |   |   | 615 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Environmental                                           |                                           |   | 374 |   |   | 573 |   |   | 346 |   |   | 114 |   |   | 82 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Other                                                   |                                           |   | 85 |   |   | 75 |   |   | 37 |   |   | 29 |   |   | 29 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    | Total                Construction Expenditures |   |   | 1,226 |   |   | 1,390 |   |   | 1,061 |   |   | 895 |   |   | 900 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                fuel                                 |                                                    |                                           | 81     |   |   | 92 |   |   | 97 |   |   | 97 |   |   | 99 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    | Total                Capital Expenditures      |   | $ | 1,307 |   | $ | 1,482 |   | $ | 1,158 |   | $ | 992 |   | $ | 999 |   |

| (a) |   | Construction                expenditures include AFUDC and capitalized interest, which are expected                to                be $162 million for the 2006-2010                period. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*Commodity      Price Risk (Non-trading)*

|                                                                                             |   | **Three                Months Ended March 31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                             |   |                                            |
|                                                                                             |   | **2006**                                        |   | **2005** |
|                                                                                             |   |                                            |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                               | (284 | ) |   | $ | (11 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Contracts                realized or otherwise settled during the period                         |   |                                            | 11 |   |   |   | (7 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of new contracts at inception                                          |   |                                            |   |   |   |   |   |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                            | 162 |   |   |   | (88 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                               | (111 | ) |   | $ | (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                                       |   | $                                                                                         | 12 |   |   | $ | 4 |   |   | $ | 2 |   |   |   |   |   |   | $ | 18 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                provided by other external sources                    |   |                                                                                      | (60 | ) |   |   | (147 | ) |   |   | (14 | ) |   |   |   |   |   |   | (221 | ) |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                based on models and other valuation methods           |   |                                                                                      | 51 |   |   |   | 41 |   |   |   |   |   |   |   |   |   |   |   | 92 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period |   | $                                                                                         | 3 |   |   | $ | (102 | ) |   | $ | (12 | ) |   |   |   |   |   | $ | (111 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                             |   | **Three                Months Ended March 31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                             |   |                                            |
|                                                                                             |   | **2006**                                        |   | **2005** |
|                                                                                             |   |                                            |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                               | 5 |   |   | $ | 10 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Contracts                realized or otherwise settled during the period                         |   |                                            | (11 | ) |   |   | (4 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of new contracts at inception                                          |   |                                            | 4 |   |   |   | 3 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                            | 14 |   |   |   | 7 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                               | 12 |   |   | $ | 16 |   |

|                                                                        |   | **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                                       |   | $                                                                                         | 12 |   |   |   |   |   |   | $ | 1 |   |   |   |   |   |   | $ | 13 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                provided by other external sources                    |   |                                                                                      | (2 | ) |   | $ | (1 | ) |   |   |   |   |   |   |   |   |   |   | (3 | ) |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                based on models and other valuation methods           |   |                                                                                      | (1 | ) |   |   | 3 |   |   |   |   |   |   |   |   |   |   |   | 2 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period |   | $                                                                                         | 9 |   |   | $ | 2 |   |   | $ | 1 |   |   |   |   |   |   | $ | 12 |   |

*Interest      Rate Risk*

*Foreign      Currency Risk*

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

*Synthetic      Fuel Tax Credit 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**

**Segment      Results **

|                                  |   | **Three                Months****Ended                March 31,** |
|---------------------------------------|--------|-------------------------------------------------------------------|
|                                  |   |                                                              |
|                                  |   | **2006**                                                          |   | **2005** |
|                                  |   |                                                              |   |   |   |   |
| Supply                                |   | $                                                                 | 149 |   |   | $ | 93 |   |
|                                  |   |                                                              |   |   |   |   |   |   |
| International                Delivery |   |                                                              | 81 |   |   |   | 62 |   |
|                                  |   |                                                              |   |   |   |   |   |   |
| Total                                 |   | $                                                                 | 230 |   |   | $ | 155 |   |

