<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  June 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 _________________


<TABLE>
<CAPTION>
 Commission File     Registrant; State of Incorporation;       IRS Employer
      Number             Address; and Telephone No.         Identification No.
------------------   -----------------------------------    ------------------
<S>                  <C>                                    <C>
     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
</TABLE>

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,
                                      144,633,835 shares outstanding at
                                      July 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
                                      July 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 JUNE 30, 2000
                      -----------------------------------

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


                                                                    Page
                                                                    ----

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          19

      Item 3. Quantitative and Qualitative Disclosures
              About Market Risk                                      31

   PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES

      Item 1. Financial Statements

           Consolidated Statement of Income                          33

           Consolidated Statement of Cash Flows                      34

           Consolidated Balance Sheet                                35

           Consolidated Statement of Shareowner's Common Equity      37

           Notes to Consolidated Financial Statements                38

      Item 2. Management's Discussion and Analysis of
              Financial Condition and Results of Operations          43

      Item 3. Quantitative and Qualitative Disclosures
              About Market Risk                                      54

PART II. OTHER INFORMATION

      Item 1. Legal Proceedings                                      55

      Item 4. Submission of Matters to a Vote of Security Holders    56

      Item 6. Exhibit and Reports on Form 8-K                        57

SIGNATURES                                                           58

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES                    59
<PAGE>

                      GLOSSARY OF TERMS AND ABBREVIATIONS


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

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.

ICP - Incentive Compensation Plan.

ISO - Independent System Operator.

LIBOR - London Interbank Offered Rate.

MOU - Memorandum of Understanding.

NOX - nitrogen oxide.

NPDES - National Pollutant Discharge Elimination System.

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.

PENOBSCOT HYDRO - Penobscot Hydro, LLC, a PPL Global subsidiary which generates
electricity for the New England market.  Effective July 1, 2000, Penobscot Hydro
was renamed PPL Maine, LLC, which is a subsidiary of PPL Generation, LLC.

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.

PPL ENERGY FUNDING - PPL Energy Funding Corporation, a PPL unregulated
subsidiary which, as of July 1, 2000, is the parent company for most of PPL's
unregulated businesses.

PPL ENERGYPLUS - PPL EnergyPlus, LLC, a PPL Electric Utilities unregulated
subsidiary which supplies energy and energy services in newly deregulated
markets.  Effective July 1, 2000, PPL EnergyPlus is a subsidiary of PPL Energy
Funding Corporation.

PPL GAS UTILITIES  - PPL Gas Utilities Corporation, a PPL 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,
<PAGE>

2000, owns and operates U.S. generating facilities through various subsidiaries.

PPL GLOBAL  - PPL Global, Inc., a PPL 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, a PPL subsidiary which generates electricity
for wholesale and retail customers in Montana and the Northwest.  Effective July
1, 2000, PPL Montana is a subsidiary of PPL Generation.

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

PPL SPECTRUM - PPL Spectrum, Inc., a PPL unregulated subsidiary which offers
energy-related products and services.  PPL Spectrum became a subsidiary of PPL
EnergyPlus, 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.

SNCR - selective non-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.

SO2 - sulfur dioxide.

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.
<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; 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 June 30, 2000 and December 31, 1999, and the Consolidated Statement
of Income and Consolidated Statement of Cash Flows for the periods ended June
30, 2000 and 1999. The financial condition and results of operations of PPL
Electric Utilities and PPL Global were the principal factors affecting PPL's
financial condition and results of operations during these periods.


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

<TABLE>
<CAPTION>
                                                                   Three Months               Six Months
                                                                   Ended June 30,            Ended June 30,
                                                                --------------------      -------------------
                                                                  2000        1999         2000         1999
                                                                --------     -------      -------      ------
<S>                                                             <C>          <C>          <C>          <C>
OPERATING REVENUES
  Electric...................................................   $  683       $  584       $1,472       $1,251
  Natural gas and propane....................................       36           24           94           70
  Wholesale energy marketing and trading.....................      483          336          943          632
  Energy related businesses..................................       95           60          201          118
                                                                ------       ------       ------       ------
  Total......................................................    1,297        1,004        2,710        2,071
                                                                ------       ------       ------       ------
OPERATING EXPENSES
  Operation
    Electric fuel............................................       95           97          216          220
    Natural gas and propane..................................       14           10           38           33
    Energy purchases for retail load and wholesale...........      484          347          947          613
    Other....................................................      141          140          304          295
    Amortization of recoverable transition costs.............       46           41          109           86
  Maintenance................................................       74           57          120           97
  Depreciation and amortization..............................       70           61          138          121
  Taxes, other than income...................................       49           43          109           95
  Energy related businesses..................................       83           44          168           85
                                                                ------       ------       ------       ------
  Total......................................................    1,056          840        2,149        1,645
                                                                ------       ------       ------       ------
OPERATING INCOME.............................................      241          164          561          426
                                                                ------       ------       ------       ------
Other Income - Net...........................................        8            7            7            7
                                                                ------       ------       ------       ------
INCOME BEFORE INTEREST, INCOME TAXES AND MINORITY INTEREST...      249          171          568          433

Interest Expense.............................................       92           61          180          123
                                                                ------       ------       ------       ------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST.............      157          110          388          310
                                                                ------       ------       ------       ------
Income Taxes.................................................       58           40          140          114
Minority Interest............................................                                  1
                                                                ------       ------       ------       ------
INCOME BEFORE DIVIDENDS ON PREFERRED STOCK...................       99           70          247          196
Preferred Stock Dividend Requirements........................        7            7           13           13
                                                                ------       ------       ------       ------
NET INCOME...................................................   $   92       $   63       $  234       $  183
                                                                ======       ======       ======       ======
EARNINGS PER SHARE OF COMMON STOCK
  BASIC AND DILUTED..........................................    $0.64        $0.40        $1.63        $1.16

Dividends Declared per Share of Common Stock.................   $0.265        $0.25        $0.53        $0.50
</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)

<TABLE>
<CAPTION>
                                                              Six Months
                                                             Ended June 30,
                                                            ----------------
                                                              2000     1999
                                                            -------   ------
<S>                                                         <C>       <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES...........         $ 254    $ 287

CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for property, plant and equipment....          (214)    (228)
  Investment in electric energy projects............          (418)
  Sale of nuclear fuel to trust.....................            27       14
  Other investing activities - net..................                     (9)
                                                             -----    -----
    Net cash used in investing activities...........          (605)    (223)
                                                             -----    -----
CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of long-term debt........................           800
  Issuance of common stock..........................            13        8
  Retirement of long-term debt......................          (275)     (32)
  Termination of nuclear fuel lease.................          (154)
  Payment of common and preferred dividends.........           (86)     (91)
  Net increase in short-term debt...................           128      276
  Payments on capital lease obligation..............           (11)     (27)
  Other financing activities - net..................            18
                                                             -----    -----
    Net cash provided by financing activities.......           433      134
                                                             -----    -----
NET INCREASE IN CASH AND CASH EQUIVALENTS...........            82      198
Cash and Cash Equivalents at Beginning of Period....           133      195
                                                             -----    -----
Cash and Cash Equivalents at End of Period..........         $ 215    $ 393
                                                             =====    =====
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest (net of amount capitalized)............         $ 157    $ 117
    Income taxes....................................         $ 145    $ 111
</TABLE>

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

<PAGE>

CONSOLIDATED BALANCE SHEET
PPL CORPORATION AND SUBSIDIARIES
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                              June 30,         December 31,
                                                                                2000               1999
                                                                            (Unaudited)         (Audited)
                                                                            -----------       -------------
<S>                                                                          <C>                 <C>
ASSETS

CURRENT ASSETS
     Cash and cash equivalents.......................................         $   215            $   133
     Accounts receivable (less reserve:  2000, $33; 1999, $22).......             482                399
     Unbilled revenues...............................................             360                310
     Fuel, materials and supplies - at average cost..................             190                200
     Prepayments.....................................................             135                119
     Unrealized energy trading gains.................................             106                 26
     Other...........................................................             125                106
                                                                              -------            -------
                                                                                1,613              1,293
                                                                              -------            -------
INVESTMENTS
     Investment in unconsolidated affiliates at equity...............             580                424
     Nuclear plant decommissioning trust fund........................             269                255
     Other...........................................................              14                 16
                                                                              -------            -------
                                                                                  863                695
                                                                              -------            -------
PROPERTY, PLANT AND EQUIPMENT
     Electric utility plant in service - net
          Transmission and distribution..............................           2,470              2,462
          Generation.................................................           2,465              2,352
          General....................................................             277                259
                                                                              -------            -------
                                                                                5,212              5,073
     Construction work in progress - at cost.........................             221                181
     Nuclear fuel owned and leased - net.............................             123                139
                                                                              -------            -------
          Electric utility plant - net...............................           5,556              5,393
     Gas and oil utility plant - net.................................             171                171
     Other property - net............................................              69                 60
                                                                              -------            -------
                                                                                5,796              5,624
                                                                              -------            -------
REGULATORY ASSETS AND OTHER NONCURRENT ASSETS
     Recoverable transition costs....................................           2,538              2,647
     Other...........................................................           1,059                915
                                                                              -------            -------
                                                                                3,597              3,562
                                                                              -------            -------
                                                                              $11,869            $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
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                                                                            June 30,    December 31,
                                                                                                              2000          1999
                                                                                                          (Unaudited)    (Audited)
                                                                                                          -----------   ------------
<S>                                                                                                       <C>           <C>
LIABILITIES AND EQUITY

