<PAGE>

                                 United States
                      Securities and Exchange Commission
                             Washington, DC  20549

                                   Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the quarterly period ended  September 30, 2000
                                    --------------------

                                       OR

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
    For the transition period from _______________ to _________________


Commission File         Registrant; State of Incorporation;     IRS Employer
    Number              Address; and Telephone No.           Identification No.
    ------              --------------------------           ------------------

    1-11459             PPL Corporation                          23-2758192
                        (Pennsylvania)
                        Two North Ninth Street
                        Allentown, PA  18101-1179
                        (610) 774-5151

    1-905               PPL Electric Utilities Corporation       23-0959590
                        (Pennsylvania)
                        Two North Ninth Street
                        Allentown, PA  18101-1179
                        (610) 774-5151


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

PPL Corporation                         Yes       X         No
                                           ---------------    ---------------

PPL Electric Utilities Corporation      Yes       X         No
                                           ---------------    ---------------

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

PPL Corporation                       Common stock, $.01 par value, 144,926,507
                                      shares outstanding at October 31, 2000,
                                      excluding 30,993,637 shares held as
                                      treasury stock
PPL Electric Utilities Corporation    Common stock, no par value, 102,230,382
                                      shares outstanding and all held by PPL
                                      Corporation at October 31, 2000, excluding
                                      55,070,000 shares held as treasury stock
<PAGE>

                     (THIS PAGE LEFT BLANK INTENTIONALLY.)
<PAGE>

                                PPL Corporation
                                      And
                      PPL Electric Utilities Corporation
                      ----------------------------------

                                   FORM 10-Q
                   FOR THE QUARTER ENDED SEPTEMBER 30, 2000

                               Table of Contents
                               -----------------

<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----
<S>                                                                      <C>
GLOSSARY OF TERMS AND ABBREVIATIONS

FORWARD-LOOKING INFORMATION                                                1

PART I.  FINANCIAL INFORMATION

   PPL Corporation and Subsidiaries

      Item 1. Financial Statements

            Consolidated Statement of Income                               3

            Consolidated Statement of Cash Flows                           4

            Consolidated Balance Sheet                                     5

            Consolidated Statement of Shareowners' Common Equity           7

            Notes to Consolidated Financial Statements                     8

      Item 2. Management's Discussion and Analysis of
              Financial Condition and Results of Operations               22

      Item 3. Quantitative and Qualitative Disclosures
              About Market Risk                                           34

   PPL Electric Utilities Corporation and Subsidiaries

      Item 1. Financial Statements

            Consolidated Statement of Income                              37

            Consolidated Statement of Cash Flows                          38

            Consolidated Balance Sheet                                    39

            Consolidated Statement of Shareowner's Common Equity          41

            Notes to Consolidated Financial Statements                    42

      Item 2. Management's Discussion and Analysis of
              Financial Condition and Results of Operations               46

      Item 3. Quantitative and Qualitative Disclosures
              About Market Risk                                           63

PART II. OTHER INFORMATION

      Item 1. Legal Proceedings                                           64

      Item 6. Exhibit and Reports on Form 8-K                             65

SIGNATURES                                                                67

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES                         68
</TABLE>

<PAGE>

                      GLOSSARY OF TERMS AND ABBREVIATIONS

CEMAR - Companhia Energetica do Maranhao, a PPL Global subsidiary which
distributes electricity in Brazil.

CGE - Compania General Electricidad, SA, a distributor of energy in Chile and
Argentina, in which PPL Global has an ownership interest.

Clean Air Act (Federal Clean Air Act Amendments of 1990) - legislation enacted
to address certain environmental issues including acid rain, ozone and toxic air
emissions.

Customer Choice Act - (Pennsylvania Electricity Generation Customer Choice and
Competition Act) - legislation enacted to restructure the state's electric
utility industry to create retail access to a competitive market for generation
of electricity.

DelSur - Distribuidora Electricidad del Sur S.A., an electric distribution
company in El Salvador, a majority of which is owned by EC.

DEP - Pennsylvania Department of Environmental Protection.

DRIP - Dividend reinvestment plan.

Emel/EC - Empresas Emel, S.A., a Chilean electric distribution holding company,
and Electricidad de Centroamerica, S.A. de C.V, an El Salvadoran holding company
and the majority owner of Del Sur.  EC is jointly owned by PPL Global and Emel.

Energy Marketing Center - business unit responsible for marketing and trading
wholesale energy.  Effective July 1, 2000, the Energy Marketing Center is part
of PPL EnergyPlus.

EPA - Environmental Protection Agency.

EPS - Earnings per share.

FASB (Financial Accounting Standards Board) - a rulemaking organization that
establishes financial accounting and reporting standards.

FERC (Federal Energy Regulatory Commission) - federal agency that regulates
interstate transmission and wholesale sales of electricity and related matters.

Hyder - Hyder plc, a subsidiary of WPDL and owner of South Wales Electricity
plc, Welsh Water and other service oriented businesses.

ICP - Incentive Compensation Plan.

ISO - Independent System Operator.

LIBOR - London Interbank Offered Rate.

MOU - Memorandum of Understanding.

Montana Power - The Montana Power Company, a Montana-based company engaging in
diversified energy and communication-related businesses.  Montana Power sold its
generating assets to PPL Global in December 1999.

NOx - nitrogen oxide.

NPDES - National Pollutant Discharge Elimination System.

NUGs -  (Non-Utility Generators) - generating plants not owned by public
utilities whose electrical output must be purchased by utilities under the
Public Utility Regulatory Policies Act if the plant meets certain criteria.

NRC (Nuclear Regulatory Commission) - federal agency that regulates operation of
nuclear power facilities.

OTR - Northeast Ozone Transport Region.

PCB (Polychlorinated Biphenyl) - additive to oil used in certain electrical
equipment up to the late-1970s.  Now classified as a hazardous chemical.

PJM (PJM Interconnection, LLC) - operates the electric transmission network and
electric energy market in the mid-Atlantic region of the U.S.

PLR - provider of last resort, referring to PPL Electric Utilities providing
electricity to retail customers within its delivery territory who have chosen
not to shop for electricity under the Customer Choice Act.

PPL - PPL Corporation, the parent holding company of PPL Electric Utilities, PPL
Energy Funding and other subsidiaries.

PPL Capital Funding - PPL Capital Funding, Inc., a PPL financing subsidiary.

PPL Capital Trust - a Delaware statutory business trust created to issue
Preferred Securities, whose common securities are held by PPL Electric
Utilities.

PPL Capital Trust II - a Delaware statutory business trust created to issue
Preferred Securities, whose common securities are held by PPL Electric
Utilities.

PPL Electric Utilities - PPL Electric Utilities Corporation, a regulated
subsidiary specializing in distribution and transmission of electricity.

PPL Energy Funding - PPL Energy Funding Corporation, an unregulated subsidiary
which, as of July 1, 2000, is the parent company for most of PPL's unregulated
businesses.
<PAGE>

PPL EnergyPlus - PPL EnergyPlus, LLC, an unregulated subsidiary of PPL Energy
Funding which supplies energy and energy services in newly deregulated markets.

PPL Gas Utilities  - PPL Gas Utilities Corporation, a regulated subsidiary
specializing in natural gas distribution, transmission and storage services, and
the sale of propane.

PPL Generation - PPL Generation, LLC, an unregulated subsidiary of PPL Energy
Funding which, effective July 1, 2000, owns and operates U.S. generating
facilities through various subsidiaries.

PPL Global  - PPL Global, Inc., an unregulated subsidiary which invests in and
develops domestic and international power projects, and operates international
projects.  Effective June 30, 2000, PPL Global, Inc. became PPL Global, LLC.
Effective July 1, 2000, PPL Global became a subsidiary of PPL Energy Funding.

PPL Maine - PPL Maine, LLC, formerly Penobscot Hydro, LLC.  PPL Maine, effective
July 1, 2000, became a subsidiary of PPL Generation, LLC.

PPL Montana  - PPL Montana, LLC, an unregulated subsidiary which generates
electricity for wholesale and retail customers in Montana and the Northwest.
Effective July 1, 2000, PPL Montana became a subsidiary of PPL Generation.

PPL Services - PPL Services Corporation, an unregulated subsidiary of PPL which,
as of July 1, 2000, provides shared services for PPL and its subsidiaries.

PPL Spectrum - PPL Spectrum, Inc., an unregulated subsidiary which offers
energy-related products and services.  PPL Spectrum became a subsidiary of PPL
EnergyPlus, effective July 1, 2000.

PPL Susquehanna - PPL Susquehanna, LLC, the nuclear generating subsidiary of PPL
Generation effective July 1, 2000.

PUC (Pennsylvania Public Utility Commission) - state agency that regulates
certain ratemaking, services, accounting, and operations of Pennsylvania
utilities.

SCR - selective catalytic reduction.

SEC - Securities and Exchange Commission.

SFAS (Statement of Financial Accounting Standards) - accounting and financial
reporting rules issued by the  FASB.

SIP - State Implementation Plan.

SNCR - selective non-catalytic reduction.

SO2 - sulfur dioxide.

Southern - The Southern Company, a diversified energy company based in Atlanta.
PPL Global and Southern jointly own WPDH and WPDL.

Superfund - federal and state environmental legislation that addresses
remediation of contaminated sites.

U.K. - United Kingdom.

Western Mass. Holdings - Western Massachusetts Holdings, Inc., an unregulated
subsidiary specializing in mechanical contracting and engineering.

WPD - Western Power Distribution, a British regional electric utility company.

WPDH - WPD Holdings UK, a jointly owned subsidiary of PPL Global and Southern.
WPDH owns Western Power Distribution.

WPDL - Western Power Distribution Limited, a jointly owned subsidiary of PPL
Global and Southern.  WPDL owns the majority of the shares of Hyder.
<PAGE>

                          Forward-looking Information

     Certain statements contained in this Form 10-Q are "forward-looking
statements" within the meaning of the federal securities laws. Although PPL and
PPL Electric Utilities believe that the expectations and assumptions reflected
in these forward-looking statements are reasonable, these statements involve a
number of risks and uncertainties, and actual results may differ materially from
the results discussed in the statements. The following are among the important
factors that could cause actual results to differ materially from the forward-
looking statements: market demand and prices for energy, capacity and fuel;
weather variations affecting customer energy usage; competition in retail and
wholesale power markets; the effect of any business or industry restructuring;
the profitability and liquidity of PPL and its subsidiaries; new accounting
requirements or new interpretations or applications of existing requirements;
operating performance of plants and other facilities; environmental conditions
and requirements; system conditions and operating costs; development of new
projects; performance of new ventures; political, regulatory or economic
conditions in countries where PPL or its subsidiaries conduct business; any
required governmental approvals or third-party consents; capital market
conditions; foreign exchange rates; and the commitments and liabilities of PPL
and its subsidiaries. Any such forward-looking statements should be considered
in light of such factors and in conjunction with PPL's and PPL Electric
Utilities' Form 10-K and other documents on file with the SEC.

     New factors that could cause actual results to differ materially from those
described in forward-looking statements emerge from time to time, and it is not
possible for PPL or PPL Electric Utilities to predict all of such factors, or
the extent to which any such factor or combination of factors may cause actual
results to differ from those contained in any forward-looking statement. Any
forward-looking statement speaks only as of the date on which such statement is
made, and neither PPL nor PPL Electric Utilities undertakes any obligation to
update the information contained in such statement to reflect subsequent
developments or information.
<PAGE>

                       PPL CORPORATION AND SUBSIDIARIES
                       --------------------------------
<PAGE>

PPL CORPORATION AND SUBSIDIARIES
--------------------------------
Part 1. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
----------------------------

  In the opinion of PPL, the unaudited financial statements included herein
reflect all adjustments necessary to present fairly the Consolidated Balance
Sheet as of September 30, 2000 and December 31, 1999, and the Consolidated
Statement of Income and Consolidated Statement of Cash Flows for the periods
ended September 30, 2000 and 1999.

CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars, except per share data)


<TABLE>
<CAPTION>
                                                                                          Three Months             Nine Months
                                                                                       Ended September 30,      Ended September 30,
                                                                                     ---------------------    ----------------------
                                                                                        2000        1999         2000        1999
                                                                                     ---------   ---------    ---------   ----------
<S>                                                                                  <C>         <C>          <C>         <C>
Operating Revenues
   Electric......................................................................    $   729     $    811     $   2,201   $ 2,062
   Natural gas and propane.......................................................         26           15           120        85
   Wholesale energy marketing and trading........................................        616          495         1,559     1,127
   Energy related businesses.....................................................         87           65           288       183
                                                                                     -------     --------     ---------   -------
   Total.........................................................................      1,458        1,386         4,168     3,457
                                                                                     -------     --------     ---------   -------

Operating Expenses
   Operation
        Electric fuel............................................................        129          131           345       351
        Natural gas and propane..................................................          7            3            45        36
        Energy purchases for retail load and wholesale...........................        554          567         1,501     1,180
        Other....................................................................        158          179           462       473
        Amortization of recoverable transition costs.............................         50           48           159       135
   Maintenance...................................................................         55           53           175       150
   Depreciation and amortization.................................................         58           73           196       193
   Taxes, other than income......................................................         37           40           146       135
   Energy related businesses.....................................................         97           54           265       139
                                                                                     -------     --------     ---------   -------
   Total.........................................................................      1,145        1,148         3,294     2,792
                                                                                     -------     --------     ---------   -------

Operating Income.................................................................        313          238           874       665
                                                                                     -------     --------     ---------   -------

Other Income - Net...............................................................          1                          8         7
                                                                                     -------     --------     ---------   -------

Income Before Interest, Income Taxes and Minority Interest.......................        314          238           882       672

Interest Expense.................................................................         94           80           274       203
                                                                                     -------     --------     ---------   -------
Income Before Income Taxes, Minority Interest and Extraordinary Items............        220          158           608       469
                                                                                     -------     --------     ---------   -------

Income Taxes.....................................................................         75          (22)          215        92

Minority Interest................................................................          3           13             4        13
                                                                                     -------     --------     ---------   -------

Income Before Extraordinary Items................................................        142          167           389       364

Extraordinary Items (net of income taxes)........................................                     (59)                    (59)
                                                                                     -------     --------     ---------   -------

Income Before Dividends on Preferred Stock.......................................        142          108           389       305

Preferred Stock Dividend Requirements............................................          6            6            19        19
                                                                                     -------     --------     ---------   -------
Net Income.......................................................................    $   136     $    102     $     370   $   286
                                                                                     =======     ========     =========   =======

Earnings Per Share of Common Stock
 Basic and Diluted

     Income Before Extraordinary Items...........................................    $  0.94     $   1.07     $    2.57   $  2.22
     Extraordinary Items (net of tax)............................................                   (0.39)                  (0.37)
                                                                                     -------     --------     ---------   -------
                                                                                     $  0.94     $   0.68     $    2.57   $  1.85
                                                                                     =======     ========     =========   =======

Dividends Declared per Share of Common Stock.....................................    $ 0.265     $   0.25     $   0.795   $  0.75
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

                                                                 Nine Months
                                                             Ended September 30,
                                                             -------------------
                                                              2000        1999
                                                             ------     --------

Net Cash Provided by Operating Activities................    $  529     $   530

Cash Flows From Investing Activities
   Expenditures for property, plant and equipment........      (311)       (291)
   Investment in electric energy projects................      (647)       (189)
   Sale of nuclear fuel to trust.........................        27          14
   Proceeds from PPL Montana sale - leaseback............       410
   Other investing activities - net......................       (17)         (4)
                                                             ------     -------
     Net cash used in investing activities...............      (538)       (470)
                                                             ------     -------

Cash Flows From Financing Activities
   Issuance of long-term debt............................     1,000       2,420
   Issuance of common stock..............................        22           8
   Retirement of long-term debt..........................      (337)     (1,469)
   Termination of nuclear fuel lease.....................      (154)
   Purchase of treasury stock............................                  (417)
   Payment of common and preferred dividends.............      (132)       (137)
   Payments on capital lease obligation..................       (11)        (42)
   Net decrease in short-term debt.......................      (250)       (200)
   Other financing activities - net......................        18         (78)
                                                             ------     -------
     Net cash provided by financing activities...........       156          85
                                                             ------     -------

Net Increase In Cash and Cash Equivalents................       147         145
Cash and Cash Equivalents at Beginning of Period.........       133         195
                                                             ------     -------
Cash and Cash Equivalents at End of Period...............    $  280     $   340
                                                             ======     =======

Supplemental Disclosures of Cash Flow Information
  Cash paid during the period for:
     Interest (net of amount capitalized)................    $  229     $   179
     Income taxes........................................    $  233     $   141

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries

(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                     September 30,           December 31,
                                                                         2000                   1999
                                                                     -------------           ------------
<S>                                                                  <C>                     <C>
Assets

Current Assets
   Cash and cash equivalents....................................     $         280           $        133
   Accounts receivable (less reserve: 2000, $58; 1999, $22).....               555                    399
   Unbilled revenues............................................               278                    310
   Fuel, materials and supplies - at average cost...............               192                    200
   Prepayments..................................................                64                    119
   Unrealized energy trading gains..............................               160                     26
   Other........................................................               213                    106
                                                                     -------------           ------------
                                                                             1,742                  1,293
                                                                     -------------           ------------

Investments
   Investment in unconsolidated affiliates at equity............               698                    424
   Nuclear plant decommissioning trust fund.....................               276                    255
   Other........................................................                47                     16
                                                                     -------------           ------------
                                                                             1,021                    695
                                                                     -------------           ------------

Property, Plant and Equipment
   Electric utility plant in service - net
     Transmission and distribution..............................             2,804                  2,462
     Generation.................................................             2,143                  2,352
     General....................................................               265                    259
                                                                     -------------           ------------
                                                                             5,212                  5,073
   Construction work in progress - at cost......................               225                    181
   Nuclear fuel owned and leased - net..........................               108                    139
                                                                     -------------           ------------
     Electric utility plant - net...............................             5,545                  5,393
   Gas and oil utility plant - net..............................               171                    171
   Other property - net.........................................                79                     60
                                                                     -------------           ------------
                                                                             5,795                  5,624
                                                                     -------------           ------------

Regulatory Assets and Other Noncurrent Assets
   Recoverable transition costs.................................             2,487                  2,647
   Other........................................................               927                    915
                                                                     -------------           ------------
                                                                             3,414                  3,562
                                                                     -------------           ------------
                                                                     $      11,972           $     11,174
                                                                     =============           ============
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED BALANCE SHEET
PPL Corporation and Subsidiaries

(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                          September 30,           December 31,
                                                                              2000                   1999
                                                                          -------------           ------------
<S>                                                                       <C>                     <C>
Liabilities and Equity