|                                             |   | **Three                Months****Ended                March 31,** |
|--------------------------------------------------|--------|-------------------------------------------------------------------|
|                                             |   |                                                              |
|                                             |   | **2006**                                                          |   | **2005** |
|                                             |   |                                                              |   |   |   |   |
| Energy                revenues                   |   | $                                                                 | 818 |   |   | $ | 724 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses         |   |                                                              | 150 |   |   |   | 116 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                operating revenues          |   |                                                              | 968 |   |   |   | 840 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Fuel                and energy purchases         |   |                                                              | 379 |   |   |   | 343 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Other                operation and maintenance   |   |                                                              | 178 |   |   |   | 200 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Depreciation                                     |   |                                                              | 34 |   |   |   | 33 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Taxes,                other than income          |   |                                                              | 9 |   |   |   | 10 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses         |   |                                                              | 147 |   |   |   | 132 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                operating expenses          |   |                                                              | 747 |   |   |   | 718 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Other                Income - net                |   |                                                              | 10 |   |   |   | 5 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Interest                Expense                  |   |                                                              | 16 |   |   |   | 22 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Income                Taxes                      |   |                                                              | 66 |   |   |   | 10 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Loss                from Discontinued Operations |   |                                                              |   |   |   |   | 2 |   |
|                                             |   |                                                              |   |   |   |   |   |   |
| Total                                            |   | $                                                                 | 149 |   |   | $ | 93 |   |

|                                                 | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                 |                                                                                      |   |   |   |   |
| Eastern                U.S. non-trading margins      |                                                                                      | $ | 26 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Northwestern                U.S. non-trading margins |                                                                                      |   | 14 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Southwestern                U.S. non-trading margins |                                                                                      |   | 1 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Net                energy trading margins            |                                                                                      |   | (3 | ) |   |
|                                                 |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses    |                                                                                      |   | (6 | ) |   |
|                                                 |                                                                                      |   |   |   |   |
| Earnings                from synfuel projects        |                                                                                      |   | 3 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Other                                                |                                                                                      |   | 2 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Unusual                items                         |                                                                                      |   | 19 |   |   |
|                                                 |                                                                                      |   |   |   |   |
|                                                 |                                                                                      | $ | 56 |   |   |

|                                                                                                              |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                              |   |                                                              |
|                                                                                                              |   | **2006**                                                          |   | **2005** |
|                                                                                                              |   |                                                              |   |   |   |   |
| Reduction                in Enron reserve (Note 2)                                                                |   | $                                                                 | 9 |   |   |   |   |   |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Off-site                remediation of ash basin leak (Note                11)                                    |   |                                                              | 1 |   |   |   |   |   |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Settlement                of NorthWestern litigation                                                              |   |                                                              |   |   |   | $ | (6 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Acceleration                of stock-based compensation expense for periods prior to 2005 (Note                9) |   |                                                              |   |   |   |   | (3 | ) |
|                                                                                                              |   |                                                              |   |   |   |   |   |   |
| Total                                                                                                             |   | $                                                                 | 10 |   |   | $ | (9 | ) |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | Higher                operation and maintenance expenses were primarily due to nuclear                refueling                outage and inspection costs at the Susquehanna station and outages                at the                Brunner Island and Martins Creek plants in 2006. The costs of these                outages exceeded the costs of the 2005 planned outage at Montour                and a                short-duration outage at the Susquehanna station.                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | The                improved earnings contribution from synfuel projects resulted from                an                unrealized gain on options purchased to hedge a portion of the risk                associated with the phase-out of the synthetic fuel tax credits for                2006                and 2007, partially offset by the lower recognition of synthetic                fuel tax                credits due to the anticipated phase-out of synthetic fuel tax credits                starting in 2006. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | In                the first quarter of 2006, PPL Energy Supply lowered its reserve                on claims                related to the Enron bankruptcy. This adjustment increased earnings                by $9                million after-tax. See Note 2 to Financial Statements for additional                information.                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | In                the first quarter of 2005, PPL Energy Supply recognized a charge                of $6                million after tax for a loss contingency related to the litigation                with                NorthWestern. In September 2005, PPL Energy Supply and NorthWestern                reached a final agreement to settle this litigation.                                                                                                                                                             |