CURRENT LIABILITIES
     Short-term debt..................................................................................      $   985         $   857
     Long-term debt...................................................................................          356             468
     Capital lease obligation.........................................................................                           58
     Above market NUG contracts.......................................................................           96              99
     Accounts payable.................................................................................          422             399
     Taxes and interest accrued.......................................................................          151             144
     Dividends payable................................................................................           45              43
     Unrealized energy trading losses.................................................................          105              28
     Other............................................................................................          113             184
                                                                                                            -------         -------
                                                                                                              2,273           2,280
                                                                                                            -------         -------
LONG-TERM DEBT........................................................................................        4,329           3,689
                                                                                                            -------         -------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
     Deferred income taxes and investment tax credits.................................................        1,529           1,548
     Above market NUG purchases.......................................................................          627             674
     Capital lease obligation.........................................................................                           67
     Other............................................................................................          933             892
                                                                                                            -------         -------
                                                                                                              3,089           3,181
                                                                                                            -------         -------
COMMITMENTS AND CONTINGENT LIABILITIES................................................................
                                                                                                            -------         -------
MINORITY INTEREST.....................................................................................           55              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...................................................................        1,873           1,860
     Treasury stock...................................................................................         (836)           (836)
     Earnings reinvested..............................................................................          812             654
     Accumulated other comprehensive income...........................................................          (63)            (55)
     Capital stock expense and other..................................................................          (12)            (12)
                                                                                                            -------         -------
                                                                                                              1,776           1,613
                                                                                                            -------         -------
                                                                                                            $11,869         $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 Six Months Ended
                                                                                          June 30,                June 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............................      1,860       1,874       1,860       1,866
    Common stock issued through the DRIP and the ICP (a).........................         13                      13           8
                                                                                    --------    --------    --------    --------
Capital in excess of par value at end of period..................................      1,873       1,874       1,873       1,874
                                                                                    --------    --------    --------    --------
Treasury stock at beginning of period............................................       (836)       (419)       (836)       (419)
                                                                                    --------    --------    --------    --------
Treasury stock at end of period..................................................       (836)       (419)       (836)       (419)
                                                                                    --------    --------    --------    --------
Earnings reinvested at beginning of period.......................................        758         453         654         372
     Net income (b)..............................................................         92          63         234         183
     Cash dividends declared on common stock.....................................        (38)        (39)        (76)        (78)
                                                                                    --------    --------    --------    --------
Earnings reinvested at end of period.............................................        812         477         812         477
                                                                                    --------    --------    --------    --------
Accumulated other comprehensive income at beginning of period....................        (35)        (11)        (55)         (4)
     Foreign currency translation adjustments, net of tax benefit
       of $9, $2, $7, $3 (b).....................................................        (28)         (9)         (8)        (16)
                                                                                    --------    --------    --------    --------
Accumulated other comprehensive income at end of period..........................        (63)        (20)        (63)        (20)
                                                                                    --------    --------    --------    --------
Capital stock expense at beginning of period.....................................        (12)        (27)        (12)        (27)
     Other.......................................................................                     (1)                     (1)
                                                                                    --------    --------    --------    --------
Capital stock expense at end of period...........................................        (12)        (28)        (12)        (28)
                                                                                    --------    --------    --------    --------
Total Shareowners' Common Equity.................................................   $  1,776    $  1,886    $  1,776    $  1,886
                                                                                    ========    ========    ========    ========
Common stock shares (thousands) at beginning of period (a).......................    143,697     157,694     143,697     157,412
    Common stock issued through the DRIP and the ICP.............................        603                     603         282
                                                                                    --------    --------    --------    --------
Common stock shares at end of period.............................................    144,300     157,694     144,300     157,694
                                                                                    ========    ========    ========    ========
(a)  $.01 par value, 390,000 thousand 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................................................................   $     92    $     63    $    234    $    183
       Other comprehensive income, net of tax:
            Foreign currency translation adjustments.............................        (28)         (9)         (8)        (16)
                                                                                    --------    --------    --------    --------
       Total other comprehensive income..........................................        (28)         (9)         (8)        (16)
                                                                                    --------    --------    --------    --------
       Comprehensive Income......................................................   $     64    $     54    $    226    $    167
                                                                                    ========    ========    ========    ========
</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 June 30, 1999 and December 31, 1999 financial
statements have been reclassified to conform to the presentation in the June 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, LLC, the new
unregulated nuclear generating subsidiary of PPL Generation, in connection with
the corporate realignment.  See Note 11 for additional information.

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 six months ended June 30, 2000, the weighted average
shares outstanding (in thousands) were 144,137 and 143,948 respectively.
Dilutive shares had no impact on EPS of $.64 and $1.63 for those periods.

     For the three and six months ended June 30, 1999, the weighted average
shares outstanding (in thousands) were 157,694 and 157,653,
<PAGE>

respectively. Dilutive shares had no impact on EPS of $.40 and $1.16 for those
periods.

4.  SEGMENT AND RELATED INFORMATION

     At June 30, 2000, PPL's principal business segment was PPL Electric
Utilities, which, along with PPL EnergyPlus, provided electricity delivery
service in eastern and central Pennsylvania, sold retail electricity throughout
Pennsylvania and in deregulated electricity markets in other states, and
marketed wholesale electricity in the United States and Canada.  PPL's other
reportable business segment, PPL Global, invested in and developed worldwide
power projects, with the majority of its international investments located in
the U.K., Chile and El Salvador.  PPL Global also owned and operated generating
facilities in the United States.  PPL Global's revenue consisted of equity
earnings in unconsolidated affiliates, revenues from the sale of generation to
wholesale customers, and revenue from the delivery of electricity to retail
customers in foreign countries.  Other operating revenues of PPL included gas
distribution, unregulated generating activities (including PPL Montana),
mechanical contracting and engineering, and unregulated energy services.
Financial data for PPL's business segments were as follows (millions of
dollars):

<TABLE>
<CAPTION>
                                      THREE MONTHS             SIX MONTHS
                                      ENDED JUNE 30,         ENDED JUNE 30,
                                    -----------------       ----------------
                                     2000      1999          2000      1999
                                    ------    ------        ------    ------
<S>                                 <C>       <C>           <C>       <C>
INCOME STATEMENT DATA
 Operating revenues
  PPL Electric Utilities            $1,006    $  923        $2,133    $1,891
  PPL Global                           129        20           231        41
  Other and Eliminations               162        61           346       139
                                    ------    ------        ------    ------
                                     1,297     1,004         2,710     2,071
 Depreciation and amortization
  PPL Electric Utilities                58        59           116       117
  PPL Global                             5                      10
  Other and Eliminations                 7         2            12         4
                                    ------    ------        ------    ------
                                        70        61           138       121
 Interest expense
  PPL Electric Utilities                64        48           125        96
  PPL Global                            14         7            28        15
  Other and Eliminations                14         6            27        12
                                    ------    ------        ------    ------
                                        92        61           180       123
 Income taxes
  PPL Electric Utilities                63        42           144       118
  PPL Global                            (1)        1            (3)        1
  Other and Eliminations                (4)       (3)           (1)       (5)
                                    ------    ------        ------    ------
                                        58        40           140       114
 Net income
  PPL Electric Utilities                95        61           226       169
  PPL Global                             8         5            16        14
  Other and Eliminations               (11)       (3)           (8)
                                    ------    ------        ------    ------
                                    $   92    $   63        $  234    $  183
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                   SIX MONTHS
                                                 ENDED JUNE 30,
                                             ----------------------
                                               2000          1999
                                             -------        -------
<S>                                          <C>            <C>
CASH FLOW DATA
Expenditures for property,
 plant & equipment
  PPL Electric Utilities                     $   155        $   142
  PPL Global                                      45             80
  Other and Eliminations                          14              6
                                             -------        -------
                                             $   214        $   228

Investment in electric energy projects
  PPL Electric Utilities
  PPL Global                                 $   418
  Other and Eliminations
                                             -------
                                             $   418
</TABLE>

---------------------------------------------------------------------

                                            JUNE 30,     DECEMBER 31,
                                              2000           1999
                                            --------     ------------
BALANCE SHEET DATA
Cumulative net investment in
 unconsolidated affiliates
  PPL Electric Utilities                     $    17        $    17
  PPL Global                                     563            407
  Other and Eliminations
                                             -------        -------
                                                 580            424
Total assets
  PPL Electric Utilities                       9,320          9,092
  PPL Global                                   1,870          1,424
  Other and Eliminations                         679            658
                                             -------        -------
                                             $11,869        $11,174

     As discussed in Note 11, PPL and PPL Electric Utilities completed a
corporate realignment on July 1, 2000.  PPL's new segments under SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information", will be
PPL Utilities (regulated electric and gas businesses), PPL EnergyPlus/PPL
Generation (domestic energy supply and marketing), PPL Global (acquisition and
development of energy projects and ownership of international energy projects),
and Other.

5.  INVESTMENTS IN UNCONSOLIDATED AFFILIATES

     PPL's investments in unconsolidated affiliates were $580 million and $424
million at June 30, 2000 and December 31, 1999, respectively. The most
significant investment was PPL Global's investment in WPD, which was $338
million at June 30, 2000 and $303 million at December 31, 1999.  PPL Global has
a 51% equity ownership interest in WPD, but lacks voting control. Accordingly,
PPL Global accounts for its investment in WPD (and other investments where it
has majority ownership but lacks voting control) under the equity method of
accounting.

     Summarized below is information from the financial statements of
unconsolidated affiliates, included in the PPL consolidated financial statements
under the equity method for the periods noted.  (For purpose of comparability,
the summarized information of Emel/EC, in which PPL Global acquired a
controlling interest in 1999, is excluded
<PAGE>

from all periods. Also, June 30, 2000 information excludes the CEMAR
acquisition, as this investment will be consolidated in the third quarter of
2000.) (millions of dollars):

<TABLE>
<CAPTION>

BALANCE SHEET DATA
                                        JUNE 30,       DECEMBER 31,
                                          2000             1999
                                        --------       ------------
<S>                                     <C>            <C>
Current Assets                           $  138           $  389
Noncurrent Assets                         3,343            3,340
Current Liabilities                         243              367
Noncurrent Liabilities                    1,819            1,890

INCOME STATEMENT DATA
                              THREE MONTHS          SIX MONTHS
                             ENDED JUNE 30,       ENDED JUNE 30,
                            ----------------     --------------
                             2000       1999      2000    1999
                            ------     -----     ------   -----
Revenues                    $  111     $ 212     $  252   $ 593
Operating Income                62        88        127     144
Net Income                      41        39         85      65
</TABLE>

6. FINANCIAL INSTRUMENTS

     PPL entered into forward-starting interest rate swaps and treasury lock
agreements with various counterparties to hedge the 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 from these settlements.  In February 2000 and in June 2000, PPL
settled $430 million and $350 million, respectively, notional amount of forward-
starting interest rate swaps in connection with medium-term note issuances, and
received net proceeds of about $16 million and $10 million, respectively, from
these settlements.  These amounts have been deferred on the balance sheet and
will subsequently be amortized over the life of the medium-term notes.  At June
30, 2000, PPL agreed to pay fixed rates between 6.174% - 7.208% on forward-
starting swaps with notional amounts of $285 million, and maturity dates between
July 31, 2010 and July 31, 2030. PPL will receive a variable-rate interest
payment based on either a 3-month or 6-month LIBOR rate through the maturity
dates of these agreements.  The estimated fair value of these agreements, which
represents the estimated amount PPL would receive if it had terminated these
agreements at June 30, 2000, was $8 million.