Current Liabilities
   Short-term debt....................................................    $         607           $        857
   Long-term debt.....................................................              417                    468
   Above market NUG purchases.........................................               94                     99
   Accounts payable...................................................              376                    399
   Taxes and interest accrued.........................................              174                    144
   Dividends payable..................................................               45                     43
   Unrealized energy trading losses...................................              170                     28
   Other..............................................................              160                    242
                                                                          -------------           ------------
                                                                                  2,043                  2,280
                                                                          -------------           ------------
Long-term Debt........................................................            4,564                  3,689
                                                                          -------------           ------------

Deferred Credits and Other Noncurrent Liabilities
   Deferred income taxes and investment tax credits...................            1,474                  1,548
   Above market NUG purchases.........................................              604                    674
   Other..............................................................              966                    959
                                                                          -------------           ------------
                                                                                  3,044                  3,181
                                                                          -------------           ------------

Commitments and Contingent Liabilities................................
                                                                          -------------           ------------

Minority Interest.....................................................               75                     64
                                                                          -------------           ------------

Company-obligated mandatorily redeemable preferred securities of
   subsidiary trust holding solely company debentures.................              250                    250
                                                                          -------------           ------------

Preferred Stock
   With sinking fund requirements.....................................               47                     47
   Without sinking fund requirements..................................               50                     50
                                                                          -------------           ------------
                                                                                     97                     97
                                                                          -------------           ------------
Shareowners' Common Equity
   Common stock.......................................................                2                      2
   Capital in excess of par value.....................................            1,882                  1,860
   Treasury stock.....................................................             (836)                  (836)
   Earnings reinvested................................................              910                    654
   Accumulated other comprehensive income.............................              (47)                   (55)
   Capital stock expense and other....................................              (12)                   (12)
                                                                          -------------           ------------
                                                                                  1,899                  1,613
                                                                          -------------           ------------
                                                                          $      11,972           $     11,174
                                                                          =============           ============
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED STATEMENT OF SHAREOWNERS' COMMON EQUITY
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                       For the Three Months Ended     For the Nine Months Ended
                                                                             September 30,                  September 30,
                                                                       --------------------------    ---------------------------
                                                                          2000            1999           2000            1999
                                                                       -----------     ----------     -----------     ----------
<S>                                                                    <C>             <C>            <C>             <C>
Common stock at beginning of period..................................   $      2       $      2        $      2        $      2
                                                                       -----------     ----------     -----------     ----------
Common stock at end of period........................................          2              2               2               2
                                                                       -----------     ----------     -----------     ----------

Capital in excess of par value at beginning of period................      1,873          1,874           1,860           1,866
   Common stock issued through the DRIP and the ICP (a)..............          9                             22               8
   Other.............................................................                       (14)                            (14)
                                                                       -----------     ----------     -----------     ----------
Capital in excess of par value at end of period......................      1,882          1,860           1,882           1,860
                                                                       -----------     ----------     -----------     ----------

Treasury stock at beginning of period................................       (836)          (419)           (836)           (419)
   Purchase of treasury stock........................................                      (417)                           (417)
                                                                       -----------     ----------     -----------     ----------
Treasury stock at end of period......................................       (836)          (836)           (836)           (836)
                                                                       -----------     ----------     -----------     ----------

Earnings reinvested at beginning of period...........................        812            477             654             372
   Net income (b)....................................................        136            102             370             286
   Cash dividends declared on common stock...........................        (38)           (37)           (114)           (115)
   Other.............................................................                         1
                                                                       -----------     ----------     -----------     ----------
Earnings reinvested at end of period.................................        910            543             910             543
                                                                       -----------     ----------     -----------     ----------

Accumulated other comprehensive income at beginning of period........        (63)           (20)            (55)             (4)
   Unrealized gain on available for sale securities (b)..............          6                              6
   Foreign currency translation adjustments, net of tax benefit
   of $3, $(1), $10, $2 (b)..........................................         10            (27)              2             (43)
                                                                       -----------     ----------     -----------     ----------
Accumulated other comprehensive income at end of period..............        (47)           (47)            (47)            (47)
                                                                       -----------     ----------     -----------     ----------

Capital stock expense at beginning of period.........................        (12)           (28)            (12)            (27)
   Other.............................................................                        16                              15
                                                                       -----------     ----------     -----------     ----------
Capital stock expense at end of period...............................        (12)           (12)            (12)            (12)
                                                                       -----------     ----------     -----------     ----------
Total Shareowners' Common Equity.....................................   $  1,899       $  1,510        $  1,899        $  1,510
                                                                       ===========     ==========     ===========     ==========

(Thousands of Shares)

Common stock shares at beginning of period (a).......................    144,300        157,694         143,697         157,412
   Treasury stock purchased..........................................                   (14,000)                        (14,000)
   Common stock issued through the DRIP and the ICP..................        420                          1,023             282
                                                                       -----------     ----------     -----------     ----------
Common stock shares at end of period.................................    144,720        143,694         144,720         143,694
                                                                       ===========     ==========     ===========     ==========
(a) $.01 par value, 390 million shares authorized. Each
    share entitles the holder to one vote on any question
    presented to any shareowners' meeting.
(b) Statement of Comprehensive Income:
     Net income......................................................   $    136       $    102        $    370        $    286
     Other comprehensive income, net of tax:
         Foreign currency translation adjustments....................         10            (27)              2             (43)
         Unrealized gain on available-for-sale securities............          6                              6
                                                                       -----------     ----------     -----------     ----------
     Total other comprehensive income................................         16            (27)              8             (43)
                                                                       -----------     ----------     -----------     ----------
     Comprehensive Income............................................   $    152       $     75        $    378        $    243
                                                                       ===========     ==========     ===========     ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of the financial statements.
<PAGE>

                                PPL CORPORATION
                  Notes to Consolidated Financial Statements
                  ------------------------------------------

     Terms and abbreviations appearing in Notes to Consolidated Financial
Statements are explained in the glossary.

1. Interim Financial Statements

     Certain information in footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
has been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the SEC.  These financial statements should be read in
conjunction with the financial statements and notes included in PPL's Annual
Report to the SEC on Form 10-K for the year ended December 31, 1999.

     Certain amounts in the September 30, 1999 and December 31, 1999 financial
statements have been reclassified to conform to the presentation in the
September 30, 2000 financial statements.

2. Summary of Significant Accounting Policies

Consolidation

It is the policy of PPL Global to record equity in earnings of affiliates on a
lag, based on the availability of financial data on a U.S. GAAP basis. Earnings
from WPD and WPDL are recorded on a one-month lag. Earnings from all other
equity affiliates are recorded on a three-month lag. PPL Global consolidates the
results of Emel, EC, Elfec and Integra on a one-month lag; the results of CEMAR
will be consolidated on a three-month lag. Elfec and Integra are Bolivian
companies engaged in distribution of electricity and the manufacture of
long-lived assets for the electric utility business, respectively.

Leases

     In March 2000, PPL Electric Utilities terminated its nuclear fuel lease and
repurchased $154 million of nuclear fuel from the lessor energy trust.  In July
2000, all nuclear fuel was transferred to PPL Susquehanna, the new unregulated
nuclear generating subsidiary of PPL Generation, in connection with the
corporate realignment.  See Note 12 for additional information.

Sale-Leaseback

     In July 2000, PPL Montana sold its investment in the Colstrip Steam
Generation electric plant to owner lessors who are leasing the assets back to
PPL Montana under a thirty-six year operating lease.  The proceeds from the sale
approximated $410 million.  A gain of approximately $8 million was deferred, and
will be amortized over the life of the lease.  PPL Montana used the proceeds to
reduce outstanding debt and make distributions to its parent, PPL Generation.
Future lease payments are estimated as follows (millions of dollars):  2001,
$43; 2002, $49; 2003, $47; 2004, $44 and 2005, $38.
<PAGE>

Depreciation

     PPL subsidiaries periodically review the depreciable lives of their fixed
assets.  In conjunction with the corporate realignment, studies were conducted
of depreciable lives of certain generation assets.  These studies indicated that
the estimated economic lives for certain generation assets were longer than the
lives used to calculate depreciation for financial statement purposes.
Therefore, effective July 1, 2000, PPL subsidiaries revised the estimated
economic lives for fossil generation and pipeline assets.

3. Earnings Per Share

     Basic EPS is calculated by dividing earnings available to common
shareowners ("Net Income" on PPL's Consolidated Statement of Income) by the
weighted average number of common shares outstanding during the period.  In the
calculation of diluted EPS, weighted average shares outstanding are increased
for additional shares that would be outstanding if potentially dilutive
securities were converted to common stock.

     For the three and nine months ended September 30, 2000, the weighted
average shares outstanding (in thousands) were 144,578 and 144,165,
respectively.  Dilutive shares had no impact on EPS of $.94 and $2.57 for those
periods.

     For the three and nine months ended September 30, 1999, the weighted
average shares outstanding (in thousands) were 150,694 and 154,865,
respectively.  Dilutive shares had no impact on EPS of $.68 and $1.85 for those
periods.

4. Segment and Related Information

     On July 1, 2000, PPL and PPL Electric Utilities completed a corporate
realignment, in order to effectively separate PPL Electric Utilities' regulated
transmission and distribution businesses from its recently deregulated
generation businesses to better position the companies and their affiliates in
the new competitive marketplace.

     PPL's reportable segments have been revised to reflect this new corporate
structure. After realignment, the new segments of PPL are Supply, Delivery,
Development, and Corporate.  The Supply group includes the domestic unregulated
energy marketing and generation functions of PPL EnergyPlus and PPL Generation.
The Delivery group includes the regulated electric and gas delivery businesses
of PPL Electric Utilities and PPL Gas Utilities.  The Development group includes
PPL Global, the principal businesses of which are the acquisition and
development of both domestic and international energy projects and the ownership
of international energy projects.  The major items reflected in Corporate
include recovery of PPL Electric Utilities' stranded costs, indirect support
group costs, preferred dividends, and interest expense not directly allocated to
the segments.  Support groups include functions such as corporate accounting,
finance, legal, human resources, and information services.  Corporate also
includes intercompany eliminations required to reconcile to the corporate books.
Prior to the corporate realignment, the reportable segments of PPL were PPL
Electric Utilities, PPL Global and Other.

     Previously reported 1999 information has been restated to conform to the
current presentation. Financial data for PPL's business segments are as follows
(millions of dollars):
<PAGE>

<TABLE>
<CAPTION>
                                                Three Months              Nine Months
                                                ------------              -----------
                                             Ended September 30,      Ended September 30,
                                             -------------------      -------------------
                                              2000         1999        2000         1999
                                              ----         ----        ----         ----
<S>                                          <C>         <C>          <C>          <C>
Income Statement data
 Revenues from external customers
  Supply                                     $1,071      $   903      $ 2,912      $2,315
  Delivery                                      167          157          550         527
  Development                                    82          198 a)       312         240
  Corporate                                     138          128          394         375
                                             ------      -------      -------      ------
                                              1,458        1,386        4,168       3,457
 Intersegment revenues
  Supply                                      N/A - there are no intersegment revenues
  Delivery                                               between these segments
  Development
  Corporate

 Net income
  Supply                                        121           50          295         135
  Delivery                                       19           11           65          46
  Development                                    12            7           31          23
  Corporate                                     (16)          34          (21)         82
                                             ------      -------      -------      ------
                                             $  136      $   102      $   370      $  286

                                                    September 30,          December 31,
                                                    -------------          ------------
                                                        2000                  1999
                                                        ----                  ----
Balance Sheet data
 Total assets
  Supply                                               $ 3,404                 $ 3,212
  Delivery                                               2,617                   2,611
  Development                                            2,215                   1,424
  Corporate                                              3,736                   3,927
                                                       -------                 -------
                                                       $11,972                 $11,174
</TABLE>

   a) In the third quarter of 1999, PPL Global increased its investment in Emel
      thereby achieving control of both Emel and EC. As a result, PPL Global
      consolidated the accounts of Emel and EC in the third quarter of 1999,
      picking up activity from January through August 1999.

5. Investments in Unconsolidated Affiliates

     PPL's investments in unconsolidated affiliates were $698 million and $424
million at September 30, 2000 and December 31, 1999, respectively.  In September
and October 2000, WPDL purchased additional shares of Hyder, bringing its total
shareholdings to approximately 97%.  See Note 9 for additional information.  PPL
Global's ownership interest in WPDL is 60%, and Southern's ownership interest is
40%.  Under an arrangement between the two companies, PPL Global's ownership
interest in WPDL may decrease to 51% and Southern's ownership interest may
increase to 49%, depending upon the execution of a call option by Southern.  PPL
Global and Southern share control of WPDL equally.  Accordingly, PPL Global
accounts for its investment in WPDL (and other investments where it has majority
ownership but lacks voting control) under the equity method of accounting.  PPL
Global's ownership investment in WPDL was $126 million at September 30, 2000.
Consistent with PPL Global's policy of recording equity earnings on a lag basis,
no equity earnings of WPDL were recorded as of September 30, 2000.

     Summarized below is information from the financial statements of
unconsolidated affiliates included in the PPL consolidated financial
<PAGE>

statements under the equity method for the periods noted (millions of dollars):

<TABLE>
<CAPTION>

Balance Sheet Data
                                             September 30,               December 31,
                                             -------------               ------------
                                                 2000                       1999
                                                 ----                       ----
<S>                                       <C>                          <C>
Current Assets                                   $  204                     $  389
Noncurrent Assets                                 4,819                      3,340
Current Liabilities                                 270                        367
Noncurrent Liabilities                            3,107                      1,890

Income Statement Data
                                             Three Months                 Nine Months
                                             ------------                 ------------
                                          Ended September 30,          Ended September 30,
                                          -------------------          -------------------
                                           2000         1999            2000         1999
                                           ----         ----            ----         ----
Revenues a)                               $ 100        $ 295           $ 352        $ 888
Operating Income                             42           54             169          198
Net Income                                   16           31             101           96
</TABLE>

a) The decrease in revenues for the three and nine months ended September 30,
2000 was primarily due to the sale of the supply business of WPD, formerly SWEB,
in the fourth quarter of 1999.

6. Sales to Other Electric Utilities

     As part of the corporate realignment on July 1, 2000, PPL Electric
Utilities' contracts for sales to other electric utilities were assigned to PPL
EnergyPlus, which was transferred to an unregulated subsidiary of PPL.  See Note
12 for information on the corporate realignment.

     PPL Montana provides power to Montana Power under two wholesale transition
sales agreements.  These agreements expire in December 2001 and June 2002.  PPL
Montana has supplied Montana Power with approximately 3,843 million kWh for the
nine months ended September 30, 2000.

7. Credit Arrangements and Financing Activities

     PPL Electric Utilities issues commercial paper.  At September 30, 2000, PPL
Electric Utilities had no commercial paper outstanding.

     PPL Capital Funding, whose purpose is to provide debt funding for PPL and
its subsidiaries, also issues commercial paper.  As with all PPL Capital Funding
debt, this commercial paper is guaranteed by PPL.  At September 30, 2000, PPL
Capital Funding had $574 million of commercial paper outstanding, at interest
rates ranging from 6.91% to 6.99% per annum.

     In order to enhance liquidity, and as a credit back-stop to the commercial
paper programs, PPL Electric Utilities, PPL Capital Funding and PPL (as
guarantor for PPL Capital Funding) share a 364-day $750 million credit facility
and a five-year $300 million credit facility, each with a group of banks.  At
September 30, 2000, no borrowings were outstanding under either facility.

     Through September 30, 2000, PPL Capital Funding had issued the following
series of medium-term notes:  in February 2000, $500 million of 7.75% Series due
2005; in June 2000, $300 million of 8.375% Series due 2007; in August 2000, $25
million of 7.75% Series due 2002; in September 2000, $125 million and $50
million of two floating-rate issues with maturities of 2002.  The proceeds from
these issuances were used for general corporate purposes, including making loans
to PPL subsidiaries and reducing commercial paper
<PAGE>

balances. The February and June issuances were under the $1.2 billion shelf
registration statement filed with the SEC in September 1999 and the August and
September issuances were under the $400 million shelf registration statement
filed with the SEC in January 1999.

     In April 2000, PPL Electric Utilities redeemed and retired all of its
outstanding First Mortgage Bonds, 9-1/4% Series due 2019, at the aggregate par
value of $27.6 million through the maintenance and replacement fund provisions
of its Mortgage.  In June 2000, PPL Electric Utilities paid and retired all $125
million aggregate principal amount of its outstanding First Mortgage Bonds, 6%
Series due 2000.

     PPL Transition Bond Company, LLC retired the following class A-1 Bonds
through September 30, 2000:  in March 2000, $62.2 million; in June 2000, $61.3
million; and in September 2000, $52.3 million.

     In 1999, PPL Montana entered into $950 million of credit facilities, non-
recourse to PPL, with a group of banks, including a $675 million 364-day
facility and two revolving credit facilities totaling $275 million which mature
in 2002.  The purpose of these facilities was to provide bridge loan financing
for the acquisition of the Montana assets and to fund PPL Montana's working
capital needs.  In May and June 2000, PPL Montana reduced the amount of these
credit facilities by $490 million. At June 30, 2000, $360 million of borrowings
were outstanding under these facilities. In July 2000, PPL Montana completed the
sale of its investment in the Colstrip coal-fired plant to owner lessors, which
are leasing the assets back to PPL Montana under a 36-year operating lease.  The
proceeds from the sale were approximately $410 million.  PPL Montana used these
proceeds to reduce outstanding debt and make distributions to its parent, PPL
Generation.  In July 2000, PPL Montana reduced the amount of the credit
facilities to $100 million.  On September 30, 2000, $5 million of borrowings
were outstanding under these facilities.

     In September 2000, a PPL Global subsidiary entered into an agreement with
General Electric for the acquisition of turbine-generators and related
equipment.  See Note 9 for additional information.  The turbines are being
financed using a leasing structure that eliminates the need for cash outlays
during the turbine manufacturing process and diversifies PPL's funding sources.
The lease financing is being consummated in two stages, and is being structured
as an operating lease.

8. Financial Instruments

     PPL enters into forward-starting interest rate swaps and treasury lock
agreements with various counterparties to hedge interest rate risk associated
with anticipated debt issuances.  These interest rate swap agreements involve
the future exchange of floating-rate interest payments for fixed-rate interest
payments over the life of the agreements.  In April 2000, PPL settled $180
million notional amount of treasury lock agreements and made a payment of $6
million under the terms of the agreements.  In February 2000, June 2000, and
July 2000, PPL settled $430 million, $350 million, and $270 million notional
amount of forward-starting interest rate swaps, respectively. The February 2000
and June 2000 settlements were in connection with medium-term note issuances,
and PPL received net proceeds of about $16 million and $10 million,
respectively.  These amounts have been deferred on the balance sheet and are
currently being amortized over the life of the medium-term notes.  The July 2000
settlement of $270 million was in connection with the PPL Montana lease
transaction and resulted in net proceeds of about $4 million, which also have
been deferred on the balance sheet and are currently being amortized over the
life of the lease.
<PAGE>

     At September 30, 2000, PPL agreed to pay fixed rates between 7.02 - 7.208%
on forward-starting swaps with notional amounts of $125  million and maturities
of October 2010.  PPL will receive a variable-rate interest payment based on
either a 3-month or 6-month LIBOR rate through the maturity of these agreements.
The estimated fair value of these agreements, which represents the estimated
amount PPL would pay if it had terminated these agreements at September 30,
2000, was $2 million.  Since the original transaction dates of these swaps, the
anticipated debt they were expected to hedge was not issued.  Therefore, the
market value of these swaps is recorded in current earnings.  During October
2000, PPL settled these positions and made a payment of $3 million under the
terms of the agreement.