*Outlook*

|                                           |   | **Three                Months****Ended                March 31,** |
|------------------------------------------------|--------|-------------------------------------------------------------------|
|                                           |   |                                                              |   |   |
|                                           |   | **2006**                                                          |   | **2005** |
|                                           |   |                                                              |   |   |   |   |
| Utility                revenues                |   | $                                                                 | 323 |   |   | $ | 293 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses       |   |                                                              | 21 |   |   |   | 18 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                operating revenues        |   |                                                              | 344 |   |   |   | 311 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy                purchases                |   |                                                              | 81 |   |   |   | 63 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Other                operation and maintenance |   |                                                              | 67 |   |   |   | 61 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Depreciation                                   |   |                                                              | 41 |   |   |   | 38 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Taxes,                other than income        |   |                                                              | 12 |   |   |   | 14 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Energy-related                businesses       |   |                                                              | 9 |   |   |   | 6 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                operating expenses        |   |                                                              | 210 |   |   |   | 182 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Other                Income - net              |   |                                                              |   |   |   |   | 3 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Interest                Expense                |   |                                                              | 48 |   |   |   | 50 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Income                Taxes                    |   |                                                              | 3 |   |   |   | 18 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Minority                Interest               |   |                                                              | 2 |   |   |   | 2 |   |
|                                           |   |                                                              |   |   |   |   |   |   |
| Total                                          |   | $                                                                 | 81 |   |   | $ | 62 |   |

|                                                                 | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|----------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
| U.K.:                                                                |                                                                                      |   |   |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Delivery                margins                                      |                                                                                      | $ | 17 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses                    |                                                                                      |   | (7 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Income                taxes                                          |                                                                                      |   | 21 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Impact                of changes in foreign currency exchange rates  |                                                                                      |   | (7 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Impairment                of investment in U.K. real estate (Note 8) |                                                                                      |   | (6 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Other                                                                |                                                                                      |   | 4 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| Latin                America                                         |                                                                                      |   | 5 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
| U.S.                income taxes                                     |                                                                                      |   | (6 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Other                                                                |                                                                                      |   | (3 | ) |   |
|                                                                 |                                                                                      |   |   |   |   |
| Unusual                item - collection of receivable from Enron    |                                                                                      |   | 1 |   |   |
|                                                                 |                                                                                      |   |   |   |   |
|                                                                 |                                                                                      | $ | 19 |   |   |

| · | The                U.K.'s earnings were positively impacted by higher delivery margins,                primarily due to price increases and 2.9% higher sales                volumes.                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                          |
| · | Lower                U.K. income taxes were due to the transfer of WPD tax items. See                Note 5 to                the Financial Statements for additional information.                                                                            |
|   |                                                                                                                                                                                                                                                          |
| · | Changes                in foreign exchange rates decreased WPD's portion of revenue and                expense                line items by 8% in the three months ended March 31, 2006, compared                with                the same period in 2005. |

*Outlook*

**Statement      of Income Analysis -- **

**Domestic      Gross Energy Margins**

|                                                   | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                   |                                                                                      |
| Wholesale                energy marketing              |                                                                                      | $ | 69 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Wholesale                energy marketing to affiliate |                                                                                      |   | 31 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Net                energy trading margins              |                                                                                      |   | (6 | ) |   |
|                                                   |                                                                                      |   |   |   |   |
| Other                revenue adjustments (a)           |                                                                                      |   | 9 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Total                revenues                          |                                                                                      |   | 103 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Fuel                                                   |                                                                                      |   | (24 | ) |   |
|                                                   |                                                                                      |   |   |   |   |
| Energy                purchases                        |                                                                                      |   | 77 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Energy                purchases from affiliate         |                                                                                      |   | 1 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Other                cost adjustments (a)              |                                                                                      |   | (16 | ) |   |
|                                                   |                                                                                      |   |   |   |   |
| Total                cost of sales                     |                                                                                      |   | 38 |   |   |
|                                                   |                                                                                      |   |   |   |   |
| Domestic                gross energy margins           |                                                                                      | $ | 65 |   |   |

| (a) |   | Adjusted                to exclude the impact of any revenues and costs not associated with                domestic gross energy margins; in particular, revenues and energy                costs                related to the international operations of PPL Global. Also adjusted                to                include the                margins of the Sundance plant, which were included in "Loss from                Discontinued Operations," prior to its sale in May 2005, and gains                or losses on sales of emission allowances, which are included in                "Other                operation and maintenance" expenses, on the Statement of                Income. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
| Non-trading                                  |                                                                                      |   |   |   |   |
|                                         |                                                                                      |   |   |   |   |
| Eastern                U.S.                  |                                                                                      | $ | 45 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Northwestern                U.S.             |                                                                                      |   | 24 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Southwestern                U.S.             |                                                                                      |   | 2 |   |   |
|                                         |                                                                                      |   |   |   |   |
| Net                energy trading            |                                                                                      |   | (6 | ) |   |
|                                         |                                                                                      |   |   |   |   |
| Domestic                gross energy margins |                                                                                      | $ | 65 |   |   |