     At June 30, 2000, PPL entered into $485 million notional amount of interest
rate swap agreements whereby it agreed to pay a floating interest rate and
receive a fixed interest rate payment.  These swaps were executed with the
intent of adjusting the amount of floating-rate debt carried in its liability
portfolio.  The estimated fair value of these contracts, representing the amount
PPL would pay if it terminated these agreements at June 30, 2000 was $8 million.

     In July 2000, PPL Montana received proceeds of $410 million in connection
with its sale and leaseback of its investment in the Colstrip Steam Generation
electric plant.  PPL unwound approximately $270 million of interest rate swaps
in connection with this lease
<PAGE>

transaction and received net proceeds of about $4 million. These amounts have
been deferred on the balance sheet and will subsequently be amortized over the
life of the lease.

     In May 2000, PPL entered into currency options related to the acquisition
bid for Hyder plc at the cost of approximately $2 million giving it the right,
but not the obligation, to purchase $400 million worth of British pounds at the
prevailing exchange rates.  The estimated fair value of these options,
representing the amount PPL would receive if it terminated these agreements on
June 30, 2000 was approximately $1 million.

7.  CREDIT ARRANGEMENTS AND FINANCING ACTIVITIES

     PPL Electric Utilities issues commercial paper.  At June 30, 2000, PPL
Electric Utilities had $272 million of commercial paper outstanding, at interest
rates ranging from 7.01% to 7.40% per annum.

     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 June 30, 2000, PPL Capital
Funding had $211 million of commercial paper outstanding, at interest rates
ranging from 6.97% to 7.40% per annum.

     In order to enhance liquidity, 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 June 30, 2000, no borrowings were outstanding under either
facility.

     In February 2000, PPL Capital Funding issued $500 million of medium-term
notes, 7.75% Series due 2005.  An additional $300 million of medium-term notes,
8.375% Series due 2007, were issued in June 2000.  The proceeds were used for
general corporate purposes including making loans to PPL subsidiaries and
reducing commercial paper balances.  Both of these issuances were under the $1.2
billion shelf registration statement filed with the SEC in September 1999.

   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 2000 and again in June 2000, PPL Montana reduced the
amount of these credit facilities by $100 million and $390 million,
respectively.  At June 30, 2000, $360 million of borrowings were outstanding
under these facilities.  PPL Montana used proceeds from the operating lease
transaction to repay its borrowings under its credit facilities and make
distributions to its post realignment parent, PPL Generation.  In July 2000, PPL
Montana reduced the amount of these facilities to $100 million.
<PAGE>

8.  ACQUISITIONS

   In 1998, PPL Global signed definitive agreements with the Montana Power
Company ("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 Company 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.

   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.

   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.  The acquisition, which is subject to certain
governmental approvals, is expected to close by the end of 2000.  The
arrangement entitles each company to one-half of the output from this 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 units are expected to be completed by the
summer of 2002, pending necessary governmental approvals.

   In June 2000, PPL Global announced plans to build 600 megawatts of peaking
capacity on Long Island in New York.  The gas-fired generation station is
expected to cost approximately $300 million and is expected to be operational by
June 2002, pending necessary governmental approvals.
<PAGE>

   On August 11, 2000, Western Power Distribution Limited (WPDL), which is
jointly owned by subsidiaries of PPL and The Southern Company (Southern),
submitted a further increased offer  for the remaining shares of Hyder plc
(Hyder) of 365 pence per share, for a total purchase price of 559 pounds
sterling ($838 million based on current exchange rates).  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.

   August 11 was the last day for submission of revised offers, no other revised
offers were submitted and WPDL was informed by the Takeover Panel in the United
Kingdom that it was the highest bidder.  WPDL's increased offer has not yet been
formally announced, pending the outcome of an appeal by Nomura (the other party
competing to acquire Hyder) against a ruling of the Panel Executive allowing the
WPDL offer to proceed.

   In 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.
PPL Global has recorded the purchase as a non-current asset under the equity
method of accounting due to insufficient information to record the full
consolidation. The opening balance sheet of CEMAR will be recorded as of
September 30, 2000.

   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.  PPL acquired Western Mass. Holdings in
September 1999.

9.  COMMITMENTS AND CONTINGENT LIABILITIES

NUCLEAR INSURANCE

     PPL Electric Utilities 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 Electric Utilities 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 Electric Utilities could be assessed retroactive premiums in the
event of the insurers' adverse loss experience.  At June 30, 2000, the maximum
amount PPL Electric Utilities could be assessed under these programs was about
$24 million.

     PPL Electric Utilities' 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 Electric
Utilities 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 Electric Utilities 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.

     In connection with the corporate realignment, effective July 1, 2000,
ownership and operation of the Susquehanna nuclear station was transferred to
PPL Susquehanna, LLC, which became the insured under these programs.
<PAGE>

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
compliance with these provisions.

     During 1999, PPL Electric Utilities achieved seasonal (May-June) NOx
reductions to 55% from 1990 levels in response to the DEP's rule implementing
the Northeast Ozone Transport Region's Memorandum of Understanding (OTR MOU).
These reductions were achieved with operational initiatives that relied, to a
large extent, on the low NOx burners installed in compliance with the acid rain
requirements.

     The DEP is close to finalizing 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
Electric Utilities' sources. The EPA's SIP-call was, in large measure, upheld by
the D.C. Circuit Court of Appeals. It is expected that the 2003 NOx reductions
will be achieved 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 in 1999.  The new particulates standard, if finalized, may
require further reductions in SO2 for certain PPL subsidiaries and require 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.  The EPA has
obtained mercury and chlorine sampling and other data from electric generating
units, including those operated by PPL subsidiaries, in order to make this
determination.

     In 1999, the EPA initiated enforcement actions against eight 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 recently issued notices
of violation to two additional utilities.  The EPA also has threatened similar
enforcement action with respect to plants operated by other unnamed utilities,
as well as facilities in other industries.  PPL at this time is unable to
predict whether such EPA enforcement actions will be brought with respect to any
of its affiliate's plants.  Compliance with any such
<PAGE>

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 as routine.

     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.


     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.

     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.

     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 June 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 its sites where PPL Gas Utilities may be liable for
remediation.  The sites primarily include former coal gas manufacturing
facilities.
<PAGE>

     At June 30, 2000, PPL Electric Utilities and PPL Gas Utilities had accrued
approximately $20 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.  Under the
Montana Power acquisition agreement, PPL Montana is indemnified by the Montana
Power Company for any pre-acquisition environmental liabilities.  However, this
indemnification is conditioned on certain circumstances that can result in PPL
Montana and the Montana Power Company 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 June 30, 2000, PPL had
guaranteed $1.4 billion of medium-term notes and $211 million of commercial
paper issued by PPL Capital Funding.  PPL had also guaranteed certain
obligations of PPL Global subsidiaries, totaling $118 million at June 30, 2000.
Additionally, PPL had guaranteed certain obligations of PPL EnergyPlus for up to
$255 million under power purchase and sales agreements.

     At June 30, 2000, PPL Electric Utilities had provided a guarantee in the
amount of $12 million in support of an affiliated company.

10.  NEW ACCOUNTING STANDARDS

     In June 2000, the FASB issued SFAS 138, which amends certain implementation
issues of SFAS 133, "Accounting for Derivative
<PAGE>

Instruments and Hedging Activities." PPL intends to adopt SFAS 133 as amended by
SFAS 137 and SFAS 138 as of January 1, 2001. The impact of adopting these
statements on the net income and financial position of PPL is not expected to be
significant.

11.  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 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 of PPL Corporation
and PPL Electric Utilities Corporation" in PPL's and 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 six months
ended June 30, 2000, to the comparable periods in 1999.

     The Consolidated Statement of Income reflects the results of past
operations and is not intended as any indication of the results of future
operations.  Future results of operations 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 $.64 during the three months ended June 30, 2000.
These earnings were $.24 per share, or about 60%, higher than the $.40 per share
earned in the second quarter of 1999.

     This earnings improvement was primarily attributable to higher earnings of
PPL Electric Utilities, resulting from increased margins from energy activities,
an end of the one-year 4% rate reduction for delivery customers, and lower other
operation expenses.  These operating expense reductions included a gain on the
sale of emission allowances, an insurance settlement for environmental liability
coverage, lower pension and medical expenses, as well as decreased load
dispatching costs.  The second quarter earnings improvement also reflects higher
earnings of PPL Global, and the benefit of fewer common shares outstanding as a
result of stock repurchase programs.  These earnings gains were partially offset
by higher levels of interest expense associated with the issuance of transition
bonds in August 1999, to securitize the recovery of stranded costs.