     PPL has also entered into interest rate swap agreements whereby PPL agreed
to pay a floating interest rate and receive a fixed interest rate payment.
These swaps are executed with the intent of adjusting the amount of floating-
rate debt carried in PPL's liability portfolio. In April and June 2000, PPL
unwound $450 million of these swaps, receiving a payment of approximately $5
million.   In September 2000, PPL settled $150 million notional amount of these
swaps and realized an insignificant gain.  At September 30, 2000, PPL had
approximately $335 million notional amount of these swaps outstanding.  The
estimated fair value of these contracts, representing the amount PPL would pay
if it terminated these agreements at September 30, 2000, was $6 million.

     During the second and third quarters of 2000, PPL entered into currency
hedges related to the acquisition of Hyder shares in order to minimize its
exposure to adverse foreign currency exchange rate fluctuations.  In May 2000,
PPL entered into currency options at a cost of approximately $2 million giving
it the right, but not the obligation, to purchase $400 million worth of British
pounds sterling at prevailing exchange rates.  These options expired in
September 2000.  PPL also entered into currency forward agreements to lock in
exchange rates on the purchase of approximately 170 million British pounds
sterling and the sale of approximately 50 million British pounds sterling.
These positions were unwound in the third quarter of 2000, at a loss of
approximately $2 million.  During October 2000, PPL entered into and
subsequently settled currency forward agreements to lock in the exchange rate on
the purchase of approximately 22 million British pounds sterling.  PPL realized
an insignificant gain on the settlement of these transactions.

9. Acquisitions

Domestic Generation Projects

     In 1998, PPL Global signed definitive agreements with Montana Power,
Portland General Electric Company ("Portland") and Puget Sound Energy, Inc.
("Puget") to acquire interests in 13 Montana power plants, with 2,372 gross
megawatts of generating capacity, for a purchase price of $1.546 billion.  The
acquisition involved the Colstrip and Corette coal-fired plants, 11
hydroelectric facilities and a storage reservoir.  The Puget and Portland
agreements also provided for the acquisition of related transmission assets for
an additional $126 million, subject to certain conditions.  In December 1999,
PPL Global completed the purchase of about 1,315 gross megawatts of generating
assets from Montana Power for $757 million.  This acquisition transferred to PPL
Montana the 11 hydroelectric facilities, the storage reservoir, the Corette
plant and Montana Power's ownership interest in three of the four units of the
Colstrip plant, along with other generation-related assets.
<PAGE>

     PPL Global's acquisition of the Colstrip interests of Puget and Portland,
totaling 1,057 additional megawatts, was subject to several conditions,
primarily the receipt by Puget and Portland of satisfactory regulatory approvals
from the state utility commissions in Washington and Oregon.  However, these
commissions denied the respective applications to sell the Puget and Portland
Colstrip interests.

     The acquisition agreements permitted each party to terminate the respective
agreements if closing did not occur by April 30, 2000.  Both of these
acquisition agreements have now been terminated.

     The Montana Power Asset Purchase Agreement, which PPL Global assigned to
PPL Montana, provided that if neither the Puget nor the Portland acquisitions
were consummated, PPL Montana would be required to purchase a portion of Montana
Power's interest in the 500-kilovolt Colstrip Transmission System for $97
million, subject to receipt of required regulatory approvals, which have been
received.  PPL Montana currently is working with Montana Power to consummate
this transaction, which is expected to be completed by June 30, 2001.

     In May 2000, PPL Global signed a definitive agreement to acquire an
additional interest in the coal-fired Conemaugh Power Plant from Potomac
Electric Power Company.  Under the terms of the acquisition agreement, PPL
Global and Allegheny Energy Supply Company, LLC will jointly acquire a 9.72
percent interest in the 1,711 megawatt plant.  PPL, through one of its
subsidiaries, currently owns an 11.39 percent interest in the two-unit facility.
PPL Global and Allegheny Energy Supply will pay $152.5 million for the 166-
megawatt share of the plant.  This acquisition, which is subject to certain
governmental approvals, is expected to be completed by the end of 2000.  The
arrangement entitles each company to one-half of the output from its newly-
acquired share of the plant.

     In May 2000, PPL Global announced plans to install five compact, natural
gas-fired electric generation facilities in eastern Pennsylvania totaling about
900 megawatts of capacity.  The five facilities, with an estimated total cost
between $400 and $450 million, will be peaking generators to be used during
periods of high energy demand.  These facilities are expected to be completed by
the summer of 2002, pending necessary governmental approvals.

     PPL Global continues to pursue plans to build peaking capacity on Long
Island in New York.  The current emphasis is on a site as a facility for 300
megawatts of capacity at a total capital cost of approximately $200 million.

     In September 2000, a PPL Global subsidiary entered into an arrangement that
provides 30 turbine-generators for PPL's domestic expansion program.  The gas-
fired, 50-megawatt turbine-generators and related equipment, manufactured by
General Electric, will provide PPL with flexibility in growing its electricity
generation and marketing business in various regions of the United States.  The
PPL Global subsidiary will pay General Electric approximately $400 million under
the terms of the arrangement.  The turbines are being financed using a leasing
structure, with the PPL Global subsidiary as the lessee, that eliminates the
need for any cash outlays during the turbine manufacturing process and
diversifies PPL's funding sources.  The units are expected to go into service
beginning in 2002.  The arrangement also gives the PPL Global subsidiary the
option to purchase an additional 36 turbine-generators.
<PAGE>

International Distribution Projects

     At the end of June 2000, PPL Global finalized the acquisition of an 84.7
percent interest in CEMAR, an electricity distribution company in Brazil.  The
acquisition price was $289 million, financed initially with short-term debt.  In
accordance with its policy of recording the results of foreign operations on a
lag basis, no operating results of CEMAR were recorded as of September 30, 2000.

     In August 2000, WPDL submitted an offer for the remaining shares of Hyder
for 365 pence per share, or a total purchase price of 559 million British pounds
sterling ($838 million based on current exchange rates at that time). Hyder is
the owner of South West Electricity plc, an electric distribution company
serving approximately 980,000 customers in Wales. Hyder also owns certain Welsh
water and other service-oriented businesses.

     On September 15, 2000, WPDL's offer of 365 pence per share was declared
unconditional in all respects and remained open for acceptance by Hyder
shareowners through October 25, 2000.  Designation of the increased offer as
unconditional allowed WPDL to take operational control of Hyder.

     On September 29, 2000, WPDL closed on the purchase of approximately 110
million shares of Hyder for a total purchase price of about 395 million British
pounds sterling ($584 million based on a current exchange rates at that time).
When combined with WPDL's existing ownership interest in Hyder, this purchase
gave WPDL approximately 70% of Hyder's total outstanding shares.  Subsequently,
WPDL purchased additional shares of Hyder bringing its total shareholdings to
approximately 97%.  WPDL currently is pursuing the acquisition of the remaining
Hyder shares.

     PPL Global's ownership interest in WPDL is 60%, and Southern's is 40%.
Under an arrangement between the two companies, PPL Global's ownership interest
in WPDL may decrease to 51% and Southern's ownership interest may increase to
49% depending upon the execution of a call option by Southern.  PPL Global and
Southern share control of WPDL equally.  PPL Global's share of the acquisition
cost was made from existing resources and facilities, of which $75 million is
expected to be repaid by the end of the first quarter of 2001.  Based on a 60%
ownership interest, PPL Global's share of the total investment in WPDL, which is
not expected to exceed $155 million, would be refinanced with a combination of
debt and equity securities.  PPL does not plan to issue common stock to
finance this acquisition.

     WPDL is actively pursuing a range of options with respect to Hyder's
non-electric businesses. In this regard, WPDL is offering management of Hyder's
water business in a competitive bid process, pursuant to European Union
procurement rules. At the same time, WPDL has announced an agreement in
principle with Welsh firm Glas Cymru Cyfyngedig (Glas) for the disposition of
the water business. Under this proposed arrangement, which is subject to
approval by the U.K. water regulator, Glas would assume the water business' 1.8
billion British pounds of debt.

     In October 2000, PPL Global announced a partnership with the Claro group, a
key shareowner of CGE, a leading energy distribution company in Chile and
Argentina.  PPL Global has already acquired approximately 3 percent of CGE.
Under the terms of the partnership, the Claro group has the right to sell up to
an additional 5.6 percent to PPL Global over the next two years.  If the rights
are exercised fully, PPL Global's total investment would be about $140 million.
CGE provides electricity delivery services to 1.4 million customers in Chile and
natural gas delivery services to 200,000 customers in Santiago.
<PAGE>

Other

     In June 2000, B-G Mechanical Services Inc., a subsidiary of Western Mass.
Holdings, acquired Clark Heating Services, Inc.  The purchase price for this
acquisition was not significant.

     In August 2000, Titan Mechanical Contractors, a subsidiary of Western Mass.
Holdings, acquired Aire Tech Mechanical Services, Inc.  The purchase price for
this acquisition was not significant.

10.  Commitments and Contingent Liabilities

Nuclear Insurance

     PPL Susquehanna is a member of certain insurance programs which provide
coverage for property damage to members' nuclear generating stations.
Facilities at the Susquehanna station are insured against property damage losses
up to $2.75 billion under these programs.  PPL Susquehanna is also a member of
an insurance program which provides insurance coverage for the cost of
replacement power during prolonged outages of nuclear units caused by certain
specified conditions.  Under the property and replacement power insurance
programs, PPL Susquehanna could be assessed retroactive premiums in the event of
the insurers' adverse loss experience.  At September 30, 2000, the maximum
amount PPL Susquehanna could be assessed under these programs was about $21
million.

     PPL Susquehanna's public liability for claims resulting from a nuclear
incident at the Susquehanna station is limited to about $9.7 billion under
provisions of The Price Anderson Amendments Act of 1988.  PPL Susquehanna is
protected against this liability by a combination of commercial insurance and an
industry assessment program.  In the event of a nuclear incident at any of the
reactors covered by The Price Anderson Amendments Act of 1988, PPL Susquehanna
could be assessed up to $168 million per incident, payable at a rate of $20
million per year, plus an additional 5% surcharge, if applicable.

Environmental Matters

   Air
   ---

     The Clean Air Act deals, in part, with acid rain, attainment of federal
ambient ozone standards and toxic air emissions.  PPL subsidiaries are in
substantial compliance with the Clean Air Act.

     During 1999, PPL's Pennsylvania plants achieved seasonal (May-June) NOx
reductions of 68% from 1990 levels in response to the DEP's rule implementing
the Northeast Ozone Transport Region's (OTR) MOU.  These reductions were
achieved with operational initiatives that relied primarily on the low NOx
burners installed in compliance with the acid rain requirements.

     The DEP has finalized regulations requiring further seasonal (May-June) NOx
reductions to 80% from 1990 levels starting in 2003.  These further reductions
are based on the requirements of the OTR MOU and two EPA ambient ozone
initiatives:  the September 1998 EPA SIP-call (i.e., EPA's requirement for
states to revise their SIPs) issued under Section 110 of the Clean Air Act,
requiring reductions from 22 eastern states, including Pennsylvania; and the
EPA's approval of petitions filed by Northeastern states, requiring reductions
from sources in 12 Northeastern states and Washington D.C., including PPL
sources.  The EPA's SIP-call was substantially upheld by the D.C. Circuit Court
of Appeals in an appeals proceeding.  Although the Court extended the
implementation to May 2004, the DEP has not changed its rules
<PAGE>

accordingly. PPL expects to achieve the 2003 NOx reductions with the recent
installation of SCR technology on the Montour units and possibly SCR or SNCR on
a Brunner Island unit.

     The EPA has also developed new standards for ambient levels of fine
particulates.  These standards were challenged and remanded to the EPA by the
D.C. Circuit Court of Appeals in 1999.  The new particulates standard, if
finalized, may require further reductions in SO2 for certain PPL subsidiaries
and year-round NOx reductions commencing in 2010-2012 at SIP-call levels in
Pennsylvania, and at slightly less stringent levels in Montana.

     Under the Clean Air Act, the EPA has been studying the health effects of
hazardous air emissions from power plants and other sources, in order to
determine what emissions should be regulated.  The EPA has concluded that
mercury is the power plant air toxin of greatest concern, and the EPA must
determine by the end of this year whether it must be regulated.  In order to
make this determination, the EPA has obtained mercury and chlorine sampling and
other data from electric generating units, including those operated by PPL
subsidiaries.

     In 1999, the EPA initiated enforcement actions against several utilities,
asserting that older, coal-fired power plants operated by those utilities have,
over the years, been modified in ways that subject them to more stringent "New
Source" requirements under the Clean Air Act.  The EPA has since issued notices
of violation and has commenced enforcement activities against other utilities
and has threatened to continue expanding its enforcement actions.  At this time
PPL is unable to predict whether such EPA enforcement actions will be brought
with respect to any of its affiliates' plants.  However,  the EPA regional
offices that regulate Pennsylvania and Montana plants have each indicated an
intention to issue information requests to all utilities in their jurisdiction
including PPL.  Compliance with any such EPA enforcement actions could result in
additional capital and operating expenses in amounts which are not now
determinable, but which could be significant.

     The EPA is also proposing to revise its regulations in a way that will
require power plants to meet "New Source" performance standards and/or undergo
"New Source" review for many maintenance and repair activities that are
currently exempted.

   Water and Residual Waste
   ------------------------

     The final NPDES permit for the Montour plant contains stringent limits for
iron and chlorine discharges.  Depending on the results of a toxic reduction
study, additional water treatment facilities or operational changes may be
needed at this station.

     Later this year, EPA is expected to significantly lower the water quality
standard for arsenic, which will affect wastewater discharge limits and
groundwater standards at some existing ash basins at PPL stations.
<PAGE>

Abatement action at several of these basins could result in expenditures which
are not now determinable, but which could be significant.

     EPA's proposed requirements for new or modified intake structures will
affect where generating facilities are built, will establish intake design
standards, and could lead to requirements for cooling towers at new power
plants.  These proposed regulations are expected to be finalized by August of
2001.  Another new rule, also expected in 2001, will address existing
structures.  In the worst case, the rule could require new or modified cooling
towers at one or more PPL stations.  Each of these rules could impose
significant costs on PPL, which are not now determinable.

   Superfund and Other Remediation
   -------------------------------

     In 1995, PPL Electric Utilities entered into a consent order with the DEP
to address a number of sites where it may be liable for remediation.  This may
include potential PCB contamination at certain PPL Electric Utilities'
substations and pole sites; potential contamination at a number of coal gas
manufacturing facilities formerly owned and operated by PPL Electric Utilities;
and oil or other contamination which may exist at some of PPL Electric
Utilities' former generating facilities.  As of September 30, 2000, PPL Electric
Utilities has completed work on approximately two-thirds of the sites included
in the consent order.

     In 1996, PPL Gas Utilities entered into a similar consent order with the
DEP to address a number of sites where subsidiaries of PPL Gas Utilities may be
liable for remediation.  The sites primarily include former coal gas
manufacturing facilities.  Subsidiaries of PPL Gas Utilities are also
investigating the potential for any mercury contamination from gas meters and
regulators.  Any sites will likely be addressed under the consent order.

     At September 30, 2000, PPL Electric Utilities and PPL Gas Utilities had
accrued approximately $22 million, representing the estimated amounts they will
have to spend for site remediation, including those sites covered by each
company's consent orders mentioned above.

     In October 1999, the Montana Supreme Court held in favor of several
citizens' groups that the right to a clean and healthful environment is a
fundamental right guaranteed by the Montana Constitution.  The court's ruling
could result in significantly more stringent environmental laws and regulations,
as well as an increase in citizens' suits under Montana's environmental laws.
The effect on PPL Montana of any such changes in laws or regulations or any such
increase in citizen suits is not currently determinable, but could be
significant.

     Future cleanup or remediation work at sites currently under review, or at
sites not currently identified, may result in material additional operating
costs for PPL subsidiaries that cannot be estimated at this time.
<PAGE>

Under the Montana Power acquisition agreement, PPL Montana is indemnified by
Montana Power for any pre-acquisition environmental liabilities. However, this
indemnification is conditioned on certain circumstances that can result in PPL
Montana and Montana Power sharing in certain costs within limits set forth in
the agreement.

   General
   -------

     Due to the environmental issues discussed above or others, PPL subsidiaries
may be required to modify, replace or cease operating certain facilities to
comply with statutes, regulations and actions by regulatory bodies or courts.
In this regard, PPL subsidiaries also may incur capital expenditures, operating
expenses and other costs in amounts which are not now determinable, but which
could be significant.

Guarantees of Affiliated Companies

     PPL provides certain guarantees for its subsidiaries.  Specifically, PPL
guarantees all of the debt of PPL Capital Funding.  As of September 30, 2000,
PPL had guaranteed $1.6 billion of medium-term notes and $574 million of
commercial paper issued by PPL Capital Funding.  PPL had also guaranteed certain
obligations of PPL Global subsidiaries, totaling $591 million at September 30,
2000.  Additionally, PPL had guaranteed certain obligations of PPL EnergyPlus
for up to $652 million under power purchase and sales agreements.

     In addition, PPL issued a letter of credit in connection with WPDL's
purchase of Hyder shares of which $200 million was outstanding at September 30,
2000.

11.  New Accounting Standards

     In June 2000, the FASB issued SFAS 138, which amends certain implementation
issues of SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities."  PPL intends to adopt SFAS 133 as amended by SFAS 137 and SFAS 138
as of January 1, 2001.

     In an effort to assess the financial statement impact of the adoption of
SFAS 133 and SFAS 138, PPL evaluated its current commodity contracts and
financial instruments.  Contract evaluations were performed by a PPL project
team of representatives from PPL's major business lines.  Additionally, an
outside consultant was retained to provide guidance to the team.  Contracts that
were identified as derivatives under SFAS 133 and SFAS 138 were also evaluated
to determine if hedge accounting treatment could be applied.

     Based upon this evaluation, it appears that as of September 30, 2000,
contracts which meet the definition of a derivative will have an insignificant
impact on PPL's net income, but would decrease other comprehensive income by
approximately $30 million.