*Eastern      U.S.*

*Northwestern      U.S.*

*Net      Energy Trading*

**Utility      Revenues**

|                                                 | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|------------------------------------------------------|-------------------------------------------------------------------------------------------|
| **International:**                                   |                                                                                      |   |   |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Retail                electric delivery (PPL Global) |                                                                                      |   |   |   |   |
|                                                 |                                                                                      |   |   |   |   |   |
|                                                 | U.K.                                                                                      |   | $ | 25 |   |   |
|                                                 |                                                                                      |   |   |   |   |   |
|                                                 | Chile                                                                                     |   |   | 9 |   |   |
|                                                 |                                                                                      |   |   |   |   |   |
|                                                 | El                Salvador                                                                |   |   | 3 |   |   |
|                                                 |                                                                                      |   |   |   |   |   |
|                                                 | Bolivia                                                                                   |   |   | 2 |   |   |
|                                                 |                                                                                      |   |   |   |   |
| Foreign                currency exchange rates       |                                                                                      |   | (9 | ) |   |
|                                                 |                                                                                      |   |   |   |   |
|                                                 |                                                                                      | $ | 30 |   |   |

| · | higher                U.K. revenues primarily due to a 2.9% increase in sales volumes and                increases in prices;  |
|--------|--------------------------------------------------------------------------------------------------------------------------------|
| · | a                7% increase in sales volumes and higher average prices overall in                Chile;                and    |
| · | an                8% increase in sales volumes and higher average prices overall in                El                Salvador. |

**Energy-related      Businesses**

**Other      Operation and Maintenance**

|                                                                                                  | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                  |                                                                                      |   |   |   |   |
| Reduction                in Enron reserve (Note 2)                                                    |                                                                                      | $ | (15 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| NorthWestern                litigation accrual in March 2005                                     |                                                                                      |   | (9 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Higher                gains on sales of emission allowances                                           |                                                                                      |   | (6 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Martins                Creek ash basin remediation adjustment (Note 11)                               |                                                                                      |   | (3 | ) |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Susquehanna                plant refueling and inspection costs                                       |                                                                                      |   | 5 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Outage                costs at Martins Creek and Brunner Island plants                                |                                                                                      |   | 4 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Increase                in international operation and maintenance expenses                           |                                                                                      |   | 3 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Increase                in domestic and international pension and postretirement                costs |                                                                                      |   | 2 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
| Other                                                                                                 |                                                                                      |   | 3 |   |   |
|                                                                                                  |                                                                                      |   |   |   |   |
|                                                                                                  |                                                                                      | $ | (16 | ) |   |

**Depreciation**

|                                                                  | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                  |                                                                                      |   |   |   |   |
| Additions                to PP&E                                  |                                                                                      | $ | 5 |   |   |
|                                                                  |                                                                                      |   |   |   |   |
| Reduction                of useful lives of certain assets            |                                                                                      |   | 2 |   |   |
|                                                                  |                                                                                      |   |   |   |   |
| Foreign                currency exchange rates                        |                                                                                      |   | (2 | ) |   |
|                                                                  |                                                                                      |   |   |   |   |
| Extension                of useful lives of certain generation assets |                                                                                      |   | (1 | ) |   |
|                                                                  |                                                                                      |   |   |   |   |
|                                                                  |                                                                                      | $ | 4 |   |   |