     During the six months ended June 30, 2000, earnings per share were $1.63.
This represents a $.47 per share increase, or 41%, over the $1.16 per share
reported for the first half of 1999.  The increase in earnings for the six month
period was due to the foregoing reasons, as well as earnings from PPL Montana.
<PAGE>

ELECTRIC ENERGY SALES

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

<TABLE>
<CAPTION>
                                       June 30, 2000   vs.  June 30, 1999
                                     -------------------------------------
                                     Three Months Ended   Six Months Ended
                                     ------------------   ----------------
                                        2000      1999      2000     1999
                                     ---------  -------   -------- -------
<S>                                  <C>        <C>       <C>       <C>
Electricity delivered
 to retail customers by PPL (a)         7,851     7,673    17,303   16,866
Less:  Electricity supplied
 by others                              1,712     2,400     4,620    4,179
                                        -----     -----    ------   ------
Electricity supplied to retail
 customers by PPL as PLR                6,139     5,273    12,683   12,687
Electricity supplied to retail
 customers by PPL EnergyPlus            3,072     2,595     6,363    4,067
                                        -----     -----    ------   ------
Total electricity supplied to
 retail customers (a)                   9,211     7,868    19,046   16,754
Wholesale electricity sales             7,184     7,308    16,723   16,261
</TABLE>

(a)  Electricity for customers residing in PPL Electric Utilities' service
     territory who are receiving energy from PPL Electric Utilities or PPL
     EnergyPlus will be reflected in both of these categories.

     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.

     Electricity delivered to retail customers in the three months ended June
30, 2000, increased by 178 million kWh, or 2.3%, from the comparable period in
1999.  This increase reflects higher usage by commercial and residential
customers.

     Electricity delivered to retail customers in the six months ended June 30,
2000, increased by 437 million kWh, or 2.6%, from the comparable period in 1999.
Again, higher usage by commercial and residential customers was the reason for
the increase.

     Electricity supplied to retail customers increased by 1,343 million kWh, or
17.1%, when comparing the three months ended June 30, 2000, to the same period
in 1999.  During the second quarter of 2000, a smaller percentage of customers
in PPL Electric Utilities' service territory obtained energy from a supplier
other than PPL Electric Utilities, which increased the PLR load.  Total
electricity supplied has also increased as the competitive electricity supply
market has expanded.  PPL EnergyPlus is now in its second year of supplying
electricity to customers throughout Pennsylvania, and in 2000 began supplying
electricity to customers in New Jersey, Delaware, Montana and Maine.  PPL
EnergyPlus is also a licensed electricity supplier in
<PAGE>

Maryland and Massachusetts, and has filed for licenses to serve customers in
Connecticut and New York.

     Electricity supplied to retail customers increased by 2,292 million kWh, or
13.7%, when comparing the six months ended June 30, 2000, to the same period in
1999.  PPL EnergyPlus' sales to commercial and industrial classes accounted for
most of the increase.

     Wholesale electricity sales, which includes sales to other utilities and
energy marketers through contracts, spot market transactions or power pool
arrangements, decreased by 124 million kWh in the three months ended June 30,
2000, when compared to the same period in 1999.  This decrease was the result of
decreased activity in the wholesale market and the expiration of bulk power
contracts.

     Wholesale electricity sales increased by 462 million kWh when comparing the
six months ended June 30, 2000 to the same period in 1999.  The increase was
primarily the result of increased activity in the wholesale market, offset
somewhat by the expiration of bulk power contracts.

     PPL Global's Emel/EC subsidiary delivered 798 million kWh and 1,511 million
kWh of retail electricity in the three and six months ended June 30, 2000,
respectively.  In those same periods, PPL Global had domestic wholesale sales of
395 million kWh and 621 million kWh, respectively, through Penobscot Hydro.

     During the three and six months ended June 30, 2000, PPL Montana had
wholesale electric sales of 1,926 million kWh and 4,174 million kWh,
respectively.

OPERATING REVENUES

Electric

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

<TABLE>
<CAPTION>
                                     June 30, 2000  vs. June 30, 1999
                                  -------------------------------------
                                  Three Months Ended   Six Months Ended
                                  ------------------   ----------------
<S>                                     <C>              <C>
Retail Electric Revenue
  PPL Electric Utilities
    Electric delivery                   $  6             $ 14
    PLR electric generation supply       (14)             (28)
  PPL EnergyPlus - electric
    generation supply                     25               82
  PPL Global - Emel/EC - electric
    delivery                              75              140
  PPL Montana                              9               12
  Other                                   (2)               1
                                        ----             ----
                                        $ 99             $221
                                        ====             ====
</TABLE>

     Operating revenues from retail electric operations increased by $99 million
and $221 million for the three and six months ended June
<PAGE>

30, 2000, respectively, when compared to the same periods in 1999. This
increase, in part, reflects PPL Global's consolidation of Emel/EC beginning in
the third quarter of 1999. For the first three months and six months of 2000,
Emel/EC recorded retail revenues of $75 million and $140 million, respectively.
Also, PPL acquired its Montana generating assets in December 1999. The results
of PPL Montana, including revenues and associated costs from electric
operations, have been recorded subsequent to acquisition. Excluding these items,
operating revenues increased by $15 million and $69 million for the three and
six months ended June 30, 2000, respectively, compared with these periods in
1999.

     These increases, in part, reflect higher PPL EnergyPlus sales volumes of
16% and 34%, for the three and six months ended June 20, 2000, respectively,
when compared to the same periods in 1999.  This was primarily driven by
marketing efforts in Pennsylvania and surrounding states that have implemented
customer choice to end-use customers. Also, PPL Electric Utilities' electric
delivery revenues increased due to the termination of a one-year, 4% rate
reduction for electric delivery customers in Pennsylvania.  Partially offsetting
these increases was a decrease in PPL Electric Utilities' energy revenues as a
PLR.

Natural Gas and Propane

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

<TABLE>
<CAPTION>
                              June 30, 2000  vs. June 30, 1999
                          -------------------------------------
                          Three Months Ended   Six Months Ended
                          ------------------   ----------------
<S>                              <C>                 <C>
PPL Gas Utilities                $ 3                 $ 5
PPL EnergyPlus                     9                  19
                                 ---                 ---
                                 $12                 $24
                                 ===                 ===
</TABLE>

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

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):
<PAGE>

<TABLE>
<CAPTION>
                              June 30, 2000  vs. June 30, 1999
                          -------------------------------------
                          Three Months Ended   Six Months Ended
                          ------------------   ----------------
<S>                              <C>                 <C>
PPL Electric Utilities
  Bilateral Sales                $ 58                $137
  PJM                              27                  14
  Cost-based contracts             (9)                (18)
  Gas & oil sales                 (17)                 21
PPL Montana                        64                 124
PPL Global                         26                  34
Other                              (2)                 (1)
                                 ----                ----
                                 $147                $311
                                 ====                ====
</TABLE>

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

     PPL acquired its Montana generating assets in December 1999.  The results
of PPL Montana, including revenues and associated costs from electric
operations, have been recorded subsequent to acquisition.

     Wholesale revenues of PPL Global are related to its operation of Penobscot
Hydro, which was acquired in May 1999.

ENERGY RELATED BUSINESSES

     Energy related businesses contributed $12 million and $16 million to the
operating income of PPL for the three months ended June 30, 2000 and 1999,
respectively.  For the six months ended June 30, 2000 and 1999, these businesses
contributed a total of $33 million to operating income each year.  These results
primarily reflect PPL Global's equity earnings from WPD, and operating income
provided by PPL Spectrum and the mechanical contractor and engineering
subsidiaries.  Energy related businesses are expected to provide an increasing
share of PPL's future earnings.

ENERGY PURCHASES

     Energy purchases for retail load and wholesale activities increased by $137
million for the three months ended June 30, 2000, compared with the same period
in 1999. Emel/EC, which PPL Global consolidated in the third quarter of 1999,
contributed $68 million to the increase through purchases to serve their
customer base.  PPL Montana contributed $29 million to the increase through its
power purchases and related transmission expenses.

      Excluding the effects of Emel/EC and PPL Montana, energy purchases
increased by $40 million in the three months ended June 30, 2000, compared with
the same period in 1999. This increase was attributed 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 the recognized losses on certain long-term forward
transactions.
<PAGE>

     Excluding the energy purchases of Emel/EC and PPL Montana, energy
purchases for the six months ended June 30 2000, increased by $171 million
compared with the same period in 1999. This increase was attributed to similar
factors noted during the comparison of results for the three months ended June
30, 2000.

OTHER OPERATION EXPENSES

     Other operation expenses increased by $1 million and $9 million for the
three and six months ended June 30, 2000, respectively, when compared with the
same periods in 1999.

     Other operation expenses included about $38 million and $57 million for the
three and six months ended June 30, 2000, related to the operations of PPL
Montana and Emel/EC.  PPL Montana acquired the Montana assets in December 1999,
and PPL Global consolidated Emel/EC beginning in the third quarter of 1999.  As
such, there were no other operation expenses recorded for these operations for
the three and six months ended June 30, 1999.

     After eliminating the expenses of PPL Montana and Emel/EC, other operation
expenses decreased by $37 million and $48 million for the three and six months
ended June 30, 2000, respectively, when compared with the same periods in 1999.
Most of this decrease was realized by PPL Electric Utilities. The decrease for
the three months ended June 30, 2000, was primarily due to gains on the sale of
emission allowances, an insurance settlement for coverage for past and potential
future environmental liabilities, and decreases in pension plan costs and
medical expenses. These decreases were partially offset by an increase in wages.

     The decrease for the six months ended June 30, 2000, was due to the
foregoing reasons, as well as decreases in load dispatching activities for
system control and computer software development costs.

MAINTENANCE EXPENSES

     Maintenance expenses increased by $17 million for the three month period
ended June 30, 2000, as compared to the second quarter of 1999.  About $2
million of this increase was due to PPL Global's consolidation of Emel/EC
beginning in the third quarter of 1999 and $5 million was due to the acquisition
of the Montana assets in December, 1999.  After eliminating these expenses from
the second quarter of 2000, maintenance expenses increased by $10 million
compared with the second quarter of 1999.

     Maintenance expenses increased by $23 million for the six months ended June
30, 2000, compared with the same period in 1999.  Contributing to the increase
were $5 million from the Emel/EC consolidation and $7 million from the Montana
acquisition.  The remainder of the increase was due to higher maintenance costs
of PPL Electric Utilities generating stations.
<PAGE>

DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expenses increased by $9 million and $17
million for the three and six months ended June 30, 2000, compared with the same
periods in 1999.  In both periods, about one-half of the increase was due to PPL
Global's consolidation of Emel/EC beginning in the third quarter of 1999 and the
other one-half of the increase was due to the acquisition of the Montana assets
in December 1999.  After eliminating these expenses, depreciation and
amortization in the two periods were essentially unchanged from the prior year.

