**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

**Form      10-Q**

| [X]                      | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 for the quarterly period ended March                31, 2007            |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     | OR                                                                                                                                                                                                           |
| [                 ] | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 for the transition period from _________ to                ___________ |

|   | Commission                FileNumber | Registrant;                State of Incorporation;Address                and Telephone Number                                                                                                                                                     | IRS                EmployerIdentification                No. |
|--------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|
|   |                                 |                                                                                                                                                                                                                                              |                                                         |
|   | 1-11459                              | **PPL                Corporation**(Exact                name of Registrant as specified in its charter)(Pennsylvania)Two                North Ninth StreetAllentown,                PA 18101-1179(610)                774-5151                    | 23-2758192                                                   |
|   |                                 |                                                                                                                                                                                                                                              |                                                         |
|   | 333-74794                            | **PPL                Energy Supply, LLC**(Exact                name of Registrant as specified in its charter)(Delaware)Two                North Ninth StreetAllentown,                PA 18101-1179(610)                774-5151                 | 23-3074920                                                   |
|   |                                 |                                                                                                                                                                                                                                              |                                                         |
|   | 1-905                                | **PPL                Electric Utilities Corporation**(Exact                name of Registrant as specified in its charter)(Pennsylvania)Two                North Ninth StreetAllentown,                PA 18101-1179(610)                774-5151 | 23-0959590                                                   |
|   |                                 |                                                                                                                                                                                                                                              |                                                         |
|   |                                 |                                                                                                                                                                                                                                              |                                                         |

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

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

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

|   | PPL                Corporation                    | Common                stock, $.01 par value, 385,949,422 shares outstanding at April 30,                2007.                                             |
|--------|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                              |                                                                                                                                                      |
|   | PPL                Energy Supply, LLC             | PPL                Corporation indirectly holds all of the membership interests in PPL                Energy                Supply, LLC.                  |
|   |                                              |                                                                                                                                                      |
|   | PPL                Electric Utilities Corporation | Common                stock, no par value, 66,368,056 shares outstanding and all held by                PPL                Corporation at April 30, 2007. |
|   |                                              |                                                                                                                                                      |

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

----

**PPL      CORPORATION**

**PPL      ENERGY SUPPLY, LLC**

**PPL      ELECTRIC UTILITIES CORPORATION**

|                                                                                                                                                                               | Page                                                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                               |                                                                                                                                       |
| GLOSSARY                OF TERMS AND ABBREVIATIONS                                                                                                                                 | i                                                                                                                                          |
|                                                                                                                                                                               |                                                                                                                                       |
| FORWARD-LOOKING                INFORMATION                                                                                                                                         | 1                                                                                                                                          |
|                                                                                                                                                                               |                                                                                                                                       |
| PART                I. FINANCIAL INFORMATION                                                                                                                                       |                                                                                                                                       |
|                                                                                                                                                                               | Item                1. Financial Statements                                                                                                |   |
|                                                                                                                                                                               |                                                                                                                                       | **PPL                Corporation and Subsidiaries** |   |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Income | 2 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Cash Flows | 3 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Balance Sheets | 4 |
|                                                                                                                                                                               |                                                                                                                                       | **PPL                Energy Supply, LLC and Subsidiaries** |   |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Income | 6 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Cash Flows | 7 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Balance Sheets | 8 |
|                                                                                                                                                                               |                                                                                                                                       | **PPL                Electric Utilities Corporation and Subsidiaries** |   |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Income | 10 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Statements of Cash Flows | 11 |
|                                                                                                                                                                               |                                                                                                                                       |   | Condensed                Consolidated Balance Sheets | 12 |
|                                                                                                                                                                               |                                                                                                                                       | Combined                Notes to Condensed Consolidated Financial Statements | 14 |
|                                                                                                                                                                               | Item                2. Management's Discussion and Analysis of Financial Condition and                Results                of Operations |   |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation and Subsidiaries | 42 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply, LLC and Subsidiaries | 54 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities Corporation and Subsidiaries | 65 |
|                                                                                                                                                                               | Item                3. Quantitative and Qualitative Disclosures About Market Risk                                                          | 69 |
|                                                                                                                                                                               | Item                4. Controls and Procedures                                                                                             | 69 |
|                                                                                                                                                                               |                                                                                                                                       |
| PART                II. OTHER INFORMATION                                                                                                                                          |                                                                                                                                       |
|                                                                                                                                                                               | Item                1. Legal Proceedings                                                                                                   | 69 |
|                                                                                                                                                                               | Item                1A. Risk Factors                                                                                                       | 69 |
|                                                                                                                                                                               | Item                6. Exhibits                                                                                                            | 70 |
|                                                                                                                                                                               |                                                                                                                                       |
| SIGNATURES                                                                                                                                                                         | 72                                                                                                                                         |
|                                                                                                                                                                               |                                                                                                                                       |
| COMPUTATION                OF RATIO OF EARNINGS TO FIXED CHARGES                                                                                                                   |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation and Subsidiaries | 73 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply, LLC and Subsidiaries | 74 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities Corporation and Subsidiaries | 75 |
|                                                                                                                                                                               |                                                                                                                                       |
| CERTIFICATES                OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER                PURSUANT                TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation | 76 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply, LLC | 78 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities Corporation | 80 |
|                                                                                                                                                                               |                                                                                                                                       |
| CERTIFICATES                OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER                PURSUANT                TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |                                                                                                                                       |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Corporation | 82 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Energy Supply, LLC | 84 |
|                                                                                                                                                                               |                                                                                                                                       |   | PPL                Electric Utilities Corporation | 86 |