**Taxes,      Other Than Income**

**Other      Income - net**

**Interest      Expense**

|                                                        | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                        |                                                                                      |
| Increase                in long-term debt interest expense  |                                                                                      | $ | 4 |   |   |
|                                                        |                                                                                      |   |   |   |   |
| Decrease                in interest expense with affiliates |                                                                                      |   | (4 | ) |   |
|                                                        |                                                                                      |   |   |   |   |
| Decrease                in foreign currency exchange rates  |                                                                                      |   | (3 | ) |   |
|                                                        |                                                                                      |   |   |   |   |
| Decrease                in short-term debt interest expense |                                                                                      |   | (2 | ) |   |
|                                                        |                                                                                      |   |   |   |   |
| Increase                in capitalized interest             |                                                                                      |   | (2 | ) |   |
|                                                        |                                                                                      |   |   |   |   |
| Other                                                       |                                                                                      |   | (1 | ) |   |
|                                                        |                                                                                      |   |   |   |   |
|                                                        |                                                                                      | $ | (8 | ) |   |

**Income      Taxes**

|                                                                                                | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                |                                                                                      |
| Higher                pre-tax book income                                                           |                                                                                      | $ | 46 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Reduction                in tax benefits related to nonconventional fuel tax                credits |                                                                                      |   | 8 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Increase                in tax expense on foreign earnings                                          |                                                                                      |   | 8 |   |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Transfer                of WPD tax items in 2006 (Note 5)                                      |                                                                                      |   | (20 | ) |   |
|                                                                                                |                                                                                      |   |   |   |   |
| Other                                                                                               |                                                                                      |   | (1 | ) |   |
|                                                                                                |                                                                                      |   |   |   |   |
|                                                                                                |                                                                                      | $ | 41 |   |   |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources**

| · | a                net decrease in short-term debt of $137 million (excluding a $1 million                impact of currency translation adjustments); |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | distributions                to Member of $58 million; and                                                                                           |
| · | $147                million of capital expenditures; offset by                                                                                       |
| · | $225                million of cash provided by operating                activities.                                                                 |

| · | WPDH                Limited IDR of BBB- and senior unsecured rating to BBB from                BBB-;                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| · | WPD                LLP IDR of BBB, senior unsecured rating to BBB+ from BBB and preferred                stock rating to BBB from BBB-; and       |
| · | WPD                (South Wales) and WPD (South West) IDR of BBB+ and senior unsecured                debt                rating to A- from BBB+. |

|                                                        |                                                    | **Projected**                                  |   |
|-------------------------------------------------------------|---------------------------------------------------------|------------------------------------------------|--------|
|                                                        |                                                    |                                           |   |
|                                                        |                                                    | **2006**                                       |   | **2007** |   | **2008** |   | **2009** |   | **2010** |   |
| Construction                expenditures                (a) |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Generating                facilities                    |                                           | $      | 256 |   | $ | 216 |   | $ | 167 |   | $ | 200 |   | $ | 174 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Transmission                and distribution facilities |                                           |   | 288 |   |   | 285 |   |   | 290 |   |   | 298 |   |   | 310 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Environmental                                           |                                           |   | 374 |   |   | 573 |   |   | 346 |   |   | 114 |   |   | 82 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        | Other                                                   |                                           |   | 37 |   |   | 37 |   |   | 1 |   |   |   |   |   |   |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    | Total                Construction Expenditures |   |   | 955 |   |   | 1,111 |   |   | 804 |   |   | 612 |   |   | 566 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                fuel                                 |                                                    |                                           | 81     |   |   | 92 |   |   | 97 |   |   | 97 |   |   | 99 |   |
|                                                        |                                                    |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |                                                    | Total                Capital Expenditures      |   | $ | 1,036 |   | $ | 1,203 |   | $ | 901 |   | $ | 709 |   | $ | 665 |   |

| (a) |   | Construction                expenditures include AFUDC and capitalized interest, which are expected                to                be $147 million for the 2006-2010                period. |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*Commodity      Price Risk (Non-Trading)*