12.  Corporate Realignment

     On July 1, 2000, PPL and PPL Electric Utilities completed a corporate
realignment in order to effectively separate PPL Electric Utilities' regulated
transmission and distribution businesses from its recently deregulated
generation businesses and to better position the companies and their affiliates
in the new competitive marketplace.  The realignment included PPL Electric
Utilities' transfer of certain generation and related assets, and associated
liabilities, to affiliates at book value. The net book value of this transfer,
recorded as a distribution on common shares from PPL
<PAGE>

Electric Utilities to its parent, PPL, was $271 million. PPL Energy Funding, a
holding company for virtually all of PPL's unregulated businesses, assumed $670
million of debt that PPL Electric Utilities had issued to other subsidiaries of
PPL.

     As a result of the corporate realignment, PPL Electric Utilities' principal
business is the transmission and distribution of electricity to serve retail
customers in its franchised territory in eastern and central Pennsylvania; PPL
Generation's principal business is owning and operating U.S. generating
facilities through various subsidiaries; PPL EnergyPlus' principal business is
wholesale and retail energy marketing; and PPL Global's principal business is
the acquisition and development of both U.S. and international energy projects
and ownership of international energy projects.  PPL Energy Funding serves as
the holding company for substantially all of PPL's unregulated businesses,
including PPL Generation, PPL EnergyPlus and PPL Global.  Other subsidiaries of
PPL and PPL Electric Utilities are generally aligned in the new corporate
structure according to their principal business functions.

     The corporate realignment followed receipt of various regulatory approvals,
including approvals from the PUC, the FERC, and the NRC.
<PAGE>

                                PPL CORPORATION
                                ---------------

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

     This discussion should be read in conjunction with the section entitled
"Review of the Financial Condition and Results of Operations" in PPL's Annual
Report to the SEC on Form 10-K for the year ended December 31, 1999.  Terms and
abbreviations appearing in Management's Discussion and Analysis of Financial
Condition and Results of Operations are explained in the glossary.

                             Results of Operations
                             ---------------------

     The following discussion explains significant changes in principal items on
the Consolidated Statement of Income, comparing the three months and nine months
ended September 30, 2000, to the comparable periods in 1999.  Certain items on
the Consolidated Statement of Income have been impacted by PPL Global's
consolidation of its investments in Emel and EC, and the acquisition of Montana
generating assets.

     In the third quarter of 1999, PPL Global increased its investment in Emel,
thereby achieving control of Emel and EC, an entity jointly owned by PPL Global
and Emel.  As a result, PPL Global consolidated the results of operations of
Emel and EC in the third quarter of 1999, consolidating their accounts from
January 1, 1999 through August 31, 1999.  Therefore, the third quarter of 1999
contained eight months of consolidated Emel and EC activity, whereas the third
quarter of 2000 included three months of activity.  When discussing PPL's
results of operations for the three months ended September 30, the results of
Emel/EC are eliminated for purposes of comparability.

     Certain items on the Consolidated Statement of Income have also been
impacted by the acquisition of Montana generating assets in December 1999.  As
such, the results of PPL Montana are included in the three and nine months ended
September 30, 2000, but no such activity is reflected for these periods in 1999.
When discussing PPL's results of operations for the three and nine months ended
September 30, the results of PPL Montana are eliminated for purposes of
comparability.

     The Consolidated Statement of Income reflects the results of past
operations and is not intended as any indication of future operating results.
Future operating results will necessarily be affected by various and diverse
factors and developments.  Furthermore, because results for interim periods can
be disproportionately influenced by various factors and developments and by
seasonal variations, the results of operations for interim periods are not
necessarily indicative of results or trends for the year.

Earnings

     Earnings per share were $.94 during the three months ended September 30,
2000, compared with $.68 per share during the same period in 1999.  Both periods
benefited by nonrecurring items of 13 cents per share.  In the third quarter of
2000, operating expenses were reduced due to environmental insurance recoveries.
Earnings during the third quarter of 1999 benefited from transactions recorded
to securitize PPL Electric Utilities' stranded costs.  Excluding these
nonrecurring items, earnings per share were $.81 during the third quarter of
2000, or 47% higher than the adjusted earnings of $.55 per share during the
third quarter of 1999.

<PAGE>

     This earnings improvement was primarily due to higher margins from
wholesale energy activities, an end of the one-year 4% rate reduction for
delivery customers, reductions in real estate taxes, lower depreciation of
fossil plants, and earnings of PPL Montana.  The third quarter earnings
improvement also reflects the benefit of fewer common shares outstanding
resulting from stock repurchase programs.  These earnings gains were partially
offset by higher levels of interest expense.

     During the nine months ended September 30, 2000, earnings per share were
$2.57, compared with $1.85 per share during the same period in 1999.  After
eliminating the aforementioned 13 cents per share nonrecurring items as noted
above, and a similar environmental insurance recovery that provided 3 cents per
share to earnings in the second quarter of 2000, adjusted earnings were $2.41
per share for the first nine months of 2000, compared with $1.72 per share for
the same period in 1999.  This earnings improvement of 69 cents per share
reflects similar reasons noted above, as well as a gain on the sale of emission
allowances that reduced operating expenses in the second quarter of 2000.

Electric Energy Sales

     Retail Delivery
     ---------------

     PPL retail electricity delivery of consolidated subsidiaries for 2000 and
1999 were as follows (millions of kWh):

<TABLE>
<CAPTION>
                                              September 30, 2000 vs. September 30, 1999
                                              -----------------------------------------
                                               Three Months Ended     Nine Months Ended
                                               ------------------     -----------------
                                                  2000      1999         2000     1999
                                                  ----      ----         ----     ----
<S>                                           <C>           <C>       <C>       <C>
Domestic - PPL Electric Utilities                 8,321     8,221       25,624   25,086
International - PPL Global                          777       709        2,352    2,181
                                                  -----     -----       ------  -------
    Total                                         9,098     8,930       27,976   27,267
                                                  =====     =====       ======  =======
</TABLE>

     PPL Electric Utilities' retail electricity delivered in the three months
ended September 30, 2000, increased by 100 million kWh, or 1.2%, from the
comparable period in 1999 due to higher industrial usage.  The increase of 538
million kWh, or 2.1%, in the nine months ended September 30, 2000, from the same
period in 1999, was due to higher usage by commercial and industrial customers.

     PPL Global's Emel/EC subsidiaries delivered 777 million kWh and 2,352
million kWh of retail electricity in the three and nine months ended September
30, 2000, respectively, to customers in Chile and El Salvador.  These figures
are reported on a one month lag basis.

     Retail Supply
     -------------

     PPL retail electricity supply of consolidated subsidiaries for 2000 and
1999 were as follows (millions of kWh):

<TABLE>
<CAPTION>
                                          September 30, 2000 vs. September 30, 1999
                                          -----------------------------------------
                                           Three Months Ended    Nine Months Ended
                                           ------------------    -----------------
                                            2000        1999      2000       1999
                                            ----        ----      ----       ----
<S>                                       <C>          <C>       <C>       <C>
Domestic - PPL EnergyPlus                   2,740      3,029      9,103      7,096
         - PPL Electric Utilities           6,600      5,451     19,283     18,136
International - PPL Global                    777        709      2,352      2,181
                                           ------      -----     ------    -------
    Total                                  10,117      9,189     30,738     27,413
                                           ======      =====     ======    =======
</TABLE>
<PAGE>

     Beginning on January 1, 1999, Pennsylvania electric customers were allowed
to choose their electricity supplier under the Customer Choice Act.  Customers
choosing an alternate supplier continue to have their electricity delivered by
the utility that serves their territory.  PPL Electric Utilities is a PLR for
customers in its service territory who have not chosen a supplier under the
Customer Choice Act.  Beginning July 1, 2000, PPL Electric Utilities purchases
its energy from PPL EnergyPlus to meet this supply.

     Domestic electricity supplied to retail customers increased by 860 million
kWh, or 10.1%, when comparing the three months ended September  30, 2000, to the
same period in 1999.  PPL Electric Utilities' supply as a PLR increased due to
industrial delivered sales growth coupled with fewer sales losses to alternate
suppliers.  PPL EnergyPlus experienced a decrease in third quarter sales from
1999 to 2000.  PPL EnergyPlus sells energy in both wholesale and retail markets.
In many of the areas in which PPL EnergyPlus participates, better opportunities
exist at this time in wholesale markets.  During such times, retail volumes may
be expected to decline.

     Domestic electricity supplied to retail customers increased by 3,154
million kWh, or 12.5%, when comparing the nine months ended September 30, 2000,
to the same period in 1999.  The increase was attributed to higher PPL
EnergyPlus sales to commercial and industrial classes, and an increase in PPL
Electric Utilities' PLR load due to an increase in sales delivered to commercial
and industrial customers, and a decrease in sales lost to alternate suppliers.

     PPL Global's Emel/EC subsidiaries supplied 777 million kWh and 2,352
million kWh of retail electricity in the three and nine months ended September
30, 2000, respectively.  These figures are reported on a one month lag basis.
These subsidiaries purchase their requirements under longer term contracts and
on the open market for delivery to their customers.

     Wholesale Sales
     ---------------

     PPL wholesale electricity supply for 1999 and 2000 is shown in the
following table (millions of kWh). Effective July 1, 2000, the unregulated
wholesale electric supply business of PPL Electric Utilities was transferred to
PPL EnergyPlus. Accordingly, the following data for periods prior to July 1,
2000 has been restated to reflect the corporate realignment:


<TABLE>
<CAPTION>
                                     September 30, 2000 vs. September 30, 1999
                                     -----------------------------------------
                                       Three Months Ended  Nine Months Ended
                                       ------------------  -----------------
                                          2000      1999      2000     1999
                                          ----      ----      ----     ----
<S>                                  <C>           <C>       <C>      <C>
Domestic - PPL EnergyPlus                 6,793    7,570     23,088   23,426
         - PPL Montana                    1,968               6,142
         - PPL Electric Utilities           205      231        633      635
         - PPL Maine                        533      153      1,154      239
                                          -----    -----     ------  -------
   Total                                  9,499    7,954     31,017   24,300
                                          =====    =====     ======  =======
</TABLE>

     Wholesale electricity sales increased by 1,545 million kWh, or 19.4%, when
comparing the three months ended September 30, 2000 to the same period in 1999.
The increase was primarily the result of the acquisition of Montana generating
assets in December 1999 and increased trading activities by PPL Maine, offset
somewhat by the expiration of bulk power contracts and decreased wholesale
activity due to increased retail load obligations.

     Wholesale electricity sales increased by 6,717 million kWh, or 27.6%, in
the nine months ended September 30, 2000, when compared to the same period in
1999.  The increase was due to the acquisitions of generating assets in
<PAGE>

Montana in December 1999 and in Maine in May 1999, partially offset by the
expiration of bulk power contracts.

Operating Revenues

     Electric
     --------

     The increase (decrease) in revenues from electric operations was
attributable to the following (millions of dollars):

                                     September 30, 2000 vs. September 30, 1999
                                     -----------------------------------------
                                      Three Months Ended    Nine Months Ended
                                      ------------------    -----------------

Retail Electric Revenue
  PPL Electric Utilities
    Electric delivery                        $  (5)              $  9
    PLR electric generation supply              14                (14)
  PPL EnergyPlus
    Electric generation supply                   4                 86
  PPL Global - Emel/EC
    Electric delivery                         (100)                40
Other                                            5                 18
                                             -----               ----
                                             $ (82)              $139
                                             =====               ====

     After excluding the impact of Emel/EC for purposes of comparability,
operating revenues from retail electric operations increased by $18 million
during the three months ended September 30, 2000, when compared with the same
period in 1999.  This increase was primarily due to PPL Electric Utilities'
energy revenues as a PLR.

     For the nine months ended September 30, 2000, operating revenues from
retail electric operations increased by $139 million.  This increase was
primarily due to higher PPL EnergyPlus sales volumes and higher revenues from
Emel/EC.

     Natural Gas and Propane
     -----------------------

     The increase in revenues from natural gas and propane was attributable to
the following (millions of dollars):

                          September 30, 2000 vs. September 30, 1999
                          -----------------------------------------
                           Three Months Ended    Nine Months Ended
                           ------------------    -----------------

PPL Gas Utilities                 $ 3                  $ 8
PPL EnergyPlus                      8                   27
                                  ---                  ---
                                  $11                  $35
                                  ===                  ===

     Both PPL Gas Utilities and PPL EnergyPlus had higher retail gas sales for
the three and nine months ended September 30, 2000, when compared to the same
periods in 1999.  The increase in PPL Gas Utilities' revenues reflects off-
system revenues in 2000.  The PPL EnergyPlus' increase was related to
intensified gas marketing efforts and increased retail pricing attributed to
higher wholesale gas commodity costs.
<PAGE>

     Wholesale Energy Marketing and Trading
     --------------------------------------

     The increase (decrease) in revenues from wholesale energy marketing and
trading activities was attributable to the following (millions of dollars):

<TABLE>
<CAPTION>
                                        September 30, 2000 vs. September 30, 1999
                                        -----------------------------------------
                                         Three Months Ended    Nine Months Ended
                                         ------------------    -----------------
<S>                                     <C>                    <C>
PPL Electric Utilities/PPL EnergyPlus
  Bilateral Sales                                $ 69                 $206
  PJM                                              (8)                   6
  Cost-based contracts                            (12)                 (30)
  Gas & oil sales                                 (32)                 (11)
PPL Montana                                        81                  205
PPL Maine                                          25                   59
Other                                              (2)                  (3)
                                                 ----                 ----
                                                 $121                 $432
                                                 ====                 ====
</TABLE>

     After excluding the impact of PPL Montana for the purposes of
comparability, wholesale energy marketing and trading revenues increased by $40
million and $227 million for the three and nine months ended September 30, 2000,
when compared to the same periods in 1999.

     The change in PPL Electric Utilities' bilateral sales revenues in both
periods reflects higher market pricing and sales volumes to other
counterparties.

     Wholesale revenues of PPL Maine have been recorded since acquisition in May
1999.

Energy Related Businesses

     The contribution to operating income of energy related businesses decreased
by $21 million for the three months ended September 30, 2000, compared with the
same period in 1999.  This was primarily due to an increase in project
development costs by PPL Global, administrative expenses of PPL Global's Chilean
affiliates, and adjustments to tax credits pending receipt of favorable private
letter ruling by the IRS.  The contribution to operating income of energy
related business also decreased by $21 million for the nine months ended
September 30, 2000, compared with the same period in 1999.  This decrease was
attributable to the foregoing factors.

Energy Purchases

     The increase (decrease) in energy purchases was attributable to the
following (millions of dollars):

                           September 30, 2000 vs. September 30, 1999
                           -----------------------------------------
                            Three Months Ended    Nine Months Ended
                            ------------------    -----------------

PPL EnergyPlus                     $(16)                $141
PPL Maine                             4                   49
PPL Global - Emel/EC                (47)                  30
PPL Montana                          45                   87
Other                                 1                   14
                                   ----                 ----
                                   $(13)                $321
                                   ====                 ====

     After excluding the impact of Emel/EC and PPL Montana for purposes of
comparability, energy purchases decreased by $11 million during the three
<PAGE>

months ended September 30, 2000, compared with the same period in 1999. This
decrease was attributed to lower priced power purchases needed to supply
wholesale and retail activities.

     After excluding the impact of PPL Montana for the purposes of
comparability, energy purchases increased by $234 million during the nine months
ended September 30, 2000, compared with the same period in 1999.  This increase
was attributed to higher wholesale purchases needed to supply retail load
obligation.

Other Operation Expenses

     Other operation expenses decreased by $21 million for the three months
ended September 30, 2000, when compared to the same period in 1999.  This
decrease was primarily due to an environmental insurance recovery.

     For the nine months ended September 30, 2000, other operation expenses
decreased by $11 million when compared to the same period in 1999.  After
excluding the impacts of PPL Montana for purposes of comparability, these
expenses decreased by $50 million when compared with the same period in 1999.
This decrease was due primarily to a gain on the sale of emission allowances and
insurance settlements for coverage for past and potential future environmental
liabilities.

Maintenance Expenses

     Maintenance expenses increased by $25 million for the nine months ended
September 30, 2000, when compared with the same period in 1999.  After excluding
the impacts of PPL Montana for purposes of comparability, maintenance expenses
increased by $14 million during the nine months ended September 30, 2000.  This
increase was primarily due to higher maintenance costs at the Susquehanna
generating station.

Depreciation and Amortization

     Depreciation and amortization expenses decreased by $15 million for the
three months ended September 30, 2000, compared with the same period in 1999.
After excluding the impacts of Emel/EC and PPL Montana for purposes of
comparability, depreciation and amortization expenses decreased by $8 million
during the third quarter of 2000.  This decrease was primarily due to a change
in the estimated remaining useful lives of certain PPL generating plants.  PPL
subsidiaries periodically review the depreciable lives of their fixed assets.
In conjunction with corporate realignment activities, undertaken in early 2000,
studies were conducted of depreciable lives of certain generation assets.  These
studies indicated that the estimated economic lives for certain generation
assets were longer than currently used to calculate depreciation for financial
statement purposes.  Therefore, effective July 1, 2000, PPL subsidiaries revised
the estimated economic lives for fossil generation and pipeline assets. This
change in estimated useful lives increased third quarter net income by about $5
million, or 3 cents per share. The change in estimated economic lives is
expected to reduce depreciation expense by approximately $33 million per year
for the next several years from previous levels.

     Depreciation and amortization increased by $3 million for the nine months
ended September 30, 2000, when compared with the same period in 1999.  After
excluding the impacts of PPL Montana for purposes of comparability, these
expenses decreased by $9 million during the nine months ended September 30,
2000, when compared with the same period in 1999.  This decrease was primarily
due to the change in estimated remaining useful lives of certain generating
plants, as discussed above.
<PAGE>

Income Taxes

     Income taxes increased by $97 million and $123 million for the three and
nine months ended September 30, 2000, respectively, when compared to the same
periods in 1999.  These changes were primarily due to an increase in PPL's pre-
tax book income and a release of deferred income taxes no longer required due to
securitization in the third quarter of 1999.

Financing Costs

     Interest expense increased by $14 million and $71 million, respectively,
for the three and nine months ended September 30, 2000, compared with the same
periods in 1999.  This was primarily due to the issuance of transition bonds in
August 1999, the issuances of medium-term notes between November 1999 and
September 2000, the financing of the Montana assets (acquired in December 1999)
and the consolidation of Emel/EC beginning in the third quarter of 1999.
Offsetting these increases were reductions in interest due to the retirement of
first mortgage bonds and lower levels of commercial paper balances.