     PPL subsidiaries periodically review the depreciable lives of their fixed
assets.  In conjunction with corporate realignment activities, undertaken in
early 2000, studies were conducted for depreciable lives of certain generation
assets.  These studies indicated that the estimated economic lives for certain
generation assets are longer than currently used to calculate depreciation for
financial statement purposes.  Therefore, effective July 1, 2000, PPL
subsidiaries will revise the estimated economic lives for fossil generation and
pipeline assets.  The changes in estimated economic lives is expected to reduce
depreciation expense by  $17 million for the remainder of 2000 and approximately
$33 million per year for the next several years from previous levels.

INCOME TAXES

     Income taxes increased by $18 million and $26 million for the three and six
months ended June 30, 2000, respectively, when compared to the same periods in
1999.  These changes were primarily due to increases in PPL's pre-tax book
income.

FINANCING COSTS

     Interest expense increased by $31 million and $57 million, respectively,
for three and six months ended June 30, 2000, compared with the same periods in
1999.  This was primarily due to the issuance of transition bonds in August 1999
and medium-term notes in February and June 2000, as well as 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 in April
and June 2000 and to lower levels of commercial paper balances.

                              FINANCIAL CONDITION
                              -------------------

ENERGY MARKETING AND TRADING ACTIVITIES

     PPL's subsidiaries purchase and sell electric capacity and energy at the
wholesale level under their FERC market-based tariffs.  PPL's 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's subsidiaries enter into these agreements to market available energy
and capacity from their generating assets and to profit from market price
fluctuations.
<PAGE>

PPL's subsidiaries are actively managing their portfolios to attempt to capture
the opportunities and limit their exposure to volatile prices. PPL's
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.  As of June 30, 2000, PPL Electric
Utilities 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 Electric Utilities' non-trading
portfolio, a 10% adverse movement in market prices across all geographic areas
and time periods could have decreased the value of its non-trading portfolio by
approximately $24 million at June 30, 2000.  However, this would have been
offset by an inverse change in the value of the underlying commodity, the
electricity generated. Also at June 30, 2000, PPL Montana estimated that a 10%
adverse movement in market prices could have decreased the value of its non-
trading portfolio by approximately $57 million. This decrease also would have
been offset by an increase in the underlying commodity, the electricity
generated. At June 30, 2000, PPL Montana had no trading transactions as defined
under EITF 98-10 "Accounting for Contracts Involved in Energy Trading and Risk
Management Activities." 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.

     During the second quarter, PPL purchased Transmission Congestion Contracts
(TCC's) in the New York Independent System Operator (ISO) region. These
contracts extend in terms of up to two years and are based upon the marginal
cost of congestion (MCC) between direction specific zonal areas. If the MCC
differs between these two areas, PPL will either receive revenue or incur
expense. Since there is no active secondary market for TCC's, price risk cannot
currently be assessed.

     In connection with the corporate realignment, effective July 1, 2000 the
commodity positions of PPL Electric Utilities were transferred to PPL
EnergyPlus.

     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
<PAGE>

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 6 to Financial Statements for a
discussion of financial derivative instruments outstanding at June 30, 2000.

     At June 30, 2000, PPL's potential annual exposure to increased interest
expense due to a 10% increase in interest rates was estimated at $7 million.

     PPL is also exposed to changes in the fair value of its debt portfolio.  At
June 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 $53 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 June 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 $23
million.

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

     Nuclear Decommissioning Fund - Securities Price Risk

     PPL Electric Utilities has maintained trust funds, as required by the
NRC, to fund certain costs of decommissioning Susquehanna.  At June 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 Electric Utilities actively monitors the investment
performance and periodically reviews asset allocation in accordance with its
nuclear decommissioning trust policy statement.  At June 30, 2000, a 10%
increase in interest rates and a 10% decrease in equity prices would have
resulted in an estimated $18 million reduction in the fair value of the trust
assets.

     Effective July 1, 2000, the nuclear decommissioning fund will be
maintained by PPL Susquehanna, LLC.
<PAGE>

ACQUISITIONS

     Refer to Note 8 to the Financial Statements for information regarding
acquisitions.

     At June 30, 2000, PPL Global had investments in foreign and domestic
facilities, including consolidated investments in Emel/EC, DelSur, and Penobscot
Hydro.  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 8, PPL Global
has continued developing energy projects in Connecticut, Pennsylvania and
Arizona.

FINANCING ACTIVITIES

     In February 2000, PPL Capital Funding issued $500 million of medium-term
notes in the form of 7.75% Series due 2005.  In June 2000, PPL Capital Funding
issued an additional $300 million of medium-term notes in the form of 8.375%
Series due 2007.  These issuances used $800 million of the $1.2 billion SEC
shelf registration filed in September 1999.  At the time of these issuances, PPL
also settled $430 million of swaps related to the February medium-term note
issuance, and $350 million related to the June medium-term note issuance. These
swap had been entered into in a lower interest rate environment as a means to
lock-in interest rates and limit exposure to increasing interest rates, all
pursuant to PPL's interest rate risk management program. PPL received net
proceeds of $16 million from the February settlement of these contracts and $10
million from the June settlement of these contracts, which were deferred on the
balance sheet and are being amortized over the life of the medium-term notes.
The effective interest rate on the medium-term notes was reduced by
approximately 75 basis points as a result of the February hedging activity and
approximately 63 basis points from the June hedging activity.

     In April and June 2000, PPL unwound $450 million of swaps in order to
adjust the amount of floating-rate debt carried in its liability portfolio, with
PPL receiving a payment of approximately $5 million.

     In February 2000, the PPL Board of Directors declared a quarterly common
stock dividend of $.265 per share payable April 1, 2000.  The amount of this
dividend represents an increase of 6% from the amount of the quarterly dividend
($.25 per share) that had been paid since October 1, 1998.  Future dividends,
declared at the discretion of the Board of Directors, will be dependent upon
future earnings, financial requirements and other factors.

     In April 2000, PPL Electric Utilities redeemed and retired all of its
outstanding First Mortgage Bonds, 9-1/4% Series due 2019, at the 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 the par value of $125
million.

     In July 2000, PPL Montana completed the sale of its investment in the
Colstrip coal-fired plant to owner lessors, who will lease the assets back to
PPL Montana under a 36-year operating lease. The proceeds from the sale were
approximately $410 million, with a deferred gain recorded that was not
significant. PPL Montana used proceeds from the operating lease transaction to
repay borrowings under its credit facilities, and make distributions to its
post-realignment parent, PPL Generation.
<PAGE>

FINANCING AND LIQUIDITY

     Cash and cash equivalents increased by $116 million less during the six
months ended June 30, 2000, compared with the same period in 1999.  The reasons
for this change were:

     .    A $33 million decrease in cash provided by operating activities.

     .    A $382 million increase in cash used in investing activities,
          primarily due to PPL Global's acquisition of an 84.7 percent interest
          in CEMAR.

     .    A $299 million increase in cash provided by financing activities. This
          increase was due to additional issuance of medium-term notes, offset
          by the termination of the nuclear fuel lease and an increase in
          retirement of long-term debt.

FINANCIAL INDICATORS

     Earnings for the twelve months ended June 30, 2000 and 1999 were impacted
by one-time adjustments, which are listed in the "Earnings" discussion in the
Results of Operations of PPL's 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:

<TABLE>
<CAPTION>

                                             12 Months Ended June 30,
                                                   2000      1999
                                                 ------    ------
<S>                                              <C>       <C>
Earnings per share, as adjusted                  $ 2.80    $ 2.12

Return on average common equity                   25.18%    12.61%

Ratio of pre-tax income to interest charges        2.94      3.23

Dividends declared per share                     $ 1.03    $ 1.00
</TABLE>

ENVIRONMENTAL MATTERS

     See Note 9 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.  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
<PAGE>

is licensed to sell energy in Maryland and Massachusetts and has filed
applications for such licenses in Connecticut and 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
        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
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 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
<PAGE>

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.

     Exhibit 99 illustrates the relevant elements of the corporate organization
immediately before and after realignment.


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>

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 June 30, 2000 and December 31, 1999, and the
Consolidated Statement of Income and Consolidated Statement of Cash Flows for
the periods ended June 30, 2000 and 1999. All nonutility operating transactions
are included in "Other Income" in PPL Electric Utilities' Consolidated Statement
of Income.

<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of Dollars)
                                                             Three Months            Six Months
                                                             Ended June 30,         Ended June 30,
                                                           -------------------    -------------------
                                                             2000       1999        2000       1999
                                                           --------   --------    --------   --------
<S>                                                        <C>        <C>         <C>        <C>
OPERATING REVENUES
  Electric............................................     $    598   $    584    $  1,320   $  1,251
  Natural gas.........................................           10          1          21          2
  Wholesale energy marketing and trading..............          394        335         782        631
  Energy related businesses...........................            4          3          10          7
                                                           --------   --------    --------   --------
  Total...............................................        1,006        923       2,133      1,891
                                                           --------   --------    --------   --------
OPERATING EXPENSES
  Operation
    Electric fuel.....................................           88         97         200        220
    Energy purchases for retail load and wholesale....          388        347         779        613
    Other.............................................           91        130         226        277
    Amortization of recoverable transition costs......           46         41         109         86
  Maintenance.........................................           67         57         106         95
  Depreciation and amortization.......................           58         59         116        117
  Taxes, other than income............................           44         41          99         91
  Energy related businesses...........................            7          3          13          7
                                                           --------   --------    --------   --------
  Total...............................................          789        775       1,648      1,506
                                                           --------   --------    --------   --------
Operating Income......................................          217        148         485        385
                                                           --------   --------    --------   --------
Other Income - Net....................................           12         15          23         22
                                                           --------   --------    --------   --------
Income Before Interest and Income Taxes...............          229        163         508        407

Interest Expense......................................           64         48         125         96
                                                           --------   --------    --------   --------
Income Before Income Taxes............................          165        115         383        311

Income Taxes..........................................           63         42         144        118
                                                           --------   --------    --------   --------
Net Income Before Dividends on Preferred stock........          102         73         239        193