|                                                                                             |   | **Three                Months Ended March 31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                             |   |                                            |
|                                                                                             |   | **2006**                                        |   | **2005** |
|                                                                                             |   |                                            |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                               | (278 | ) |   | $ | (9 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Contracts                realized or otherwise settled during the period                         |   |                                            | 9 |   |   |   | (9 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of new contracts at inception                                          |   |                                            |   |   |   |   |   |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                            | 173 |   |   |   | (88 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                               | (96 | ) |   | $ | (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                                       |   | $                                                                                         | 12 |   |   | $ | 4 |   |   | $ | 2 |   |   |   |   |   |   | $ | 18 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                provided by other external sources                    |   |                                                                                      | (49 | ) |   |   | (143 | ) |   |   | (14 | ) |   |   |   |   |   |   | (206 | ) |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                based on models and other valuation methods           |   |                                                                                      | 51 |   |   |   | 41 |   |   |   |   |   |   |   |   |   |   |   | 92 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period |   | $                                                                                         | 14 |   |   | $ | (98 | ) |   | $ | (12 | ) |   |   |   |   |   | $ | (96 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                             |   | **Three                Months Ended March 31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                             |   |                                            |
|                                                                                             |   | **2006**                                        |   | **2005** |
|                                                                                             |   |                                            |   |   |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                               | 5 |   |   | $ | 9 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Contracts                realized or otherwise settled during the period                         |   |                                            | (11 | ) |   |   | (3 | ) |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of new contracts at inception                                          |   |                                            | 4 |   |   |   | 3 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                            | 14 |   |   |   | 7 |   |
|                                                                                             |   |                                            |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                               | 12 |   |   | $ | 16 |   |

|                                                                        |   | **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                                       |   | $                                                                                         | 12 |   |   |   |   |   |   | $ | 1 |   |   |   |   |   |   | $ | 13 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                provided by other external sources                    |   |                                                                                      | (2 | ) |   | $ | (1 | ) |   |   |   |   |   |   |   |   |   |   | (3 | ) |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                based on models and other valuation methods           |   |                                                                                      | (1 | ) |   |   | 3 |   |   |   |   |   |   |   |   |   |   |   | 2 |   |
|                                                                        |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the end of the period |   | $                                                                                         | 9 |   |   | $ | 2 |   |   | $ | 1 |   |   |   |   |   |   | $ | 12 |   |

*Interest      Rate Risk*

*Foreign      Currency Risk*

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

*Synthetic      Fuel Tax Credit 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****March                31, 2006 vs. March 31, 2005** |
|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                                                      |                                                                                      |
| Delivery                revenues (net of CTC/ITC amortization, interest expense on transition                bonds and ancillary charges) |                                                                                      | $ | (1 | ) |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Operation                and maintenance expenses                                                                                         |                                                                                      |   | 7 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Other                                                                                                                                     |                                                                                      |   | 1 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
| Unusual                items                                                                                                              |                                                                                      |   | 29 |   |   |
|                                                                                                                                      |                                                                                      |   |   |   |   |
|                                                                                                                                      |                                                                                      | $ | 36 |   |   |

|                                                                                                                   |   | **Three                Months Ended March 31,** |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                                                                   |   |                                            |
|                                                                                                                   |   | **2006**                                        |   | **2005** |
|                                                                                                                   |   |                                            |   |   |
| PJM                billing dispute (Note 11)                                                                           |   |                                            |   |   |   | $ | (27 | ) |
|                                                                                                                   |   |                                            |   |   |   |   |   |   |
| Acceleration                of stock-based compensation expense for periods prior to 2005 (Note                9) |   |                                            |   |   |   |   | (2 | ) |
|                                                                                                                   |   |                                            |   |   |   |   |   |   |
| Total                                                                                                                  |   |                                            |   |   |   | $ | (29 | ) |

| · | PPL                Electric recognized an after-tax charge of $27 million in the first                quarter of 2005 for a loss contingency related to the PJM billing                dispute.                See Note 11 to the Financial Statements for an update on this matter.                PPL                Electric cannot be certain of the outcome of this matter or the impact                on                PPL Electric.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | Lower                operation and maintenance expenses in the first quarter of 2006 were                primarily due to the costs incurred in January 2005, when severe                ice                storms hit PPL Electric's service territory. The total cost of restoring                service to 238,000 customers, excluding capitalized costs and regular                payroll expenses, was $16 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | In                August 2005, the PUC issued an order granting PPL Electric's petition                for                authority to defer and amortize for regulatory accounting and reporting                purposes these storm costs subject to certain conditions. As a result                of                the PUC Order and in accordance with SFAS 71, "Accounting for the                Effects                of Certain Types of Regulation," in the third quarter of 2005, PPL                Electric deferred $12 million of its previously expensed storm costs.                The                deferral was based on its assessment of the timing and likelihood                of                recovering the deferred costs in PPL Electric's next distribution                base                rate case. At this time, PPL Electric cannot be certain that it will                recover the storm costs, nor can it predict whether future incidents                of                severe weather will cause significant facility damage and service                disruptions that would also result in significant costs. |