                              Financial Condition
                              -------------------

Energy Marketing and Trading Activities

     PPL subsidiaries purchase and sell electric capacity and energy at the
wholesale level under their FERC market-based tariffs.  PPL subsidiaries also
have entered into agreements to sell firm capacity or energy under their market-
based tariffs to certain entities located inside and outside of the PJM power
pool.  PPL subsidiaries enter into these agreements to market available energy
and capacity from their generating assets and to profit from market price
fluctuations.  PPL subsidiaries are actively managing their portfolios to
attempt to capture opportunities and limit their exposure to volatile prices.
PPL subsidiaries also purchase and sell energy futures contracts as well as
other commodity-based financial instruments in accordance with risk management
objectives and strategies.

Market Risk Sensitive Instruments

     Commodity Price Risk
     --------------------

     PPL uses various methodologies to simulate forward price curves in the
energy markets to estimate the size and probability of changes in market value
resulting from commodity price movements.  The methodologies require several key
assumptions, including selection of confidence levels, the holding period of the
commodity positions, and the depth and applicability to future periods of
historical commodity price information.  In connection with the corporate
realignment, effective July 1, 2000, the commodity positions of PPL Electric
Utilities were transferred to PPL EnergyPlus.

     As of September 30, 2000, PPL EnergyPlus estimated that a 10% adverse
movement in market prices across all geographic areas and time periods could
have decreased the value of its trading portfolio by approximately $1 million.
For PPL EnergyPlus' non-trading portfolio, a 10% adverse movement in market
prices across all geographic areas and time periods could have decreased the
value of this portfolio by approximately $31 million at September 30, 2000.
However, this would have been offset by an inverse change in the value of the
underlying commodity, the electricity generated.  As of September 30, 2000, PPL
Montana estimated that a 10% adverse movement in market prices would have a
negligible impact on its trading portfolio,
<PAGE>

whereas a 10% adverse movement in market prices could have decreased the value
of its non-trading portfolio by approximately $76 million. This decrease also
would have been offset by an inverse change in the underlying commodity, the
electricity generated. In addition to commodity price risk, PPL's commodity
positions are also subject to operational and event risks such as increases in
load demand and forced outages at generating plants.

     Interest Rate Risk
     ------------------

     PPL and its subsidiaries have issued debt to finance operations and to
provide funds for unregulated energy investments, which creates interest rate
risk.  PPL manages its interest rate risk by using financial derivative products
to adjust the mix of fixed and floating-rate interest rates in its debt
portfolios, adjusting the duration of its debt portfolios and locking in U.S.
treasury rates (and interest rate spreads over treasuries) in anticipation of
future financing, when appropriate.  Risk limits are designed to balance risk
exposure to volatility in interest expense and increases in market valuation of
PPL's debt obligation due to changes in the absolute level of interest rates.
See Note 8 to Financial Statements for a discussion of financial derivative
instruments outstanding at September 30, 2000.

     At September 30, 2000, PPL's potential annual exposure to increased
interest expense due to a 10% increase in interest rates was estimated at $8
million.

     PPL is also exposed to changes in the fair value of its debt portfolio.  At
September 30, 2000, PPL estimated that its potential exposure to a change in the
fair value of its debt portfolio through a 10% adverse movement in interest
rates was about $56 million.

     PPL utilizes various risk management instruments to reduce its exposure to
adverse interest rate movements for future anticipated financings.  While PPL is
exposed to changes in the fair value of these instruments, they are designed
such that any economic loss in value should be offset by interest rate savings
at the time the future anticipated financing is completed.  At September 30,
2000, PPL estimated that its potential exposure to a change in the fair value of
these instruments, through a 10% adverse movement in interest rates, was about
$6 million.

     Market events that are inconsistent with historical trends could cause
actual results to differ from estimated levels.

     Nuclear Decommissioning Fund - Securities Price Risk
     ----------------------------------------------------

     In connection with the corporate realignment, effective July 1, 2000, the
nuclear decommissioning fund for the Susquehanna nuclear plant was transferred
from PPL Electric Utilities to PPL Susquehanna.

     PPL Susquehanna maintains trust funds, as required by the NRC, to fund
certain costs of decommissioning Susquehanna.  At September 30, 2000, these
funds were invested primarily in domestic equity securities and fixed-rate,
fixed-income securities and are reflected at fair value on the Consolidated
Balance Sheet.  The mix of securities is designed to provide returns to be used
to fund Susquehanna's decommissioning and to compensate for inflationary
increases in decommissioning costs.  However, the equity securities included in
the trusts are exposed to price fluctuation in equity markets, and the value of
fixed-rate, fixed-income securities are exposed to changes in interest rates.
PPL Susquehanna actively monitors the investment performance
<PAGE>

and periodically reviews asset allocation in accordance with its nuclear
decommissioning trust policy statement. At September 30, 2000, a 10% increase in
interest rates and a 10% decrease in equity prices would have resulted in an
estimated $19 million reduction in the fair value of the trust assets.

Acquisitions

     Refer to Note 9 to the Financial Statements for information regarding
acquisitions.

     At September 30, 2000, PPL Global had investments in foreign facilities
including consolidated investments in Emel/EC and CEMAR.  See Note 5 for
information on PPL Global's unconsolidated investments.  PPL Global continues to
pursue opportunities to develop and acquire electric generation, transmission
and distribution facilities in the U.S. and abroad.  In addition to the specific
acquisition activity discussed in Note 9, PPL Global has continued developing
energy projects in Connecticut, Pennsylvania, Arizona and New York.

Financing Activities

     Refer to Note 7 to the Financial Statements for information regarding
financing activities.

Financing and Liquidity

     Cash and cash equivalents increased on a net basis by $2 million more
during the nine months ended September 30, 2000, compared with the same period
in 1999.  The reasons for this change were:

     .    A $1 million decrease in cash provided by operating activities.

     .    A $68 million increase in cash used in investing activities, primarily
          due to PPL Global's investments in CEMAR, Hyder and South West Power
          Partners, the entity that is developing PPL Global's Griffith project
          in Arizona. These investing outflows were partially offset by proceeds
          from the PPL Montana sale - leaseback.

     .    A $71 million increase in cash provided by financing activities. This
          increase was due to higher net issuances of debt and equity securities
          during the nine months ended September 30, 2000, compared with the
          same period in 1999.

Financial Indicators

     Earnings for the twelve months ended September 30, 2000 and 1999 were
impacted by nonrecurring items which are listed in the "Earnings" discussion in
the Results of Operations of this Form 10-Q and the Form 10-K for the year ended
December 31, 1999.  The following financial indicators reflect the elimination
of these impacts from earnings, and provide an additional measure of the
underlying earnings performance of PPL and its subsidiaries:
<PAGE>

                                             12 Months Ended September 30,
                                             -----------------------------
                                                 2000             1999
                                                 ----             ----

Earnings per share, as adjusted                 $ 3.04           $2.13
Return on average common equity                  26.50%          13.90%
Ratio of pre-tax income to interest charges       2.90            3.06
Dividends declared per share                    $1.045           $1.00

Environmental Matters

     See Note 10 to Financial Statements for a discussion of environmental
matters.

     Expenditures to meet the 2000 acid rain and 2003 NOx reduction requirements
are included in the table of projected construction expenditures in the section
entitled "Financial Condition - Capital Expenditure Requirements" in the Review
of the Financial Condition and Results of Operations in PPL's 1999 Form 10-K.
It is currently expected that additional capital expenditures and operating
costs for environmental compliance under the Clean Air Act will be incurred
beyond 2002 in amounts which are not now determinable, but which could be
significant.

     Capital expenditures through the year 2003 to correct groundwater
degradation at fossil-fueled generating stations and to address waste water
control at facilities, pursuant to DEP regulations are included in the table of
construction expenditures in the section entitled "Financial Condition - Capital
Expenditure Requirements" in the Review of the Financial Condition and Results
of Operations in PPL's 1999 10-K.  Additional capital expenditures could be
required beyond the year 2003 in amounts which are not now determinable, but
which could be significant.  Actions taken to correct groundwater degradation
and to address waste water control are also expected to result in increased
operating costs in amounts which are not now determinable, but which could be
significant.

Increasing Competition

     The electric utility industry has experienced, and will continue to
experience, a significant increase in the level of competition in the energy
supply market at both the state and federal level.  Refer to PPL's 1999 Form 10-
K for a discussion of state and federal activities in this regard.

     PPL EnergyPlus is serving industrial and commercial customers in
Pennsylvania, New Jersey, Delaware, Maine and Montana.  PPL EnergyPlus is
licensed to sell energy in Maryland and Massachusetts and has filed an
application for such a license in New York.

Corporate Realignment

     On July 1, 2000, PPL and PPL Electric Utilities completed a corporate
realignment in order to effectively separate PPL Electric Utilities' regulated
transmission and distribution businesses from its recently deregulated
generation businesses and to better position the companies and their affiliates
in the new competitive market place.  The corporate realignment included the
following key features:

     .    PPL Electric Utilities transferred its generating and certain other
          related assets, along with associated liabilities, to new unregulated
          generating subsidiaries of PPL Generation. In connection with the
          transfer, PPL Energy Funding, the parent company of PPL Generation,
          assumed $670 million aggregate principal amount of PPL Electric
          Utilities' debt issued to affiliated companies.

     .    PPL Electric Utilities also transferred assets constituting its
          wholesale energy marketing business, along with associated
          liabilities, to its wholly-owned subsidiary, PPL EnergyPlus, and
          transferred its interest in PPL EnergyPlus to PPL Energy Funding.

     .    PPL Electric Utilities distributed, as a distribution on common stock
          in a "tax-free spin-off," all of the outstanding shares of stock of
          PPL Energy Funding to PPL, which resulted in PPL Energy Funding
          becoming a wholly-owned subsidiary of PPL.

     .    PPL's independent power subsidiary, PPL Global, also transferred its
          U.S. electric generating subsidiaries to PPL Generation.

     .    PPL Electric Utilities entered into power sales agreements with PPL
          EnergyPlus for the purchase of electricity to meet PPL Electric
<PAGE>

          Utilities' obligations as a PLR for customers who have not selected an
          alternative supplier under the Customer Choice Act.

     As a result of the corporate realignment, PPL Electric Utilities' principal
businesses are the transmission and distribution of electricity to serve retail
customers in its franchised territory in eastern and central Pennsylvania and
the supply of electricity to retail customers as a PLR; PPL Generation's
principal business is owning and operating U.S. generating facilities through
various subsidiaries; PPL EnergyPlus' principal business is wholesale and retail
energy marketing; and PPL Global's principal business is the acquisition and
development of both U.S. and international energy projects and ownership of
international energy projects.  PPL Energy Funding serves as the parent company
for substantially all of PPL's unregulated businesses, including PPL Generation,
PPL EnergyPlus and PPL Global.  Other subsidiaries of PPL and PPL Electric
Utilities are generally aligned in the new corporate structure according to
their principal business functions.

     The corporate realignment followed receipt of various regulatory approvals,
including approvals from the PUC, the FERC and the NRC.

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

     Reference is made to "Market Risk Sensitive Instruments," in Review of
Financial Condition and Results of Operations.
<PAGE>

              PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES
<PAGE>

PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES
---------------------------------------------------
Item 1. Financial Statements
----------------------------

     In the opinion of PPL Electric Utilities, the unaudited financial
statements included herein reflect all adjustments necessary to present fairly
the Consolidated Balance Sheet as of September 30, 2000 and December 31, 1999,
and the Consolidated Statement of Income and Consolidated Statement of Cash
Flows for the periods ended September 30, 2000 and 1999. All nonutility
operating transactions are included in "Other Income" in PPL Electric Utilities'
Consolidated Statement of Income. These financial statements have been impacted
by the corporate realignment on July 1, 2000. See Note 8 to Financial Statements
for additional information.

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                            Three Months                Nine Months
                                                                         Ended September 30,        Ended September 30,
                                                                       ---------------------       ---------------------
                                                                           2000       1999            2000        1999
                                                                       ---------   ---------       ---------   ---------
<S>                                                                    <C>         <C>             <C>         <C>
Operating Revenues
   Electric..........................................................     $ 527     $   635         $ 1,847     $ 1,886
   Wholesale energy marketing and trading............................        39         489             842       1,122
   Energy related businesses.........................................         4           4              14          11
                                                                       ---------   ---------       ---------   ---------
   Total.............................................................       570       1,128           2,703       3,019
                                                                       ---------   ---------       ---------   ---------

Operating Expenses
   Operation
     Electric fuel...................................................                   131             200         351
     Energy purchases for retail load and wholesale..................       299         457           1,078       1,070
     Other...........................................................        56         155             282         431
     Amortization of recoverable transition costs....................        50          48             159         135
   Maintenance.......................................................        16          45             122         140
   Depreciation and amortization.....................................        26          59             142         176
   Taxes, other than income..........................................        20          39             119         130
   Energy related businesses.........................................         3           3              16          10
                                                                       ---------   ---------       ---------   ---------
   Total.............................................................       470         937           2,118       2,443
                                                                       ---------   ---------       ---------   ---------

Operating Income.....................................................       100         191             585         576
                                                                       ---------   ---------       ---------   ---------

Other Income - Net...................................................         4           7              27          29
                                                                       ---------   ---------       ---------   ---------

Income Before Interest and Income Taxes..............................       104         198             612         605

Interest Expense.....................................................        59          59             184         155
                                                                       ---------   ---------       ---------   ---------

Income Before Income Taxes and Extraordinary Items...................        45         139             428         450

Income Taxes.........................................................        14         (27)            158          91
                                                                       ---------   ---------       ---------   ---------

Income Before Extraordinary Items....................................        31         166             270         359
                                                                       ---------   ---------       ---------   ---------

Extraordinary Items (net of income taxes)............................                   (59)                        (59)
                                                                       ---------   ---------       ---------   ---------

Net Income Before Dividends on Preferred Stock.......................        31         107             270         300

Dividends on Preferred Stock.........................................         6           6              19          30
                                                                       ---------   ---------       ---------   ---------

Earnings Available to PPL Corporation................................     $  25     $   101         $   251     $   270
                                                                       =========   =========       =========   =========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of the financial statements.
<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                                             Nine Months
                                                                                          Ended September 30,
                                                                                   ----------------------------
                                                                                       2000             1999
                                                                                   ----------        ----------
<S>                                                                                <C>               <C>
Net Cash Provided by Operating Activities.......................................      $  492           $   459

Cash Flows From Investing Activities
   Expenditures for property, plant and equipment...............................        (199)             (201)
   Loan repayment by parent and affiliates......................................         156               136
   Sale of nuclear fuel to trust................................................          27                14
   Other investing activities - net.............................................          (4)              (10)
                                                                                   ----------        ----------
     Net cash used in investing activities......................................         (20)              (61)
                                                                                   ----------        ----------

Cash Flows From Financing Activities
   Issuance of long-term debt...................................................                         2,420
   Retirement of long-term debt.................................................        (327)           (1,467)
   Purchase of treasury stock...................................................                          (632)
   Retirement of preferred stock................................................                          (369)
   Termination of nuclear fuel lease............................................        (154)
   Payments on capital lease obligation.........................................         (11)              (42)
   Payment of common and preferred dividends....................................         (94)             (188)
   Cash of subsidiaries divested in corporate realignment.......................         (73)
   Net increase in short-term debt..............................................         184               130
   Other financing activities-net...............................................                           (89)
                                                                                   ----------        ----------
     Net cash used in financing activities......................................        (475)             (237)
                                                                                   ----------        ----------

Net Increase in Cash and Cash Equivalents.......................................          (3)              161
Cash and Cash Equivalents at Beginning of Period................................          52                31
                                                                                   ----------        ----------
Cash and Cash Equivalents at End of Period......................................      $   49          $    192
                                                                                   ==========        ==========

Supplemental Disclosures of Cash Flow Information
   Cash paid during the period for:
     Interest (net of amount capitalized).......................................      $  173          $    130
     Income taxes...............................................................      $  216          $    143
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of the financial statements.
<PAGE>

CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and Subsisiaries
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                              September 30,              December 31,
                                                                                 2000                       1999
                                                                              ------------               -----------
<S>                                                                           <C>                         <C>
Assets

Current Assets
   Cash and cash equivalents...........................................       $     49                  $       52
   Accounts receivable (less reserve: 2000, $22; 1999, $18)............            270                         274
   Unbilled revenues...................................................            138                         275
   Fuel, materials and supplies - at average cost......................             31                         175
   Prepayments.........................................................             50                          87
   Unrealized energy trading gains.....................................                                         26
   Other...............................................................             61                          78
                                                                              --------                  ----------
                                                                                   599                         967
                                                                              --------                  ----------

Investments
   Loan to parent and its affiliates...................................             46                         489
   Nuclear plant decommissioning trust fund............................                                        255
   Investment in unconsolidated affiliate at equity....................                                         17
   Other...............................................................             15                          15
                                                                              --------                  ----------
                                                                                    61                         776
                                                                              --------                  ----------
Property, Plant and Equipment
   Electric utility plant in service - net
     Transmission and distribution.....................................          2,166                       2,193
     Generation........................................................                                      1,620
     General...........................................................            188                         208
                                                                              --------                  ----------
                                                                                 2,354                       4,021
   Construction work in progress - at cost.............................             45                         139
   Nuclear fuel owned and leased - net.................................                                        139
                                                                              --------                  ----------
     Electric utility plant - net......................................          2,399                       4,299
   Gas and oil utility plant - net.....................................                                         26
   Other property - net................................................              5                          20
                                                                              --------                  ----------
                                                                                 2,404                       4,345
                                                                              --------                  ----------
Regulatory Assets and Other Noncurrent Assets
   Recoverable transition costs........................................          2,487                       2,647
   Other...............................................................            335                         357
                                                                              --------                  ----------
                                                                                 2,822                       3,004
                                                                              --------                  ----------

                                                                              $  5,886                  $    9,092
                                                                              ========                  ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED BALANCE SHEET
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>

                                                                                           September 30,         December 31,
                                                                                               2000                   1999
                                                                                            ------------           -----------
<S>                                                                                         <C>                    <C>
Liabilities and Equity

Current Liabilities
    Short-term debt...................................................................      $        4              $      183
    Long-term debt....................................................................             237                     352
    Above market NUG purchases........................................................                                      99
    Accounts payable..................................................................              74                     284
    Taxes and interest accrued........................................................              34                     116
    Dividends payable.................................................................              45                       6
    Unrealized energy trading losses..................................................                                      28
    Other.............................................................................              77                     220
                                                                                            ----------              ----------
                                                                                                   471                   1,288
                                                                                            ----------              ----------

Long-term Debt........................................................................           2,941                   3,153
                                                                                            ----------              ----------
Deferred Credits and Other Noncurrent Liabilities
    Deferred income taxes and investment tax credits..................................             743                   1,528
    Above market NUG purchases........................................................                                     674
    Other.............................................................................             217                     806
                                                                                            ----------              ----------
                                                                                                   960                   3,008
                                                                                            ----------              ----------