Dividends on Preferred Stock..........................            7         12          13         24
                                                           --------   --------    --------   --------
Earnings Available to PPL Corporation.................     $     95   $     61    $    226   $    169
                                                           ========   ========    ========   ========
</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)
                                                            Six Months
                                                           Ended June 30,
                                                         -------------------
                                                           2000       1999
                                                         --------   --------
NET CASH PROVIDED BY OPERATING ACTIVITIES.............    $  258     $  241

CASH FLOWS FROM INVESTING ACTIVITIES
  Expenditures for property, plant and equipment........    (155)      (142)
  Sale of nuclear fuel to trust.........................      27         14
  Repayment from (loan to) parent and its affiliates....       6        (12)
  Other investing activities - net......................                  3
                                                         --------   --------
    Net cash used in investing activities...............    (122)      (137)
                                                         --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Retirement of long-term debt..........................    (275)
  Termination of nuclear fuel lease.....................    (154)
  Payments on capital lease obligation..................     (11)       (26)
  Payment of common and preferred dividends.............     (51)      (141)
  Net increase in short-term debt.......................     466        164
                                                         --------   --------
    Net cash used in financing activities...............     (25)        (3)
                                                         --------   --------
Net Increase in Cash and Cash Equivalents...............     111        101
Cash and Cash Equivalents at Beginning of Period........      52         31
                                                         --------   --------
Cash and Cash Equivalents at End of Period..............  $  163     $  132
                                                         ========   ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest (net of amount capitalized)................  $  117     $  103
    Income taxes........................................  $  137     $  122


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
(Millions of Dollars)

<TABLE>
<CAPTION>

                                                                  June 30,       December 31,
                                                                    2000             1999
                                                                 (Unaudited)      (Audited)
                                                                 -----------     ------------
ASSETS
<S>                                                              <C>              <C>
CURRENT ASSETS
  Cash and cash equivalents...................................     $   163          $    52
  Accounts receivable (less reserve:  2000, $25; 1999, $18)...         296              274
  Unbilled revenues...........................................         334              275
  Fuel, materials and supplies - at average cost..............         175              175
  Prepayments.................................................         122               87
  Unrealized energy trading gains.............................         106               26
  Other.......................................................          86               78
                                                                 -----------     ------------
                                                                     1,282              967
                                                                 -----------     ------------
INVESTMENTS
  Loan to parent and its affiliates...........................         483              489
  Nuclear plant decommissioning trust fund....................         269              255
  Investment in unconsolidated affiliate at equity............          17               17
  Other.......................................................          14               15
                                                                 -----------     ------------
                                                                       783              776
                                                                 -----------     ------------
PROPERTY, PLANT AND EQUIPMENT
  Electric utility plant in service - net
    Transmission and distribution.............................       2,194            2,193
    Generation................................................       1,653            1,620
    General...................................................         211              208
                                                                 -----------     ------------
                                                                     4,058            4,021
  Construction work in progress - at cost.....................         136              139
  Nuclear fuel owned and leased - net.........................         123              139
                                                                 -----------     ------------
    Electric utility plant - net..............................       4,317            4,299
  Gas and oil utility plant - net.............................          25               26
  Other property - net........................................          21               20
                                                                 -----------     ------------
                                                                     4,363            4,345
                                                                 -----------     ------------
REGULATORY ASSETS AND OTHER NONCURRENT ASSETS
  Recoverable transition costs................................       2,538            2,647
  Other.......................................................         354              357
                                                                 -----------     ------------
                                                                     2,892            3,004
                                                                 -----------     ------------
                                                                   $ 9,320          $ 9,092
                                                                 ===========     ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.

<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
PPL ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES
(Millions of Dollars)
                                                                                                 June 30,     December 31,
                                                                                                   2000          1999
                                                                                                (Unaudited)    (Audited)
                                                                                                -----------   ------------
<S>                                                                                             <C>            <C>
LIABILITIES AND EQUITY

CURRENT LIABILITIES
  Short-term debt............................................................................      $  276         $  183
  Short-term debt payable to affiliates of parent............................................         373
  Long-term debt.............................................................................         234            352
  Capital lease obligation...................................................................                         58
  Above market NUG contracts.................................................................          96             99
  Accounts payable...........................................................................         302            284
  Taxes and interest accrued.................................................................         118            116
  Dividends payable..........................................................................          45              6
  Unrealized energy trading losses...........................................................         105             28
  Other......................................................................................          92            162
                                                                                                -----------   ------------
                                                                                                    1,641          1,288
                                                                                                -----------   ------------
LONG-TERM DEBT...............................................................................       2,997          3,153
                                                                                                -----------   ------------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
     Deferred income taxes and investment tax credits........................................       1,519          1,528
     Above market NUG purchases..............................................................         627            674
     Capital lease obligation................................................................                         67
     Other...................................................................................         743            739
                                                                                                -----------   ------------
                                                                                                    2,889          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......................................................................         569            419
    Accumulated other comprehensive income...................................................          (6)            (6)
    Capital stock expense and other..........................................................         (16)           (16)
                                                                                                -----------   ------------
                                                                                                    1,446          1,296
                                                                                                -----------   ------------
                                                                                                   $9,320         $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 Six Months Ended
                                                                                  June 30,                       June 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
                                                                        ------------  ------------        ---------  -------------
Additional paid-in capital at end of period...........................         55            70                 55          70
                                                                        ------------  ------------        ---------  -------------
Treasury stock at beginning of period.................................       (632)                            (632)
                                                                        ------------  ------------        ---------  -------------
Treasury stock at end of period.......................................       (632)                            (632)
                                                                        ------------  ------------        ---------  -------------
Earnings reinvested at beginning of period............................        512           241                419         210
     Net income (b)...................................................         95            61                226         169
     Cash dividends declared on common stock..........................        (38)          (40)               (76)       (117)
                                                                        ------------  ------------        ---------  -------------
Earnings reinvested at end of period..................................        569           262                569         262
                                                                        ------------  ------------        ---------  -------------
Accumulated other comprehensive income at beginning of period.........         (6)           (6)                (6)         (6)
                                                                        ------------  ------------        ---------  -------------
Accumulated other comprehensive income at end of period...............         (6)           (6)                (6)         (6)
                                                                        ------------  ------------        ---------  -------------
Capital stock expense at beginning of period..........................        (16)          (20)               (16)        (20)
                                                                        ------------  ------------        ---------  -------------
Capital stock expense at end of period................................        (16)          (20)               (16)        (20)
                                                                        ------------  ------------        ---------  -------------
Total Shareowner's Common Equity......................................   $  1,446      $  1,782           $  1,446    $  1,782
                                                                        ============  ============        =========  =============
Common stock shares (thousands) at beginning of period (a)............    102,230       157,300            102,230     157,300
                                                                        ------------  ------------        ---------  -------------
Common stock shares at end of period..................................    102,230       157,300            102,230     157,300
                                                                        ============  ============        =========  =============
(a)  No par value.  170,000 thousand shares authorized.  All common
     shares of PPL Electric Utilities stock are owned by PPL.
(b)  Statement of Comprehensive Income:
     Net income.......................................................   $     95      $     61           $    226    $    169
     Total other comprehensive income.................................
                                                                        ------------  ------------        ---------  -------------
     Comprehensive Income.............................................   $     95      $     61           $    226    $    169
                                                                        ============  ============        =========  =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
                         of the financial statements.

<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 June 30, 1999 and December 31, 1999 financial
statements have been reclassified to conform to the presentation in the
June 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, LLC, the new
unregulated nuclear generating subsidiary of PPL Generation, in connection with
the corporate realignment. See Note 6 for additional information.

3.  CREDIT ARRANGEMENTS AND FINANCING ACTIVITIES

     PPL Electric Utilities issues commercial paper.  At June 30, 2000, PPL
Electric Utilities had $272 million of commercial paper outstanding at interest
rates ranging from 7.01% to 7.40% per annum.  At June 30, 2000, PPL Electric
Utilities also had $373 million of notes payable to a subsidiary of PPL.

     In order to enhance liquidity, 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 June 30, 2000, no borrowings were outstanding under either
facility.

4.  COMMITMENTS AND CONTINGENT LIABILITIES

NUCLEAR INSURANCE

     PPL Electric Utilities 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 Electric Utilities 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
<PAGE>

specified conditions.  Under the property and replacement power insurance
programs, PPL Electric Utilities could be assessed retroactive premiums in the
event of the insurers' adverse loss experience.  At June 30, 2000, the maximum
amount PPL Electric Utilities could be assessed under these programs was about
$24 million.

     PPL Electric Utilities' 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 Electric
Utilities 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 Electric Utilities 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.

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

ENVIRONMENTAL MATTERS

     Air

     The Clean Air Act deals, in part, with acid rain, attainment of federal
ambient ozone standards and toxic air emissions.  PPL Electric Utilities is in
compliance with these provisions.

     During 1999, PPL Electric Utilities achieved seasonal (May-June) NOx
reductions to 55% from 1990 levels in response to the DEP's rule implementing
the Northeast Ozone Transport Region's Memorandum of Understanding (OTR MOU).
These reductions were achieved with operational initiatives that rely, to a
large extent, on the low NOx burners installed in compliance with the acid rain
requirements.

     The DEP is close to finalizing 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
Electric Utilities' sources. The EPA's SIP-call was, in large measure, upheld by
the D. C. Circuit Court of Appeals. It is expected that the 2003 NOx reductions
will be achieved 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 in 1999.  The new particulates standard, if finalized, may
require further reductions in SO2 and may
<PAGE>

expand the planned seasonal NOx reductions at PPL Electric Utilities to year-
round commencing in 2010-2012.

     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 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.  The EPA has obtained mercury and
chlorine sampling and other data from electric generating units, including those
operated by PPL Electric Utilities, in order to make this determination.

     In 1999, the EPA initiated enforcement actions against eight 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 recently issued notices of
violation to two additional utilities.  The EPA also has threatened similar
enforcement action with respect to plants operated by other unnamed utilities,
as well as facilities in other industries.  PPL Electric Utilities at this time
is unable to predict whether such EPA enforcement actions will be brought with
respect to any of the plants transferred to PPL Generation effective July 1,
2000.  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 as routine.