*Outlook*

**Statement      of Income Analysis -- **

**Operating      Revenues**

|                                          | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|-----------------------------------------------|-------------------------------------------------------------------------------------------|
|                                          |                                                                                      |
| PLR                electric generation supply |                                                                                      | $ | 34 |   |   |
|                                          |                                                                                      |   |   |   |   |
| Electric                delivery              |                                                                                      |   | (3 | ) |   |
|                                          |                                                                                      |   |   |   |   |
| Other                                         |                                                                                      |   | 1 |   |   |
|                                          |                                                                                      |   |   |   |   |
|                                          |                                                                                      | $ | 32 |   |   |

**Energy      Purchases**

**Energy      Purchases from Affiliate**

**Other      Operation and Maintenance**

|                                                                   | **Three                Months Ended****March                31, 2006 vs. March 31, 2005** |
|------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                   |                                                                                      |
| Costs                associated with severe ice storms in January 2005 |                                                                                      | $ | (16 | ) |   |
|                                                                   |                                                                                      |   |   |   |   |
| PUC                reportable storm costs in 2006                      |                                                                                      |   | 4 |   |   |
|                                                                   |                                                                                      |   |   |   |   |
| Other                                                                  |                                                                                      |   | (2 | ) |   |
|                                                                   |                                                                                      |   |   |   |   |
|                                                                   |                                                                                      | $ | (14 | ) |   |

**Other      Income - net**

**Interest      Expense**

**Income      Taxes**

**Financial      Condition**

**Liquidity      and Capital Resources**

| · | the                retirement of $222 million of long-term debt;                                           |
|--------|------------------------------------------------------------------------------------------------------------|
| · | a                net increase of $100 million in a note receivable from an                affiliate;       |
| · | the                payment of $38 million of common stock dividends to PPL Corporation;                and |
| · | $43                million of capital expenditures; offset by                                              |
| · | a                net increase in short-term debt of $100 million; and                                      |
| · | $15                million of cash provided by operating                activities.                        |

**Risk      Management**

*Commodity      Price Risk - PLR Contracts*

*Interest      Rate Risk*

**Related      Party Transactions**

**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 March                31,                2006, 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' first 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                2005 Form 10-K; and |
|                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                                                                                                                                                                                                                                                  | · | Note                11 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 2005 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                  (1)** | **Average                  Price Paid****per                  Share****(or                  Unit)** | **Total                  Number of****Shares                  (or Units)****Purchased                  as Part of****Publicly                  Announced****Plans                  or Programs (2)** | **Maximum                  Number (or****Approximate                  Dollar Value) of Shares (or Units) that May Yet Be Purchased Under                  the                  Plans or Programs (2)** |
| January                  1 to January 31, 2006   |                                                                                                         |                                                                                                |                                                                                                                                                                                                 |                                                                                                                                                                                                   |
| February                  1 to February 28, 2006 | 25,817                                                                                                       | $30.92                                                                                              |                                                                                                                                                                                                 |                                                                                                                                                                                                   |
| March                  1 to March 31, 2006       |                                                                                                         |                                                                                                |                                                                                                                                                                                                 |                                                                                                                                                                                                   |
| Total                                            | 25,817                                                                                                       |                                                                                                |                                                                                                                                                                                                 |                                                                                                                                                                                                   |

| (1)    |   | Represents                shares of common stock withheld by PPL at the request of its executive                officers to pay taxes upon the vesting of the officers' restricted                stock                awards, as permitted under the terms of PPL's Incentive Compensation                Plan                and Incentive Compensation Plan for Key Employees. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                              |
| (2)    |   | Not                applicable. PPL does not currently have in place any publicly announced                plans or programs to purchase equity                securities.                                                                                                                                                                                                         |