Commitments and Contingent Liabilities................................................
                                                                                            ----------              ----------

Company-obligated mandatorily redeemable preferred securities of
   subsidiary trust holding solely company debentures.................................             250                     250
                                                                                            ----------              ----------

Preferred stock
    With sinking fund requirements....................................................              47                      47
    Without sinking fund requirements.................................................              50                      50
                                                                                            ----------              ----------
                                                                                                    97                      97
                                                                                            ----------              ----------
Shareowner's Common Equity
    Common stock......................................................................           1,476                   1,476
    Additional paid-in capital........................................................              55                      55
    Treasury stock....................................................................            (632)                   (632)
    Earnings reinvested...............................................................             284                     419
    Accumulated other comprehensive income............................................                                      (6)
    Capital stock expense and other...................................................             (16)                    (16)
                                                                                            ----------              ----------
                                                                                                 1,167                   1,296
                                                                                            ----------              ----------

                                                                                            $    5,886              $    9,092
                                                                                            ==========              ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.
<PAGE>

CONSOLIDATED STATEMENT OF SHAREOWNER'S COMMON EQUITY
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                         For the Three Months Ended    For the Nine Months Ended
                                                                               September 30,                 September 30,
                                                                         --------------------------    -------------------------
                                                                             2000            1999         2000           1999
                                                                         -----------       --------    ----------      ---------
<S>                                                                       <C>              <C>          <C>           <C>
Common stock at beginning of period.....................................  $    1,476       $   1,476    $   1,476     $    1,476
                                                                          ----------       ---------    ---------     ----------
Common stock at end of period...........................................       1,476           1,476        1,476          1,476
                                                                          ----------       ---------    ---------     ----------

Additional paid-in capital at beginning of period.......................          55              70           55             70
Other...................................................................                         (15)                        (15)
                                                                          ----------       ---------    ---------     ----------
Additional paid-in capital at end of period.............................          55              55           55             55
                                                                          ----------       ---------    ---------     ----------

Treasury stock at beginning of period...................................        (632)              0         (632)             0
   Purchase of treasury stock...........................................                        (632)                       (632)
                                                                          ----------       ---------    ---------     ----------
Treasury stock at end of period.........................................        (632)           (632)        (632)          (632)
                                                                          ----------       ---------    ---------     ----------

Earnings reinvested at beginning of period..............................         569             262          419            210
   Net income (b).......................................................          25             101          251            270
   Cash dividends declared on common stock..............................         (39)            (36)        (115)          (153)
   Common distribution in corporate realignment.........................        (271)                        (271)
                                                                          ----------       ---------    ---------     ----------
Earnings reinvested at end of period....................................         284             327          284            327
                                                                          ----------       ---------    ---------     ----------

Accumulated other comprehensive income at beginning of period...........          (6)             (6)          (6)            (6)
   Transfer of minimum pension liability in corporate
     realignment (b)....................................................           6                            6
                                                                          ----------       ---------    ---------     ----------
Accumulated other comprehensive income at end of period.................           0              (6)           0             (6)
                                                                          ----------       ---------    ---------     ----------

Capital stock expense at beginning of period............................         (16)            (20)         (16)           (20)
Other...................................................................                           4                           4
                                                                          ----------       ---------    ---------     ----------
Capital stock expense at end of period..................................         (16)            (16)         (16)           (16)
                                                                          ----------       ---------    ---------     ----------

Total Shareowner's Common Equity........................................  $    1,167       $   1,204    $   1,167     $    1,204
                                                                          ==========       =========    =========     ==========
(Thousands of Shares)

Common stock shares at beginning of period (a)..........................     102,230         157,300      102,230        157,300
   Treasury stock purchased.............................................                     (55,070)                    (55,070)
                                                                          ----------       ---------    ---------     ----------
Common stock shares at end of period....................................     102,230         102,230      102,230        102,230
                                                                          ==========       =========    =========     ==========
(a) No par value. 170 million shares authorized. All common
     shares of PPL Electric Utilities stock are owned by PPL.
(b) Statement of Comprehensive Income:
    Net income..........................................................  $       25       $     101    $     251     $      270
    Other comprehensive income, net of tax:
        Minimum pension liability transferred in corporate realignment..           6                            6
                                                                          ----------       ---------    ---------     ----------
    Total other comprehensive income....................................           6                            6
                                                                          ----------       ---------    ---------     ----------
    Comprehensive Income................................................  $       31       $     101    $     257     $      270
                                                                          ==========       =========    =========     ==========
</TABLE>

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

                                       42
<PAGE>

                      PPL ELECTRIC UTILITIES CORPORATION

                  Notes to Consolidated Financial Statements
                  ------------------------------------------

     Terms and abbreviations appearing in Notes to Consolidated Financial
Statements are explained in the glossary.

1. Interim Financial Statements

     Certain information in footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
has been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the SEC.  These financial statements should be read in
conjunction with the financial statements and notes included in PPL Electric
Utilities' Annual Report to the SEC on Form 10-K for the year ended December 31,
1999.

     Certain amounts in the September 30, 1999 and December 31, 1999 financial
statements have been reclassified to conform to the presentation in the
September 30, 2000 financial statements.

2. Summary of Significant Accounting Policies

Leases

     In March 2000, PPL Electric Utilities terminated its nuclear fuel lease and
repurchased $154 million of nuclear fuel from the lessor energy trust.  In July
2000, all nuclear fuel was transferred to PPL Susquehanna, the new unregulated
nuclear generating subsidiary of PPL Generation, in connection with the
corporate realignment.  See Note 8 for additional information.

3. Sales to Other Electric Utilities

     As part of the corporate realignment on July 1, 2000, PPL Electric
Utilities' contracts for sales to other electric utilities were assigned to PPL
EnergyPlus, which was transferred to an unregulated subsidiary of PPL.  See Note
8 to Financial Statements for information on the corporate realignment.

4. Credit Arrangements and Financing Activities

     PPL Electric Utilities issues commercial paper.  At September 30, 2000, PPL
Electric Utilities had no commercial paper outstanding.

     In order to enhance liquidity, and as a credit back-stop to the commercial
paper programs, PPL Electric Utilities, PPL Capital Funding and PPL (as
guarantor for PPL Capital Funding) share a 364-day $750 million credit facility
and a five-year $300 million credit facility, each with a group of banks.  At
September 30, 2000, no borrowings were outstanding under either facility.

     In April 2000, PPL Electric Utilities redeemed and retired all of its
outstanding First Mortgage Bonds, 9-1/4% Series due 2019, at par value of $27.6
million through the maintenance and replacement fund provisions of its Mortgage.
In June 2000, PPL Electric Utilities paid and retired all of its outstanding
first mortgage bonds, 6% Series due 2000, at par value of $125 million.
<PAGE>

     PPL Transition Bond Company, LLC retired the following class A-1 Bonds: in
March 2000, $62.2 million; in June 2000, $61.3 million; and in September 2000,
$52.3 million.

5. Commitments and Contingent Liabilities

Nuclear Insurance

     In connection with the corporate realignment, effective July 1, 2000,
ownership and operation of the Susquehanna nuclear station was transferred to
PPL Susquehanna, which became the insured under PPL Electric Utilities' existing
nuclear insurance programs.

Environmental Matters

     In connection with the corporate realignment, effective July 1, 2000, any
air, water and residual waste contingent liabilities associated with the
generation assets of PPL Electric Utilities were assumed by PPL Generation.

     Superfund and Other Remediation
     -------------------------------

In 1995, PPL Electric Utilities entered into a consent order with the DEP to
address a number of sites where PPL Electric Utilities may be liable for
remediation. This may include potential PCB contamination at certain PPL
Electric Utilities' substations and pole sites; potential contamination at a
number of coal gas manufacturing facilities formerly owned and operated by PPL
Electric Utilities; and oil or other contamination which may exist at some of
PPL Electric Utilities' former generating facilities. As of September 30, 2000,
PPL Electric Utilities has completed work on approximately two-thirds of the
sites included in the consent order.

     At September 30, 2000, PPL Electric Utilities had accrued approximately $6
million, representing the amount it estimates it will have to spend for site
remediation, including those sites covered by its consent order mentioned above.

6. Related Party Transactions

     As part of the corporate realignment, PPL Electric Utilities entered into
power sales agreements with PPL EnergyPlus for the purchase of electricity to
meet its obligations as a PLR for customers who have not selected an alternative
supplier under the Customer Choice Act.  Under the terms of these agreements,
this electricity is purchased by PPL Electric Utilities at the applicable
shopping credits authorized by the PUC, plus nuclear decommissioning costs, less
state taxes.  These purchases totaled $256 million for the three months ended
September 30, 2000, and are included in "Energy purchases for retail load and
wholesale" on the Consolidated Statement of Income.

     Also as part of the corporate realignment, PPL Electric Utilities executed
a reciprocal contract with PPL EnergyPlus to sell electricity purchased under
contracts with NUGs.  PPL Electric Utilities purchases electricity from the NUGs
at contractual rates, and then sells the electricity at the same price to PPL
EnergyPlus.  These revenues totaled $39 million for the three months ended
September 30, 2000, and are included in Operating Revenues as "Wholesale energy
marketing and trading" on the Consolidated Statement of Income.
<PAGE>

7. New Accounting Standards

     In June 2000, the FASB issued SFAS 138, which amends certain implementation
issues of SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities."  PPL Electric Utilities intends to adopt SFAS 133 as amended by
SFAS 137 and SFAS 138 as of January 1, 2001.

     In an effort to assess the financial statement impact of the adoption of
SFAS 133 and SFAS 138, PPL evaluated its current commodity contracts and
financial instruments.  Contract evaluations were performed by a PPL project
team of representatives from PPL's major business lines.  Additionally, an
outside consultant was retained to provide guidance to the team.  Contracts that
were identified as derivatives under SFAS 133 and SFAS 138 were also evaluated
to determine if hedge accounting treatment could be applied.

     Based upon this evaluation, it appears that as of September 30, 2000,
contracts which meet the definition of a derivative will have an insignificant
impact on PPL Electric Utilities' net income and other comprehensive income.

8. Corporate Realignment

     On July 1, 2000, PPL and PPL Electric Utilities completed a corporate
realignment in order to effectively separate PPL Electric Utilities' regulated
transmission and distribution businesses from its recently deregulated
generation businesses and to better position the companies and their affiliates
in the new competitive market-place.  The realignment included PPL Electric
Utilities' transfer of certain generation and related assets, along with the
associated liabilities, to PPL Energy Funding, a wholly-owned subsidiary.  PPL
Electric Utilities then distributed its investment in PPL Energy Funding to PPL.
The net book value of this transfer, recorded effective July 1, 2000, was $271
million.

     This $271 million non-cash dividend to PPL had a significant impact on the
consolidated assets and liabilities of PPL Electric Utilities.  As indicated on
the Consolidated Statement of Cash Flows of PPL Electric Utilities,
approximately $73 million of cash and cash equivalents of consolidated
affiliates was divested as a result of the realignment distribution.  The
following major reductions in consolidated assets and liabilities resulted from
the non-cash dividend (millions of dollars):

Assets
Cash and cash equivalents          $   73
Other current assets                  331
Investments                           578
Property, plant and equipment       1,969
Other noncurrent assets                16
                                   ------
                                    2,967
                                   ------

Liabilities and Equity
Current liabilities                   767
Deferred credits and other
  noncurrent liabilities            1,935
Minimum pension liability
  component of accumulated
  other comprehensive income           (6)
                                   ------
                                    2,696
                                   ------

    Net Dividend                   $  271
                                   ======
<PAGE>

     As a result of the corporate realignment, PPL Electric Utilities' principal
business is the transmission and distribution of electricity to serve retail
customers in its franchised territory in eastern and central Pennsylvania.
Other subsidiaries of PPL and PPL Electric Utilities are generally aligned in
the new corporate structure according to their principal business functions.

     The corporate realignment followed receipt of various regulatory approvals,
including approvals from the PUC, the FERC, and the NRC.
<PAGE>

                      PPL ELECTRIC UTILITIES CORPORATION

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

     This discussion should be read in conjunction with the section entitled
"Review of the Financial Condition and Results of Operations" in PPL Electric
Utilities' Annual Report to the SEC on Form 10-K for the year ended December 31,
1999.  Terms and abbreviations appearing in Management's Discussion and Analysis
of Financial Condition and Results of Operations are explained in the glossary.

                             Results of Operations
                             ---------------------

     The following discussion explains significant changes in principal items on
the Consolidated Statement of Income comparing the three months and nine months
ended September 30, 2000, to the comparable periods in 1999. Certain items on
the Consolidated Statement of Income have been impacted by the corporate
realignment undertaken by PPL and PPL Electric Utilities effective July 1, 2000.
See Note 8 to the Financial Statements for information regarding the corporate
realignment.

     The Consolidated Statement of Income of PPL Electric Utilities for the
three months ended September 30, 2000 includes the results of its remaining
businesses, the transmission and distribution of electricity in its franchised
service territory and the supply of electricity as a PLR under Pennsylvania's
Customer Choice Act.  The results for the first six months of 2000 and the nine
months ended September 30, 1999 also include PPL Electric Utilities' former
electric generation and unregulated wholesale and retail marketing functions.
When discussing the results of operations for the three and nine month periods,
the estimated results of operations of the electric generation and unregulated
marketing functions for the three months ended September 30, 1999 are eliminated
for purposes of comparability.

     As an additional measure of comparability, pro forma financial statements
are provided at the end of "Management's Discussion and Analysis of Financial
Condition and Results of Operations."  This pro forma information presents a
balance sheet and income statements as if PPL Electric Utilities had been
realigned in all periods, thereby presenting these statements for the remaining
businesses of PPL Electric Utilities.

     The Consolidated Statement of Income reflects the results of past
operations and is not intended as any indication of future operating results.
Future operating results will necessarily be affected by various and diverse
factors and developments, particularly the corporate realignment as discussed in
Note 8.  Furthermore, because results for interim periods can be
disproportionately influenced by various factors and developments and by
seasonal variations, the results of operations for interim periods are not
necessarily indicative of results or trends for the year.
<PAGE>

Earnings

     PPL Electric Utilities' earnings available to PPL were $25 million for the
three months ended September 30, 2000, compared with $101 million during the
same period in 1999.  Earnings for the nine months ended September 30, 2000 were
$251 million, compared with $270 million during the first nine months of 1999.
The following table shows the adjusted earnings for these periods on a
comparable basis, after eliminating the estimated impacts of businesses
transferred in the corporate realignment and certain nonrecurring items
(millions of dollars):

<TABLE>
<CAPTION>
                                                         Three Months Ended         Nine Months Ended
                                                           September 30,              September 30,
                                                         ------------------         -----------------
                                                         2000          1999         2000         1999
                                                         ----          ----         ----         ----
<S>                                                      <C>          <C>          <C>          <C>
Actual Earnings                                          $  25        $ 101        $ 251        $ 270
  Eliminate third quarter 1999
    earnings of unregulated electricity
    supply and marketing businesses                                     (73)                      (73)
  Eliminate nonrecurring items:
  . Benefit of securitization transactions                              (19)                      (19)
  . Environmental insurance recoveries                     (18)                      (23)
                                                         -----        -----        -----        -----
Adjusted Earnings                                        $   7        $   9        $ 228        $ 178
                                                         =====        =====        =====        =====
</TABLE>

     Adjusted earnings for the nine months ended September 30, 2000 increased by
$50 million over the same period in 1999.  (These adjusted earnings reflect six
months of PPL Electric Utilities' full operations, and three months of the post-
realignment businesses:  the transmission and distribution of electricity and
the supply of electricity as a PLR.)  This increase in earnings was primarily
due to higher margins on wholesale activities during the first half of 2000
compared with 1999, the end of a one-year 4% rate reduction for delivery
customers, higher electric delivery sales, and lower other operating expenses.
The operating expense reductions included a gain on the sale of emission
allowances, as well as reductions in pension and medical expenses.  These
earnings improvements were partially offset by higher interest expense due to
the issuance of transition bonds to securitize stranded costs.

Electric Energy Sales

     PPL Electric Utilities' electricity sales for 2000 and 1999 were as follows
(millions of kWh):

<TABLE>
<CAPTION>
                                      September 30, 2000 vs. September 30, 1999
                                      -----------------------------------------
                                        Three Months Ended  Nine Months Ended
                                        ------------------  -----------------
                                           2000      1999      2000     1999
                                           ----      ----      ----     ----
<S>                                   <C>            <C>    <C>        <C>
Electricity delivered
 to retail customers by
 PPL Electric Utilities                    8,321     8,221    25,624   25,086
Less:  Electricity supplied
 by others                                 1,721     2,770     6,341    6,950
                                           -----     -----    ------   ------
Electricity supplied to retail
 customers by PPL Electric Utilities
 as PLR                                    6,600     5,451    19,283   18,136
Electricity supplied to retail
 customers by PPL EnergyPlus                         3,029     6,363    7,096
                                           -----     -----    ------   ------
Total electricity supplied to
 retail customers                          6,600     8,480    25,646   25,232
Wholesale electricity sales                  205     7,801    16,928   24,061
</TABLE>
<PAGE>

     Beginning on January 1, 1999, Pennsylvania electric customers were allowed
to choose their electricity supplier under the Customer Choice Act.  Customers
choosing an alternate supplier continue to have their electricity delivered by
the utility that serves their territory.

     As of the July 1, 2000, corporate realignment, PPL EnergyPlus is no longer
a part of PPL Electric Utilities, but rather was transferred to an unregulated
subsidiary of PPL.  Therefore, PPL Electric Utilities supplies electricity to
retail customers only as a PLR, but continues to deliver electricity to all
retail customers in its service territory.

     Electricity delivered to retail customers in the three months ended
September 30, 2000, increased by 100 million kWh, or 1.2%, from the comparable
period in 1999.  This increase reflects higher usage by industrial customers.

     Electricity delivered to retail customers in the nine months ended
September 30, 2000, increased by 538 million kWh, or 2.1%, from the comparable
period in 1999.  This increase was due to higher usage by commercial and
industrial customers.

     Electricity supplied to retail customers decreased by 1,880 million kWh, or
22.2%, when comparing the three months ended September 30, 2000, to the same
period in 1999.  After eliminating PPL EnergyPlus' retail energy supply that was
transferred in the corporate realignment, electricity supplied as a PLR
increased by 1,149 million kWh, or 21.1%.  Most of the increase was due to fewer
commercial and industrial customers selecting a supplier other than PPL Electric
Utilities in 2000.