     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 the 1999 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.

     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.

     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 the 1999 10-K.  Additional capital expenditures could be
required beyond the year 2003
<PAGE>

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.

     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 June 30, 2000, PPL
Electric Utilities has completed work on approximately two-thirds of the sites
included in the consent order.

     At June 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.

     General

     Due to the environmental issues discussed above or other environmental
matters, PPL Electric Utilities and, effective July 1, 2000, PPL Generation, 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, additional capital expenditures, operating expenses and other costs may
be incurred in amounts which are not now determinable, but which could be
significant.

GUARANTEES OF AFFILIATED COMPANIES

     At June 30, 2000, PPL Electric Utilities provided a guarantee in the amount
of $12 million in support of an affiliated company.

5.  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.  The impact of adopting these
statements on the net income and financial position of PPL Electric Utilities is
not expected to be significant.

6.  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.
<PAGE>

The realignment included PPL Electric Utilities' transfer of certain generation
and related assets, along with the associated liabilities, to affiliates at book
value. The net book value of this transfer, recorded as a distribution on common
shares from PPL Electric Utilities to its parent, PPL, was $271 million. PPL
Energy Funding, a holding company for substantially 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.
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 of PPL Electric
Utilities Corporation" 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 six months
ended June 30, 2000, to the comparable periods in 1999.

     The Consolidated Statement of Income reflects the results of past
operations and is not intended as any indication of the results of future
operations.  Future results of operations will necessarily be affected by
various and diverse factors and developments, particularly the corporate
realignment as discussed in Note 6.  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

     PPL Electric Utilities' earnings available to PPL were $95 million for the
three months ended June 30, 2000.  These earnings were $34 million, or about
56%, higher than the $61 million of earnings available to PPL during the second
quarter of 1999.  Comparing the first six months of 2000 to the same period in
1999, earnings available to PPL increased from $169 million to $226 million, or
34%.

     These earnings improvements were primarily due to increased margins on
energy activities, an end of the one-year 4% rate reduction for delivery
customers, and lower other operation expenses.  These operating expense
reductions included a gain on the sale of emission allowances, an insurance
settlement for environmental liability coverage, lower pension and medical
expenses, as well as decreased load dispatching costs.

     Additional earnings were also made available to PPL as a result of lower
dividends based on fewer shares of outstanding preferred stock.

     The earnings improvements were partially offset by higher interest expense
associated with the issuance of transition bonds in August 1999, to securitize
the recovery of stranded costs.
<PAGE>

ELECTRIC ENERGY SALES

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

                                         June 30, 2000 vs. June 30, 1999
                                         -------------------------------
                                       Three Months Ended   Six Months Ended
                                       ------------------   ----------------
                                         2000      1999      2000     1999
                                         -----     ----      ----     ----
Electricity delivered
 to retail customers by PPL (a)         7,851     7,673    17,303   16,866
Less:  Electricity supplied
 by others                              1,712     2,400     4,620    4,179
                                        -----     -----    ------   ------
Electricity supplied to retail
 customers by PPL as PLR                6,139     5,273    12,683   12,687
Electricity supplied to retail
 customers by PPL EnergyPlus            3,072     2,595     6,363    4,067
                                        -----     -----    ------   ------
Total electricity supplied to
 retail customers (a)                   9,211     7,868    19,046   16,754
Wholesale electricity sales             7,184     7,308    16,723   16,261

(a)  Electricity for customers residing in PPL Electric Utilities' service
     territory who are receiving energy from PPL Electric Utilities or PPL
     EnergyPlus will be reflected in both of these categories.

     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.

     Electricity delivered to retail customers in the three months ended June
30, 2000, increased by 178 million kWh, or 2.3%, from the comparable period in
1999.  This increase reflects higher usage by commercial and residential
customers.

     Electricity delivered to retail customers in the six months ended June 30,
2000, increased by 437 million kWh, or 2.6%, from the comparable period in 1999.
Again, higher usage by commercial and residential customers was the reason for
the increase.

     Electricity supplied to retail customers increased by 1,343 million kWh, or
17.1%, when comparing the three months ended June 30, 2000, to the same period
in 1999.  During the second quarter of 2000, a smaller percentage of customers
in PPL Electric Utilities' service territory obtained energy from a supplier
other than PPL Electric Utilities, which increased the PLR load.  Total
electricity supplied has also increased as the competitive electricity supply
market has expanded.  PPL EnergyPlus is now in its second year of supplying
electricity to customers throughout Pennsylvania, and began supplying
electricity in 2000 to customers in New Jersey, Delaware, Montana and Maine.
PPL EnergyPlus is also a licensed electricity supplier in
<PAGE>

Maryland and Massachusetts, and has filed for such licenses to serve customers
in Connecticut and New York.

     Electricity supplied to retail customers increased by 2,292 million kWh, or
13.7%, when comparing the six months ended June 30, 2000, to the same period in
1999.  Since PPL EnergyPlus markets to the commercial and industrial classes,
they accounted for most of the increase.

     Wholesale electricity sales, which includes sales to other utilities and
energy marketers through contracts, spot market transactions or power pool
arrangements, decreased by 124 million kWh in the three months ended June 30,
2000, when compared to the same period in 1999.  This decrease was the result of
decreased activity of the Energy Marketing Center in the wholesale market and by
the expiration of bulk power contracts.

     Wholesale electricity sales increased by 462 million kWh when comparing the
six months ended June 30, 2000 to the same period in 1999.  The increase was
primarily the result of increased activity of the Energy Marketing Center in the
wholesale market, offset somewhat 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):

                                          June 30, 2000 VS. June 30, 1999
                                          -------------------------------
                                       Three Months Ended   Six Months Ended
                                       ------------------   ----------------

PPL Electric Utilities
   Electric delivery                          $  6               $ 14
   PLR electric generation supply              (14)               (28)
PPL EnergyPlus - electric
    generation supply                           25                 82
   Other                                        (3)                 1
                                              ----               ----
                                              $ 14               $ 69
                                              ====               ====

     Operating revenues from retail electric operations increased by $14 million
and $69 million for the three and six months ended June 30, 2000, respectively,
when compared to the same periods in 1999.  PPL EnergyPlus volumes have
increased by 16% and 34% for the three and six months ended June 30, 2000,
respectively, when compared to the same periods in 1999.  This increase was
primarily driven by PPL EnergyPlus' marketing efforts in Pennsylvania and
surrounding states that have been implemented to secure end-use customers in
these deregulated states.  Also, PPL Electric Utilities' electric delivery
revenues have increased, in part, due to the termination of a one-year, 4% rate
reduction for electric delivery customers in Pennsylvania.  Partially offsetting
these increases was a decrease in PPL Electric Utilities' energy revenues as a
PLR.
<PAGE>

Natural Gas

     The increase in natural gas revenues of $9 million and $19 million for the
three and six months ended June 30, 2000, respectively, when compared to the
same periods in 1999 was attributable to higher retail sales by PPL EnergyPlus.
This increase reflects intensified gas marketing efforts in 2000, and increased
retail pricing attributed to higher wholesale gas commodity costs.

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):


                                         June 30, 2000 vs. June 30, 1999
                                         -------------------------------
                                       Three Months Ended  Six Months Ended
                                       ------------------  ----------------
PPL Electric Utilities
  Bilateral Sales                            $ 58              $137
  PJM                                          27                14
  Cost-based contracts                         (9)              (18)
  Gas & oil sales                             (19)               19
  Other                                         2                (1)
                                             ----              ----
                                             $ 59              $151
                                             ====              ====

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

ELECTRIC FUEL COSTS

     For the three and six months ended June 30, 2000, electric fuel costs
decreased $9 million and $20 million compared with the same periods in 1999.
The decrease during both periods was attributed to lower generation because of
the Holtwood plant closing in April 1999, the sale of the Sunbury plant in
November 1999, and plant outages.  In addition, lower nuclear fuel expense
contributed to the six-month period 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 increased by $41
million during the three months ended June 30, 2000 compared with the same
period in 1999. This increase was attributed 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.
<PAGE>

    Energy purchases for the six months ended June 30, 2000 increased by $166
million compared with the same period in 1999.  This increase was attributed to
similar factors noted during the comparison of results for the second quarter.

OTHER OPERATION EXPENSES

     Other operation expenses decreased by $39 million and $51 million for the
three and six months ended June 30, 2000, respectively, when compared with the
same periods in 1999.

     The decrease for the three months ended June 30, 2000, was primarily due to
gains on the sale of emission allowances, an insurance settlement coverage for
past and potential future environmental liabilities and decreases in pension
plan costs and medical expenses. These decreases were partially offset by an
increase in wages.

     The decrease for the six months ended June 30, 2000, was due to the
foregoing reasons, as well as decreases in load dispatching activities for
system control and computer software development costs.

MAINTENANCE EXPENSES

     Maintenance expenses increased by $10 million and $11 million for the three
and six months ended June 30, 2000, respectively, when compared with the same
periods in 1999.  The increases were due to higher maintenance costs at
generating stations.

FINANCING COSTS

     Interest expense increased by $16 million and $29 million, respectively,
for the three months and six months ended June 30, 2000, compared with the same
periods in 1999.  These increases were primarily due to the issuance of
transition bonds in August 1999, partially offset by the retirement of first
mortgage bonds in April and June 2000.

     Dividends on preferred stock decreased by $5 million and $11 million during
the three and six months ended June 30, 2000, compared with the same periods in
1999.  These decreases were 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 $21 million and $26 million for the three and six
months ended June 30, 2000, respectively, when compared to the same periods in
1999.  These changes were primarily due to increases in PPL Electric Utilities'
pre-tax book income.
<PAGE>

                              Financial Condition

ENERGY MARKETING AND TRADING ACTIVITIES

     PPL Electric Utilities purchases and sells electric capacity and energy at
the wholesale level under its FERC market-based tariff.  PPL Electric Utilities
has entered into agreements to sell firm capacity or energy under its market-
based tariff to certain entities located inside and outside of the PJM power
pool.  PPL Electric Utilities enters into these agreements to market available
energy and capacity from its generating assets and to profit from market price
fluctuations.  PPL Electric Utilities is actively managing its portfolio to
attempt to capture the opportunities and limit its exposure to volatile prices.
PPL Electric Utilities also purchases and sells energy futures contracts as well
as other commodity-based financial instruments in accordance with its risk
management objectives and strategies.