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| **Item                6. Exhibits**                                                                                                                                                                                                                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                  |   |   |
| 3(a)                                                                                                                                                                                                                                                  | - | Amended                and Restated Articles of Incorporation of PPL Electric Utilities                Corporation |
| *3(b)                                                                                                                                                                                                                                                 | - | Bylaws                of PPL Electric Utilities Corporation, as amended and restated effective                March 30, 2006 (PPL Electric Utilities Corporation Form 8-K Report                (File                No. 1-905) dated March 30, 2006) |
| *10(a)                                                                                                                                                                                                                                                | - | Third                Amendment to Reimbursement Agreement, dated as of March 30, 2006,                among                PPL Energy Supply, LLC, The Bank of Nova Scotia, as Issuer and                Administrative Agent, and the Lenders party thereto from time to                time                (Exhibit 10(a) to PPL Energy Supply, LLC Form 8-K Report (File No.                333-74794) dated April 5, 2006) |
| *[_]10(b)                                                                                                                                                                                                                                             | - | Short-term                Incentive Plan (Schedule A to Proxy Statement of PPL Corporation,                dated                March 20, 2006) |
| *[_]10(c)                                                                                                                                                                                                                                             | - | Establishment                of 2006 annual performance goals and business criteria for incentive                awards to PPL Corporation Named Executive Officers (PPL Corporation                Form                8-K Report (File No. 1-11459) dated March 23, 2006) |
| *[_]10(d)                                                                                                                                                                                                                                             | - | Establishment                of 2006 annual performance goals and business criteria for incentive                awards to PPL Electric Utilities Corporation Named Executive Officers                (PPL                Electric Utilities Corporation Form 8-K Report (File No. 1-905) dated                March 23, 2006) |
| 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 |
|                                                                                                                                                                                                                                                  |   |   |
|                                                                                                                                                                                                                                                  |   | *                -                Previously filed |
|                                                                                                                                                                                                                                                  |   | [_]                - Filed                or listed pursuant to Item 601(b)(10)(iii) of Regulation                S-K |
|                                                                                                                                                                                                                                                  |   |   |
| Certifications                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for the                quarterly period ended March 31, 2006,                filed by the following officers for the following                companies:     |
| 31(a)                                                                                                                                                                                                                                                 | - | William                F. Hecht for PPL Corporation |
| 31(b)                                                                                                                                                                                                                                                 | - | John                R. Biggar for PPL Corporation |
| 31(c)                                                                                                                                                                                                                                                 | - | William                F. Hecht for PPL Energy Supply, LLC |
| 31(d)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Energy Supply, LLC |
| 31(e)                                                                                                                                                                                                                                                 | - | John                F. Sipics for PPL Electric Utilities Corporation |
| 31(f)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Electric Utilities Corporation |
|                                                                                                                                                                                                                                                  |   |   |
| Certifications                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the                quarterly period ended March 31, 2006,                furnished by the following officers for the following                companies: |
| 32(a)                                                                                                                                                                                                                                                 | - | William                F. Hecht for PPL Corporation |
| 32(b)                                                                                                                                                                                                                                                 | - | John                R. Biggar for PPL Corporation |
| 32(c)                                                                                                                                                                                                                                                 | - | William                F. Hecht for PPL Energy Supply, LLC |
| 32(d)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Energy Supply, LLC |
| 32(e)                                                                                                                                                                                                                                                 | - | John                F. Sipics for PPL Electric Utilities Corporation |
| 32(f)                                                                                                                                                                                                                                                 | - | Paul                A. Farr for PPL Electric Utilities                Corporation |

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SIGNATURES

|                                        | **PPL                Corporation**                                                                                                                                                                                                                                                               |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        | (Registrant)                                                                                                                                                                                                                                                                                     |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
|                                        | **PPL                Energy Supply, LLC**                                                                                                                                                                                                                                                        |
|                                        | (Registrant)                                                                                                                                                                                                                                                                                     |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
|                                        | **PPL                Electric Utilities Corporation**                                                                                                                                                                                                                                            |
|                                        | (Registrant)                                                                                                                                                                                                                                                                                     |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
|                                        |                                                                                                                                                                                                                                                                                             |   |
| Date:  May                4, 2006 | /s/  Matt                Simmons                                          |
|                                        | Matt                Simmons                                                                                                                                                                                                                                                                      |   |
|                                        | Vice                President and Controller                                                                                                                                                                                                                                                     |   |
|                                        | (principal                accounting officer)                                                                                                                                                                                                                                                    |   |