     Electricity supplied to retail customers increased by 414 million kWh, or
1.6%, when comparing the nine months ended September 30, 2000, to the same
period in 1999. After eliminating PPL EnergyPlus' retail energy supply that was
transferred in the corporate realignment from the results for the third quarter
of 1999, electricity supplied increased by 3,443 million kWh, or 15.5%. The
increase was due to increased supply to commercial and industrial customers.

     Wholesale electricity sales decreased by 7,596 million kWh, in the three
months ended September 30, 2000, when compared to the same period in 1999. After
eliminating the kWh of PPL EnergyPlus wholesale transactions that were
transferred in the corporate realignment, sales were basically unchanged.

     Wholesale electricity sales decreased by 7,133 million kWh in the nine
months ended September 30, 2000, when compared to the same period in 1999. After
eliminating the kWh of the wholesale transactions that were transferred in the
corporate realignment from the results of the third quarter of 1999, sales
increased by 437 million kWh. The increase was primarily the result of increased
activity in the first half of 2000 by the Energy Marketing Center in the
wholesale market, offset somewhat by the expiration of bulk power contracts.
<PAGE>

Operating Revenues

     Electric
     --------

     The increase (decrease) in revenues from electric operations was
attributable to the following (millions of dollars):

                                    September 30, 2000 vs. September 30, 1999
                                    -----------------------------------------
                                     Three Months Ended    Nine Months Ended
                                     ------------------    -----------------

PPL Electric Utilities
   Electric delivery                       $  (5)               $  9
   PLR electric generation supply             13                 (14)
PPL EnergyPlus
    Electric generation supply              (116)                (35)
  Other                                                            1
                                           -----                ----
                                           $(108)               $(39)
                                           =====                ====

     As of the July 1, 2000 corporate realignment, PPL EnergyPlus is no longer a
part of PPL Electric Utilities; rather, it has been transferred to an
unregulated subsidiary of PPL.  Subsequent to July 1, PPL Electric Utilities
continues to supply electricity to retail customers as a PLR, and delivers
electricity to all retail customers in its service territory.

     After eliminating PPL EnergyPlus' retail energy supply that was transferred
in the corporate realignment from the results for the third quarter of 1999,
operating revenues from retail electric operations increased by $8 million and
$77 million for the three and nine months ended September 30, 2000,
respectively, when compared to the same periods in 1999.

     The adjusted increase of $77 million for the nine months ended September
30, 2000 was primarily due to an increase in PPL EnergyPlus' volumes during the
first half of 2000 versus the same period in 1999.  This increase was driven by
PPL EnergyPlus' marketing efforts in Pennsylvania and surrounding states that
have been implemented to secure and retain end-use customers in these
deregulated states.

     Wholesale Energy Marketing and Trading
     --------------------------------------

     The increase (decrease) in revenues from wholesale energy marketing and
trading activities was attributable to the following (millions of dollars):

                                    September 30, 2000 vs. September 30, 1999
                                    -----------------------------------------
                                     Three Months Ended    Nine Months Ended
                                     ------------------    -----------------

PPL Electric Utilities
  Bilateral Sales                           $(296)              $(159)
  PJM                                         (50)                (36)
  Cost-based contracts                        (39)                (57)
  Gas & oil sales                             (93)                (54)
  Other                                       (12)                (14)
  NUG purchases sold to affiliate              40                  40
                                            -----               -----
                                            $(450)              $(280)
                                            =====               =====

     After eliminating the revenues of businesses transferred in the corporate
realignment from the results for the third quarter of 1999, wholesale revenues
decreased by $12 million for the three months ended September 30, 2000, compared
with the same period in 1999.

     After eliminating the revenues of businesses transferred in the corporate
realignment from the results for the third quarter of 1999,
<PAGE>

wholesale revenues increased by $158 million for the nine months ended September
30, 2000, compared with the same period in 1999. This was primarily due to
increased bilateral sales revenues of $137 million during the first half of 2000
compared with the same period in 1999. The change in bilateral sales revenues
reflected higher market pricing and energy sales to other counterparties.

Electric Fuel Costs

     For the three and nine months ended September 30, 2000, electric fuel costs
decreased by $131 million and $151 million, respectively, compared with the same
periods in 1999.  After eliminating the expenses of businesses transferred in
the corporate realignment from the results for the third quarter of 1999,
electric fuel costs decreased by $20 million for the nine months ended September
30, 2000.  This decrease was attributed to lower generation because of the
Holtwood plant closing in April 1999, the sale of the Sunbury plant in November
1999, plant outages, and reduced operation of marginal units.  In addition,
lower nuclear fuel expense contributed to the decrease in electric fuel costs.
During the first quarter of 1999, there was a charge of $5 million to accrue for
the increase in estimated costs of dry cask canisters for the on-site spent fuel
storage at the Susquehanna plant.

Energy Purchases

     Energy purchases for retail load and wholesale activities decreased by $158
million during the three months ended September 30, 2000 compared with the same
period in 1999.  After eliminating the expenses of businesses transferred in the
corporate realignment from the results for the third quarter of 1999, energy
purchases increased by $24 million during the three months ended September 30,
2000.  This increase reflects higher energy purchases from PPL EnergyPlus in the
third quarter of 2000 than would have been incurred if realigned in the third
quarter of 1999. This was attributed to higher energy sales by PPL Electric
Utilities as a PLR.

     Energy purchases increased by $8 million during the nine months ended
September 30, 2000, compared with the same period in 1999.  After eliminating
the expenses of businesses transferred in the corporate realignment from the
results for the third quarter of 1999, energy purchases increased by $190
million during the nine months ended September 30, 2000.  During the first half
of 2000, energy purchases increased by $166 million over the same period in
1999.  This was primarily due to higher purchases to support PPL EnergyPlus'
increased unregulated retail electric and gas sales.  Also, higher per unit
prices for these purchases contributed to the increase in energy purchases,
coupled with recognized losses on certain long-term forward transactions.  The
remainder of the increase during the nine month period, $24 million, represents
the estimated increase in PPL Electric Utilities' purchases to support its PLR
load in the third quarter of 2000, as noted above.

Other Operation Expenses

     Other operation expenses decreased by $99 million and $149 million for the
three and nine months ended September 30, 2000, respectively, when compared with
the same periods in 1999. After eliminating the expenses of businesses
transferred in the corporate realignment from the results for the third quarter
of 1999, other operation expenses decreased by $32 million and $82 million for
the three and nine months ended September 30, 2000, respectively.
<PAGE>

     The decrease for the three months ended September 30, 2000, was primarily
due to an environmental insurance recovery.  The decrease for the nine months
ended September 30, 2000, was due to the foregoing reason, as well as gains on
the sale of emission allowances, and decreases in wages, pension plan costs,
medical expenses, load dispatching activities for system control and computer
software development costs.

Maintenance Expenses

     Maintenance expenses decreased by $29 million and $18 million for the three
and nine months ended September 30, 2000, respectively, when compared to the
same periods in 1999. After eliminating the expenses of businesses transferred
in the corporate realignment from the results for the third quarter of 1999,
maintenance expenses decreased by $10 million for the three month period and
increased by $1 million for the nine month period ended September 30, 2000, when
compared to the same periods in 1999.

     The decrease for the three month period ended September 30, 2000, was
primarily due to lower wages and transmission line maintenance expenses.

Depreciation and Amortization

     Depreciation and amortization decreased by $33 million and $34 million for
the three and nine months ended September 30, 2000, respectively, when compared
with the same periods in 1999.  However, after eliminating the expenses of
businesses transferred in the corporate realignment from the results of the
third quarter of 1999, depreciation on assets used in the electric delivery
business was essentially unchanged from the prior year.

Financing Costs

     Interest expense increased by $29 million for the nine months ended
September 30, 2000, compared with the same period in 1999.  This increase was
primarily due to the issuance of transition bonds in August 1999, partially
offset by the retirement of first mortgage bonds in August 1999, and in April
and June 2000.

     Dividends on preferred stock decreased by $11 million during the nine
months ended September 30, 2000, compared with the same period in 1999. This
decrease was the result of PPL Electric Utilities acquiring $380 million of its
preferred stock that had been held by PPL.  PPL Electric Utilities acquired this
preferred stock in August 1999, using a portion of the proceeds from
securitization.

Income Taxes

     Income taxes increased by $41 million and $67 million for the three and
nine months ended September 30, 2000, respectively, when compared to the same
periods in 1999.  After eliminating the expenses of businesses transferred in
the corporate realignment from the results of the third quarter of 1999, income
taxes increased by $84 million and $110 million for the three month and nine
month periods, respectively.  These changes were primarily due to a release of
deferred taxes no longer required due to securitization in the third quarter of
1999, and by higher adjusted pre-tax book income during the nine months ended
September 30, 2000.
<PAGE>

                              Financial Condition
                              -------------------

Energy Marketing and Trading Activities

     In connection with the corporate realignment, effective July 1, 2000, PPL
Electric Utilities' unregulated energy marketing and trading activities were
transferred to PPL EnergyPlus.

Market Risk Sensitive Instruments

     Commodity Price Risk
     --------------------

     In connection with the corporate realignment, effective July 1, 2000, the
commodity positions of PPL Electric Utilities were also transferred to PPL
EnergyPlus, which was moved to an unregulated subsidiary of PPL.

     Interest Rate Risk
     ------------------

     PPL Electric Utilities has issued debt to finance its operations, which
increases interest rate risk.  At September 30, 2000, PPL Electric Utilities'
potential annual exposure to increased interest expense due to a 10% increase in
interest rates was estimated at $3 million.

     PPL Electric Utilities is also exposed to changes in the fair value of its
debt portfolio.  At September 30, 2000, PPL Electric Utilities estimated that
its potential exposure to a change in the fair value of its debt portfolio,
through a 10% adverse movement in interest rates, was about $11 million.

     Market events that are inconsistent with historical trends could cause
actual results to differ from estimated levels.

     Nuclear Decommissioning Fund - Securities Price Risk
     ----------------------------------------------------

     In connection with the corporate realignment, effective July 1, 2000, the
nuclear decommissioning fund was transferred to, and will be maintained by, PPL
Susquehanna.

Financing Activities

     Refer to Note 4 to the Financial Statements for information regarding
Financing Activities.
<PAGE>

Financing and Liquidity

     Cash and cash equivalents decreased by an additional $164 million during
the nine months ended September 30, 2000, compared with the same period in 1999.
The reasons for this change were:

     .    A $33 million increase in cash provided by operating activities,
          primarily due to changes in current assets and current liabilities.

     .    A $41 million decrease in cash used in investing activities, primarily
          due to an increase in proceeds from the sales of nuclear fuel to the
          trust and an increase in loan repayments from affiliated companies.

     .    A $238 million increase in cash used in financing activities. This
          increase was due to greater net retirements of securities in the nine
          months ended September 30, 2000 compared with the same period in 1999,
          the termination of the nuclear fuel lease, and cash of affiliates
          divested in the corporate realignment.

Financial Indicators

     Earnings for the twelve months ended September 30, 2000 and 1999 were
impacted by nonrecurring items and restructuring impacts, which are listed in
the "Earnings" discussion in the Results of Operations of this Form 10-Q and the
Form 10-K for the year ended December 31, 1999.  The following financial
indicators for PPL Electric Utilities reflect the elimination of these impacts
from earnings, and provide an additional measure of the underlying earnings
performance of PPL Electric Utilities and its subsidiaries.  For purposes of
comparability, the results of businesses transferred in the corporate
realignment were eliminated for the third quarter of 1999.

<TABLE>
<CAPTION>
                                              12 Months Ended September 30,
                                              -----------------------------
<S>                                           <C>                  <C>
                                                  2000             1999
                                                  ----             ----

Earnings available to PPL
  (adjusted, in millions)                        $ 313            $ 240

Ratio of pre-tax income to interest charges       2.98%            3.06%
</TABLE>

Environmental Matters

     See Note 5 to Financial Statements for a discussion of environmental
matters.

Increasing Competition

     The electric utility industry has experienced, and will continue to
experience, a significant increase in the level of competition in the energy
supply market at both the state and federal level.  PPL Electric Utilities' PLR
supply business will be affected by customers who select alternate suppliers.
Refer to PPL Electric Utilities' 1999 Form 10-K for a discussion of state and
federal activities in this regard.
<PAGE>

Corporate Realignment

     On July 1, 2000, PPL and PPL Electric Utilities completed a corporate
realignment in order to effectively separate PPL Electric Utilities' regulated
transmission and distribution businesses from its recently deregulated
generation businesses and better position the companies and their affiliates in
the new competitive market-place.  The corporate realignment included the
following key features:

     .    PPL Electric Utilities transferred its generating and certain other
          related assets, along with associated liabilities, to new unregulated
          generating subsidiaries of PPL Generation. In connection with the
          transfer, PPL Energy Funding, the parent company of PPL Generation,
          assumed $670 million aggregate principal amount of PPL Electric
          Utilities' debt issued to affiliated companies.

     .    PPL Electric Utilities also transferred assets constituting its
          wholesale energy marketing business, along with associated
          liabilities, to its wholly-owned subsidiary, PPL EnergyPlus, and
          transferred its interest in PPL EnergyPlus to PPL Energy Funding.

     .    PPL Electric Utilities distributed, as a distribution on common stock
          in a "tax-free spin-off," all of the outstanding shares of stock of
          PPL Energy Funding to PPL, which resulted in PPL Energy Funding
          becoming a wholly-owned subsidiary of PPL.

     .    PPL Electric Utilities entered into power sales agreements with PPL
          EnergyPlus for the purchase of electricity to meet PPL Electric
          Utilities' obligations as a PLR for customers who have not selected an
          alternative supplier under the Customer Choice Act.

     As a result of the corporate realignment, PPL Electric Utilities' principal
businesses are the transmission and distribution of electricity to serve retail
customers in its franchised territory in eastern and central Pennsylvania and
the supply of electricity to retail customers as a PLR.  Other subsidiaries of
PPL and PPL Electric Utilities are generally aligned in the new corporate
structure according to their principal business functions.

     The corporate realignment followed receipt of various regulatory approvals,
including approvals from the PUC, the FERC and the NRC.
<PAGE>

PPL Electric Utilities Corporation
----------------------------------
Unaudited Pro Forma Condensed Consolidated Financial Information
----------------------------------------------------------------

     The pro forma information that follows is presented to give effect to the
corporate realignment on the balance sheet and income statement of PPL Electric
Utilities.  The pro forma results are based on certain assumptions and are not
necessarily indicative of the results of operations which would actually have
occurred if the transactions had occurred in such periods, or which may exist or
occur in the future.

     The corporate realignment is described above.  From the perspective of PPL
Electric Utilities, the realignment involved the disposition and transfer of
assets and liabilities associated with the generating and marketing portions of
its existing business, as well as certain other corporate assets and
liabilities.  These assets and liabilities were transferred to unregulated
subsidiaries of PPL, the parent of PPL Electric Utilities.

     Specifically, PPL Electric Utilities transferred generating, marketing and
certain related assets (including its investments in PPL EnergyPlus, PPL
Interstate Energy Company, Realty Company of Pennsylvania, and Pennsylvania
Mines Corporation) and liabilities to its wholly-owned subsidiary, PPL Energy
Funding.  PPL Electric Utilities then distributed its investment in PPL Energy
Funding to PPL in a "tax-free spin-off."

     PPL Electric Utilities also distributed other corporate assets (net of
associated liabilities) to PPL, which PPL then contributed to PPL Services, a
new subsidiary of PPL.

     The distribution reflects the transfer of these assets and liabilities at
book value, and was recorded effective July 1, 2000.

     The pro forma balance sheet gives effect to the distribution of PPL
Electric Utilities' investment in PPL Energy Funding as if the asset and
liability transfer and subsequent distribution were made on December 31, 1999.
The adjustments are applied to the balance sheet at December 31, 1999, as set
forth in Item 1.  The as-adjusted balances at December 31, 1999 reflect the pro
forma balances for the remaining business of PPL Electric Utilities, principally
the transmission and distribution of electricity to retail customers in its
franchised territory in eastern and central Pennsylvania, and the supply of
electricity as a PLR.  The as-adjusted balance sheet also reflects the
consolidated accounts of PPL Transition Bond Company, PPL Capital Trust, PPL
Capital Trust II,  and CEP Commerce, LLC.