MARKET RISK SENSITIVE INSTRUMENTS

     Commodity Price Risk

     PPL Electric Utilities uses various methodologies to simulate forward price
curves in the energy markets to estimate the size and probability of changes in
market value resulting from commodity price movements. The methodologies require
several key assumptions, including selection of confidence levels, the holding
period of the commodity positions, and the depth and applicability to future
periods of historical commodity price information. As of June 30, 2000, PPL
Electric Utilities estimated that a 10% adverse movement in market prices could
have decreased the value of its trading portfolio by approximately $1 million.
For PPL Electric Utilities' non-trading portfolio, a 10% adverse movement in
market prices across all geographic areas and time periods could have decreased
the value of its non-trading portfolio by approximately $24 million at June 30,
2000. However, this would have been offset by an inverse change in the value of
the underlying commodity, the electricity generated. In addition to commodity
price risk, PPL Electric Utilities' commodity positions are also subject to
operational and event risks such as increases in load demand and forced outages
at generating plants.

     During the second quarter, PPL purchased Transmission Congestion Contracts
(TCC's) in the New York Independent System Operator (ISO) region. These
contracts extend in terms of up to two years and are based upon the marginal
cost of congestion (MCC) between direction specific zonal areas. If the MCC
differs between these two areas PPL will either receive revenue or incur
expense. Since there is no active secondary market for TCC's, price risk cannot
currently be assessed.

     In Connection with the corporate realignment, effective July 1, 2000 the
commodity positions of PPL Electric Utilities were transferred to PPL
EnergyPlus.
<PAGE>

Interest Rate Risk

     PPL Electric Utilities has issued debt to finance its operations, which
increases interest rate risk.  At June 30, 2000, PPL Electric Utilities'
potential annual exposure to increased interest expense due to a 10% increase in
interest rates was estimated at $5 million.

     PPL Electric Utilities is also exposed to changes in the fair value of its
debt portfolio.  At June 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 $12 million.

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

Nuclear Decommissioning Fund - Securities Price Risk

     PPL Electric Utilities has maintained trust funds, as required by the
NRC, to fund certain costs of decommissioning Susquehanna.  At June 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 Electric Utilities actively monitors the investment
performance and periodically reviews asset allocation in accordance with its
nuclear decommissioning trust policy statement.  At June 30, 2000, a 10%
increase in interest rates and 10% decrease in equity prices would have resulted
in an estimated $18 million reduction in the fair value of the trust assets.

     Effective July 1, 2000, the nuclear decommissioning fund will be maintained
by PPL Susquehanna, LLC.

FINANCING ACTIVITIES

     In April 2000, PPL Electric Utilities redeemed and retired all of its
outstanding First Mortgage Bonds, 9-1/4% Series due 2019, at the 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 the par value of $125
million.
<PAGE>

FINANCING AND LIQUIDITY

     Cash and cash equivalents increased by an additional $10 million during the
six months ended June 30, 2000, compared with the same period in 1999.  The
reasons for this change were:

     .    A $17 million increase in cash provided by operating activities.

     .    A $15 million decrease in cash used in investing activities, primarily
          due to an increase in proceeds from the sales of nuclear fuel to the
          trust, prior to the termination of the nuclear fuel lease.

     .    A $22 million increase in cash used in financing activities. This
          increase was due to greater retirement of long-term debt, and the
          termination of the nuclear fuel lease. These net financing outflows
          were partially offset by additional issuance of short-term debt, and a
          decrease in payments of common and preferred dividends.

FINANCIAL INDICATORS

     Earnings for the twelve months ended June 30, 2000 and 1999 were impacted
by one-time adjustments and restructuring impacts, which are listed in the
"Earnings" discussion in the Results of Operations of 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:


                                               12 Months Ended June 30,
                                               ------------------------
                                                  2000          1999
                                                 ------        ------
Earnings available to PPL
  (adjusted, in millions)                        $ 394          $ 322

Ratio of pre-tax income to interest charges       3.47           3.87

ENVIRONMENTAL MATTERS

     See Note 4 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.  Refer to PPL Electric
Utilities' 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
<PAGE>

is licensed to sell energy in Maryland and Massachusetts and has filed
applications for such licenses in Connecticut and 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 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 company 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
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
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.  This distribution will
be reflected in PPL Electric Utilities' Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000.

     The pro forma balance sheet gives effect to the distribution of PPL
Electric Utilities' investment in PPL Energy Funding as if the distribution was
made on June 30, 2000.  The adjustments are applied to the balance sheet at June
30, 2000, as set forth in Item 1.  The as-adjusted balances at June 30, 2000
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.  The as-adjusted balance sheet also reflects the consolidated
accounts of PPL Transition Bond Company, PPL Capital Trust and PPL Capital Trust
II,  and CEP Commerce, LLC.

     Pro forma adjustments are also provided to the income statement for the six
months ended June 30, 2000.  The adjustments are to the income statement 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 statement is intended
<PAGE>

to reflect the pro forma consolidated operations of the remaining portions of
PPL Electric Utilities.

PPL Electric Utilities Corporation and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
June 30, 2000
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                           Pro Forma
                                           As Reported    Adjustments    As Adjusted
                                           ------------   -----------    -----------
                                           (Unaudited)
<S>                                          <C>            <C>            <C>
ASSETS
Current Assets                               $1,282        $  (404)       $  878
Investments                                     783           (578)          205
Property, Plant and Equipment                 4,363         (1,969)        2,394
Regulatory Assets and
 Other Noncurrent Assets                      2,892            (16)        2,876
                                             ------        -------        ------
                                             $9,320        $(2,967)       $6,353
                                             ======        =======        ======

LIABILITIES AND EQUITY

Current Liabilities                          $1,641        $  (767)       $  874
Long-term Debt                                2,997                        2,997
Deferred Credits and
 Other Noncurrent Liabilities                 2,889         (1,935)          954
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                            569           (271)          298
 Other Common Equity                            877              6           883
                                             ------        -------        ------
                                             $9,320        $(2,967)       $6,353
                                             ======        =======        ======

</TABLE>

PPL Electric Utilities Corporation and Subsidiaries
Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 2000
(Millions of Dollars)

<TABLE>
<CAPTION>
                                                           Pro Forma
                                            As Reported   Adjustments   As Adjusted
                                            -----------   -----------   -----------
                                            (Unaudited)
<S>                                          <C>            <C>           <C>
Operating Revenues                           $2,133        $(1,062)       $1,071
Operating Expenses                            1,648           (813)          835
                                             ------        -------        ------
Operating Income                                485           (249)          236
Other Income                                     23            (15)            8
                                             ------        -------        ------
Income Before Interest and
 Income Taxes                                   508           (264)          244
Interest Expense                                125            (27)           98
Income Taxes                                    144            (95)           49
                                             ------        -------        ------
Income Before Dividends on
 Preferred Stock                             $  239        $  (142)       $   97
                                             ======        =======        ======
</TABLE>
<PAGE>

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 August 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
<PAGE>

$123,000 annually. In July 2000, the School District submitted its own
appraisal, 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 may not occur for several years.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At PPL's Annual Meeting of Shareowners held on April 28, 2000, the
shareowners:

     (1)  Elected all four nominees for the office of director. The vote for all
     nominees was 113,260,010. The votes for individual nominees were as
     follows:


                                        Number Of Votes
                                        ---------------
                                 For         Withhold Authority
                                 ---         ------------------
     John W. Conway           113,530,967            2,437,964
     E. Allen Deaver          113,577,689            2,391,062
     Elmer D. Gates           113,260,010            2,708,921
     W. Keith Smith           113,448,121            2,520,810

     The vote to withhold authority for all nominees was 2,391,062.

     (2)  Ratified the appointment of PricewaterhouseCoopers LLP as independent
     auditors for the year ended December 31, 2000.  The vote was 113,696,261 in
     favor and 930,850 against, with 1,341,820 abstaining.

     At PPL Electric Utilities' Annual Meeting of Shareowners held on April 28,
2000, the shareowners:

     (1) Elected all four nominees for the office of director. The vote for all
     nominees was 102,230,382. The votes for individual nominees were as
     follows:
                                             Number of Votes For
                                             -------------------
     John W. Conway                             103,204,705
     E. Allen Deaver                            103,204,705
     Elmer D. Gates                             103,204,705
     W. Keith Smith                             103,204,705

     The vote to withhold authority for all nominees was 0.
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits

             4 - Supplemental Indenture No. 4 dated as of June 1, 2000,
          supplemental to the Indenture dated as of November 1, 1997 among PPL
          Capital Funding, Inc., PPL Corporation and the Chase Manhattan Bank.

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

             27 - Financial Data Schedule

             99 - Corporate Organization Before and After Realignment

     (b)  Reports on Form 8-K

     PPL Report dated May 19, 2000

     Item 5.  Other Events

          Press release dated May 19, 2000 regarding PPL's agreement to acquire
     an additional interest in the Conemaugh power plant.

          Press release dated May 25, 2000 regarding PPL's announcement to
     develop five generation facilities in Pennsylvania.

     PPL Report dated May 31, 2000

     Item 5.  Other Events

          Information regarding WPD's cash offer to purchase all of the ordinary
     share capital of Hyder plc.

     PPL Report date June 15, 2000

     Item 5.  Other Events

          Information regarding PPL Global's tender offer to purchase an 84.7
     percent interest in CEMAR.
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934,
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:  August 14, 2000        /s/         John R. Biggar
                              -----------------------------------------
                                          John R. Biggar
                                     Senior Vice President and
                                     Chief Financial Officer
                                         (PPL Corporation)
                                    (principal financial officer)


                              /s/          James E. Abel
                              -----------------------------------------
                                           James E. Abel
                                             Treasurer
                                (PPL Electric Utilities Corporation)
                                    (principal financial officer)