     Pro forma adjustments are also provided to the income statement for the
three and nine months ended September 30, 2000 and 1999, as set forth in Item 1.
The pro forma adjustments assume that the transfer was consummated at the
beginning of the income statement period.  The as-adjusted income statements are
intended to reflect the pro forma consolidated operations of the remaining
portions of PPL Electric Utilities.
<PAGE>

PPL Electric Utilities Corporation and Subsidiaries
---------------------------------------------------
Pro Forma Condensed Consolidated Balance Sheet
----------------------------------------------
December 31, 1999
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                      Pro Forma
                                                       As Reported   Adjustments    As Adjusted
                                                       -----------   -----------    -----------
<S>                                                    <C>           <C>            <C>
Assets
Current Assets                                           $   967       $   119  a)     $1,086
Investments                                                  776          (626) b)        150
Property, Plant and Equipment                              4,345        (1,953) c)      2,392
Regulatory Assets and
  Other Noncurrent Assets                                  3,004           (13) d)      2,991
                                                         -------       -------         ------
                                                         $ 9,092       $(2,473)        $6,619
                                                         =======       =======         ======

Liabilities and Equity

Current Liabilities                                      $ 1,288       $  (351) e)     $  937
Long-term Debt                                             3,153                        3,153
Deferred Credits and
  Other Noncurrent Liabilities                             3,008        (2,027) f)        981
Company-obligated mandatorily
  redeemable preferred securities
  of subsidiary trust holding
  solely company debentures                                  250                          250
Preferred Stock                                               97                           97
Shareowner's Common Equity:
  Earnings Reinvested                                        419          (101) g)        318
  Other Common Equity                                        877             6  f)        883
                                                         -------       -------         ------
                                                         $ 9,092       $(2,473)        $6,619
                                                         =======       =======         ======
</TABLE>

See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>

PPL Electric Utilities Corporation and Subsidiaries
---------------------------------------------------
2000 Pro Forma Condensed Consolidated Statement of Income
---------------------------------------------------------
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                       Three Months Ended                         Nine Months Ended
                                       September 30, 2000                         September 30, 2000
                             --------------------------------------     --------------------------------------
                                As         Pro Forma          As           As         Pro Forma          As
                             Reported     Adjustments      Adjusted     Reported     Adjustments      Adjusted
                             --------     -----------      --------     --------     -----------      --------
<S>                      <C>              <C>              <C>          <C>          <C>              <C>
Operating Revenues       a)  $    570     $    f)          $    570     $  2,703     $      (957)     $  1,746
Operating Expenses       b)       470                           470        2,118            (724)        1,394
                             --------     -----------      --------     --------     -----------      --------
Operating Income                  100                           100          585            (233)          352
                             --------     -----------      --------     --------     -----------      --------
Other Income             c)         4                             4           27             (15)           12
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Interest and
  Income Taxes                    104                           104          612            (248)          364
Interest Expense         d)        59                            59          184              10           194
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Income Taxes                     45                            45          428            (258)          170
Income Taxes             e)        14                            14          158             (96)           62
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Extraordinary
  Items and
  Dividends on
  Preferred Stock                  31                            31          270            (162)          108
Extraordinary
  Item (net of
  income taxes)
                             --------     -----------      --------     --------     -----------      --------
Net Income Before
  Dividends on
  Preferred Stock                  31                            31          270            (162)          108
Dividends on
  Preferred Stock                   6                             6           19                            19
                             --------     -----------      --------     --------     -----------      --------
Earnings Available
  to PPL
  Corporation                $     25     $                $     25     $    251     $      (162)     $     89
                             ========     ===========      ========     ========     ===========      ========
</TABLE>

See Notes to Unaudited Pro Forma Consolidated Financial Information.
<PAGE>

PPL Electric Utilities Corporation and Subsidiaries
---------------------------------------------------
1999 Pro Forma Consolidated Statement of Income
-----------------------------------------------
(Unaudited)
(Millions of Dollars)

<TABLE>
<CAPTION>
                                       Three Months Ended                         Nine Months Ended
                                       September 30, 1999                         September 30, 1999
                             --------------------------------------     --------------------------------------
                                As                                         As
                             Reported-     Pro Forma          As        Reported-     Pro Forma          As
                             Restated     Adjustments      Adjusted     Restated     Adjustments      Adjusted
                             --------     -----------      --------     --------     -----------      --------
<S>                      <C>              <C>              <C>          <C>          <C>              <C>
Operating Revenues       a)  $  1,128     $      (556)     $    572     $  3,019     $    (1,269)     $  1,750
Operating Expenses       b)       937            (446)          491        2,443          (1,085)        1,358
                             --------     -----------      --------     --------     -----------      --------
Operating Income                  191            (110)           81          576            (184)          392
                             --------     -----------      --------     --------     -----------      --------
Other Income             c)         7              (4)            3           29             (18)           11
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Interest and
  Income Taxes                    198            (114)           84          605            (202)          403
Interest Expense         d)        59               2            61          155               1           156
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Income Taxes                    139            (116)           23          450            (203)          247
Income Taxes             e)       (27)            (43)          (70)          91             (77)           14
                             --------     -----------      --------     --------     -----------      --------
Income Before
  Extraordinary
  Items and
  Dividends on
  Preferred Stock                 166             (73)           93          359            (126)          233
Extraordinary
  Item (net of
  income taxes)                   (59)                          (59)         (59)                          (59)
                             --------     -----------      --------     --------     -----------      --------
Net Income Before
  Dividends on
  Preferred Stock                 107             (73)           34          300            (126)          174
Dividends on
  Preferred Stock                   6                             6           30                            30
                             --------     -----------      --------     --------     -----------      --------
Earnings Available
  to PPL
  Corporation                $    101     $       (73)     $     28     $    270     $      (126)     $    144
                             ========     ===========      ========     ========     ===========      ========
</TABLE>

See Notes to Unaudited Pro Forma Consolidated Financial Information.

<PAGE>

PPL Electric Utilities Corporation and Subsidiaries
---------------------------------------------------
Notes to Unaudited Pro Forma Consolidated Financial Information
---------------------------------------------------------------

   Adjustments to the Balance Sheet
   --------------------------------

a) Adjustment reflects the transfer of current assets as part of the
   distribution, including fuel, spare parts and other inventories used in the
   generation of electricity, as well as the asset positions of energy trading
   activities. The adjustment to cash and cash equivalents also includes an
   assumed intercompany borrowing by PPL Electric Utilities of $350 million
   prior to realignment. See Note g), below.
b) Adjustment reflects the transfer of:
   .   notes and other receivables on the books of certain subsidiaries of
       PPL Energy Funding;
   .   two nuclear decommissioning trust funds, which fund the future
       decommissioning of the Susquehanna generating station;
   .   equity investment in Safe Harbor Water Power Corporation; and
   .   other miscellaneous investments.
c) Adjustment reflects the transfer of steam, hydro and combustion-turbine
   generating plant, net of accumulated reserves for depreciation. Also
   reflected in the adjustment are generation-related transformers, leads, and
   circuit breakers; the balances of generation-related construction projects in
   progress; nuclear fuel; and oil/gas pipeline property.
d) Adjustment reflects the transfer of miscellaneous deferred debits for
   benefits and payroll.
e) Adjustment reflects the transfer of:
   .   notes payable to affiliated companies. At December 31, 1999, PPL
       Electric Utilities had a $300 million note payable to CEP Reserves, Inc.,
       a wholly-owned subsidiary of PPL Energy Funding. This debt was
       transferred to PPL Energy Funding as part of the realignment. Also, it
       was assumed that PPL Electric Utilities borrowed $350 million from a PPL
       affiliate prior to realignment, and that this debt was transferred to PPL
       Energy Funding as part of the realignment. See Note g), below, for
       additional information;
   .   a loss accrual to PPL EnergyPlus. PPL Electric Utilities will
       continue to purchase power from non-utility generators under pre-existing
       contracts, at prices currently above market. PPL Utilities will then sell
       this power to PPL EnergyPlus at the same prices. PPL EnergyPlus will then
       amortize the loss accrual as an offset to the purchased power;
   .   current liabilities, including accounts payable for fuel, spare parts
       and other inventories used in the generation of electricity; accrued
       taxes and interest associated with unregulated activities; and liability
       positions of energy trading activities; and
   .   various accrued liabilities including payroll and benefit-related
       liabilities, air pollution control emission fees, and nuclear
       decommissioning fees.
f) Adjustment reflects the transfer of:
   .   deferred income taxes associated with the transferred generating
       plant and related assets; and
   .   deferred credits for nuclear decommissioning and certain retirement
       plan liabilities to PPL Services.
g) Adjustment reflects the net dividend to PPL of PPL Electric Utilities'
   investment in PPL Energy Funding, as well as the transfer of certain assets
   and liabilities to PPL Services. For purposes of this pro forma transfer at
   December 31, 1999, it was assumed that $350 million of intercompany borrowing
   was made by PPL Electric Utilities prior to this realignment, and that this
   debt was transferred to PPL Energy Funding. This then resulted in an as-
   adjusted retained earnings balances at December 31, 1999 that was
   approximately the same proportionate share of total capitalization as that
   which actually resulted upon the July 1, 2000 transfer.
<PAGE>

PPL Electric Utilities Corporation and Subsidiaries
---------------------------------------------------
Notes to Unaudited Pro Forma Consolidated Financial Information
---------------------------------------------------------------

   Adjustments to the Statement of Income
   --------------------------------------

a) Adjustment reflects the elimination of operating revenues of:

   .  unregulated retail electricity and gas sales by PPL EnergyPlus. Remaining
      retail revenues are from the transmission and distribution of electricity
      in PPL Electric Utilities' franchised territory in Pennsylvania, as well
      as from providing electricity as a PLR for customers who have not selected
      an alternate supplier under the Pennsylvania Customer Choice Act;

   .  unregulated wholesale marketing business transferred to PPL EnergyPlus.
      Remaining wholesale revenues consist of sales to municipalities, and
      intercompany sales to PPL EnergyPlus of power purchased from non-utility
      generators; and

   .  energy-related businesses of PPL Interstate Energy Company.

b) Adjustment reflects the elimination of operating expenses of:

   .  fuel to operate the generating stations. After realignment, fuel expense
      will be incurred by the generating subsidiaries of PPL Generation;

   .  external purchases of energy to meet retail and wholesale load, as well as
      for energy trading purposes. After realignment, these expenses will be
      incurred by PPL EnergyPlus. This reduction is partially offset by
      additional expenses for the purchase of electricity from PPL EnergyPlus to
      meet PPL Electric Utilities' obligation as a PLR. This intercompany
      purchase by PPL Electric Utilities is under a power sales agreement valued
      at the applicable shopping credits, plus nuclear decommissioning costs,
      minus state taxes;

   .  other operation and maintenance expenses associated with generation and
      marketing functions. These amounts include the direct expenses incurred by
      these functions, and estimated direct corporate support and allocations of
      corporate overheads;

   .  depreciation expense associated with generation facilities;

   .  PPL EnergyPlus' gross receipts tax related to its retail sales and PPL
      Energy Funding's share of other taxes; and

   .  expenses of energy-related businesses of PPL Interstate Energy Company and
      PPL EnergyPlus.

c) Adjustment reflects the elimination of other non-operating income of
   businesses transferred out of PPL Electric Utilities.

d) Adjustment reflects the additional interest expense associated with debt to
   affiliates transferred in the realignment.

e) Adjustment reflects the elimination of income taxes associated with the
   generation and marketing functions.

f) No adjustments were required for the three months ended September 30, 2000
   results of operations. These results were subsequent to the corporate
   realignment, and therefore include solely the results of operations of PPL
   Electric Utilities' remaining businesses: the transmission and distribution
   of electricity to retail customers in its franchised territory and the supply
   of electricity as a PLR.

<PAGE>

Management's Discussion and Analysis of Results of Operations
-------------------------------------------------------------
Pro Forma Consolidated Statements of Income
-------------------------------------------

     The following discussion explains significant changes in principal items on
the Pro Forma Consolidated Statements of Income.  This discussion uses the "As
Adjusted" results for the three and nine months ended September 30, 2000 and
1999.  The "As Adjusted" results are intended to reflect the pro forma
consolidated operations of PPL Electric Utilities' remaining businesses,
principally the transmission and distribution of electricity to retail customers
in its franchised territory, and the supply of electricity as a PLR.  The pro
forma results are based on assumptions and are not necessarily indicative of the
results of operations which would actually have occurred in such periods, or
which may occur in the future.

     Operating Expenses
     ------------------

     Pro forma operating expenses decreased by $21 million during the three
months ended September 30, 2000, compared with the same period in 1999.  This
was primarily due to environmental insurance recoveries recorded in the third
quarter of 2000, partially offset by higher energy purchases from PPL
EnergyPlus, to support PPL Electric Utilities' higher sales as a PLR.

     Pro forma operating expenses increased by $36 million during the nine
months ended September 30, 2000, compared with the same period in 1999.  This
increase was primarily due to a $51 million increase in energy purchases that
would have been made from PPL EnergyPlus, to support PPL Electric Utilities'
higher sales as a PLR.  For the nine months ended September 30, 2000, PLR sales
increased by 1,147 million kWh, or 6.3%, over the same period in 1999.  This
reflects an increase in sales to commercial and industrial customers, and a
decrease in sales lost to alternate suppliers.  Pro forma operating expenses
also increased by $24 million during the nine months ended September 30, 2000
due to higher amortization of recoverable transition costs.  Higher regulated
electric deliveries of 2.1% contributed to the increase in amortization during
this period.  These increases in pro forma operating expenses were partially
offset by a $49 million decrease in other operation expenses, largely due to
environmental insurance recoveries.

     Interest Expense
     ----------------

     Pro forma interest expense increased by $38 million during the nine months
ended September 30, 2000 compared with the same period in 1999.  This was the
net effect of additional interest expense due to the issuance of transition
bonds, and lower interest expense due to retirement of first mortgage bonds.

     Income Tax Expense
     ------------------

     Pro forma income tax expense increased by $84 million for the three months
ended September 30, 2000, compared with the same period in 1999.  This change
was due to a credit to income tax expense recorded in the third quarter of 1999,
for deferred income taxes no longer required due to securitization.

     Pro forma income tax expense increased by $48 million during the nine
months ended September 30, 2000, compared with the same period in 1999.  This
increase was due to the credit to tax expense noted above, partially offset by
reduced income taxes associated with lower pre tax book income during the 2000
period.
<PAGE>

     Dividends on Preferred Stock
     ----------------------------

     Pro forma dividends on preferred stock decreased by $11 million during the
nine months ended September 30, 2000, compared with the same period in 1999.
This decrease was the result of PPL Electric Utilities acquiring $380 million of
its preferred stock that had been held by PPL.  PPL Electric Utilities acquired
this preferred stock in August 1999, using a portion of the proceeds from
securitization.

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

     Reference is made to "Market Risk Sensitive Instruments" in Review of
Financial Condition and Results of Operations.
<PAGE>

                              PPL CORPORATION AND
                              -------------------
              PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES
              ---------------------------------------------------

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

     Reference is made to "Legal Proceedings" in PPL's and PPL Electric
Utilities' Annual Report to the SEC on Form 10-K for the year ended December 31,
1999, and to the PPL and PPL Electric Utilities Notes to Consolidated Financial
Statements for additional information regarding various pending administrative
and judicial proceedings involving regulatory, environmental and other matters.

     Pursuant to changes in the Pennsylvania Public Utility Realty Tax Act
("PURTA") enacted in 1999, PPL Electric Utilities has filed a number of tax
assessment appeals in various counties throughout its service territory.  These
appeals challenge existing local tax assessments, which now furnish the basis
for payment of the PURTA tax on PPL Electric Utilities' properties.  Also, as of
January 1, 2000, generation facilities are no longer taxed under PURTA, and
these local assessments will be used directly to determine local real estate tax
liability for PPL Electric Utilities' power plants.  PPL Electric Utilities has
filed retroactive appeals for tax years 1998 and 1999, as permitted by the new
law, as well as prospective appeals for 2000, as permitted under normal
assessment procedures.

     Hearings on the appeals were held by the boards of assessment appeals in
each county, and decisions have now been rendered by most counties.  To the
extent the appeals were denied or PPL Electric Utilities was not otherwise
satisfied with the results, PPL Electric Utilities has filed further appeals
from the board decisions with the appropriate county Courts of Common Pleas.

     Of all the pending proceedings, the most significant appeal concerns the
assessed value of the Susquehanna nuclear station.  The current county
assessment of the Susquehanna station indicates a market value of $3.9 billion.
However, based on Pennsylvania assessment law, PPL Electric Utilities contends
that machinery and equipment used at the Susquehanna station are not part of the
real estate subject to taxation.  An independent appraiser for PPL Electric
Utilities has estimated the market value of the taxable portion of the plant to
be approximately $20 million.

     PPL Electric Utilities' appeal of the Susquehanna station assessment is
currently pending in the Luzerne County Court of Common Pleas, and a trial date
has been set for December 2000.  As a result of these proceedings and potential
appeals, a final determination of market value and the associated tax liability
may not occur for several years.

     Based on the county market valuation of $3.9 billion, the Berwick Area
School District (where the Susquehanna station is located) has issued a tax bill
to PPL Electric Utilities for just under $25 million for the first six months of
2000 and another tax bill for about $47 million for its fiscal year 2000-2001.
PPL Electric Utilities has also received a joint tax bill from the county and
the municipality for another $22 million, which covers tax year 2000.  On the
basis of PPL Electric Utilities' appraisal, the School District would be
entitled to receive about $250,000 in local taxes annually, and the county and
the township combined would receive about $123,000 annually.  In July 2000, the
School District submitted its own appraisal,
<PAGE>

which indicates a market value of the taxable portion of the plant of about $372
million. Based on this appraisal, the School District would be entitled to
receive about $4.5 million dollars annually in local taxes and the county and
township combined would receive about $2.2 million dollars annually.

     In the other assessment appeals pending in county courts, the local
authorities have assessed PPL Electric Utilities' generating plants at an
aggregate amount of about $330 million for tax year 2000, for a total tax
liability of about $6.8 million.  PPL Electric Utilities has estimated the
aggregate market value of these plants at about $26 million for tax year 2000,
for a total tax liability of about $454,000.  As at the Susquehanna station, the
School Districts involved in these proceedings have issued interim tax bills at
levels which are disputed by PPL Electric Utilities.  Final determinations of
market value and associated tax liability, in these proceedings may not occur
for several years.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

       (a)     Exhibits

               10 - 364-Day Revolving Credit Facility

               12a and 12b - Computation of Ratio of Earnings to Fixed Charges

               27 - Financial Data Schedule

       (b)     Reports on Form 8-K

       PPL and PPL Electric Utilities Report dated July 1, 2000
       --------------------------------------------------------

       Item 5. Other Events

               Information regarding PPL's and PPL Utilities' completion of a
       corporate realignment.

       PPL and PPL Electric Utilities Report dated July 1, 2000
       --------------------------------------------------------

       Item 2. Disposition of Assets (PPL Electric Utilities)

       Item 5. Other Events (PPL)

               Information regarding PPL's and PPL Utilities' completion of a
       corporate realignment.

       Item 7. Financial Statements and Exhibits

               Corporate Organization Before and After Realignment.

               Unaudited Pro Forma Consolidated Financial Information of PPL
       Electric Utilities.
<PAGE>

       PPL Report dated July 26, 2000
       ------------------------------

       Item 5. Other Events

               Press release regarding PPL's earnings for the second quarter of
       2000 and its revised earnings forecasts for 2000 and 2001.

       Item 7. Financial Statements and Exhibits

               Press release dated July 26, 2000, regarding PPL's earnings for
       the second quarter of 2000 and forecasted earnings.

       PPL Report dated August 1, 2000
       -------------------------------

       Item 5. Other Event

               Press release regarding the financial impact on PPL of the
       potential acquisition of Hyder plc.

       Item 7. Financial Statements and Exhibits

               Press release regarding the financial impact on PPL of the
       potential acquisition of Hyder plc.

       PPL Report dated August 18, 2000
       --------------------------------

       Item 5. Other Events

               Press release regarding WPDL's announcement of a further
       increased offer of 365 pence per share for the remaining shares of Hyder
       plc.

               Press release  regarding PPL's announcement of revised earnings
       forecasts for 2000 and 2001.

       PPL Report dated September 29, 2000
       -----------------------------------

       Item 5. Other Events

               Information regarding the acquisition of Hyder plc.

       Item 7. Financial Statements and Exhibits

               Audited Consolidated Financial Information of Hyder plc.

               Unaudited Pro Forma Consolidated Financial Information of PPL.

               Consent of PricewaterhouseCoopers, LLP.
<PAGE>

                                   SIGNATURE
                                   ---------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized. The signature for each undersigned
company shall be deemed to relate only to matters having reference to such
company or its subsidiaries.

                                     PPL Corporation
                                     ---------------
                                         (Registrant)

                                     PPL Electric Utilities Corporation
                                     ----------------------------------
                                         (Registrant)



Date: November 13, 2000                      /s/ John R. Biggar
                                     -------------------------------------
                                               John R. Biggar
                                         Senior Vice President and
                                          Chief Financial Officer
                                             (PPL Corporation)
                                        (principal financial officer)



                                             /s/ Joseph J. McCabe
                                     -------------------------------------
                                               Joseph J. McCabe
                                         Vice President and Controller
                                     (PPL Electric Utilities Corporation)
                                        (principal accounting officer)