----

**GLOSSARY      OF TERMS AND ABBREVIATIONS**

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

***Elfec***

***Emel***

***Griffith***

***Hyder***

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

***PPL      Capital Funding***

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

***PPL      Energy Funding***

***PPL      EnergyPlus***

***PPL      Energy Supply***

***PPL      Gas Utilities***

***PPL      Generation***

***PPL      Global***

***PPL      Martins Creek***

***PPL      Montana***

***PPL      Services***

***PPL      Susquehanna***

***PPL      Transition Bond Company***

***SIUK      Capital Trust I***

***WPD***

***WPD      LLP***

***WPD***
**(South      Wales)**

***WPD***
**(South      West)**

***WPDH      Limited***

***WPDL***

***Other      terms and abbreviations***

**£**

***2006      Form 10-K***

***APB***

***ARO***

***Bcf***

***Clean      Air Act***

***CTC***

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

***DEP***

***DOE***

***EITF***

***EMF***

***EPA***

***EPS***

***EWG***

***FASB***
** **

***FERC***

***FIN***

***Fitch***

***FSP***

***FTR***

***GWh***

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

***ISO***

***ITC***

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

***Montana      Power***

***Moody's***

***MW***

***NorthWestern***

***NRC***

***NUGs***
* *

***NYMEX***

***PCB***

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

***PLR***

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

***Preferred      Securities***

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

***PUC      Final Order***

***PUHCA***

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

***Regulation      S-X***

***SCR***

***Scrubber***

***SEC***

***SFAS***

***S&P***

***Superfund***

***Synfuel      projects***

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

***VaR***
*** ***

----

**FORWARD-LOOKING      INFORMATION**

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

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

----

| **PART                I. FINANCIAL                INFORMATION**                                                                                                                 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Item                1. Financial Statements**                                                                                                                                 |
| **CONDENSED                CONSOLIDATED STATEMENTS OF INCOME**                                                                                                                  |
| **PPL                Corporation and Subsidiaries**                                                                                                                             |
| (Unaudited)                                                                                                                                                                     |
| *(Millions                of Dollars, except per share data)*                                                                                                                   |
|                                                                                                                                                                            |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                            |   | **2007** |   | **2006** |
| **Operating                Revenues**                                                                                                                                           |   |   |   |   |   |   |
| Utility                                                                                                                                                                         |   | **$** | **1,175** |   |   | $ | 1,112 |   |
| Unregulated                retail electric                                                                                                                                      |   |   | **22** |   |   |   | 25 |   |
| Wholesale                energy marketing                                                                                                                                       |   |   | **249** |   |   |   | 335 |   |
| Net                energy trading margins                                                                                                                                       |   |   | **7** |   |   |   | 10 |   |
| Energy-related                businesses                                                                                                                                        |   |   | **185** |   |   |   | 168 |   |
| Total                                                                                                                                                                           |   |   | **1,638** |   |   |   | 1,650 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                           |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                            |   |   | **299** |   |   |   | 241 |   |
| Energy                purchases                                                                                                                                                 |   |   | **120** |   |   |   | 223 |   |
| Other                operation and maintenance                                                                                                                                  |   |   | **336** |   |   |   | 311 |   |
| Amortization                of recoverable transition costs                                                                                                                     |   |   | **81** |   |   |   | 72 |   |
| Depreciation                                                                                                                                                                    |   |   | **118** |   |   |   | 102 |   |
| Taxes,                other than income                                                                                                                                         |   |   | **79** |   |   |   | 70 |   |
| Energy-related                businesses (Note 8)                                                                                                                               |   |   | **202** |   |   |   | 158 |   |
| Total                                                                                                                                                                           |   |   | **1,235** |   |   |   | 1,177 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                             |   |   | **403** |   |   |   | 473 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                               |   |   | **26** |   |   |   | 8 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                 |   |   | **121** |   |   |   | 114 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations Before Income Taxes, Minority Interest                and                Dividends on Preferred Securities of a Subsidiary** |   |   | **308** |   |   |   | 367 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                     |   |   | **74** |   |   |   | 95 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Minority                Interest                                                                                                                                                |   |   | **1** |   |   |   |   |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Dividends                on Preferred Securities of a Subsidiary                                                                                                                |   |   | **5** |   |   |   | 1 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations**                                                                                                                            |   |   | **228** |   |   |   | 271 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| (Loss)                Income from Discontinued Operations (net of income taxes) (Note                8)                                                                         |   |   | **(25** | **)** |   |   | 9 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Net                Income**                                                                                                                                                   |   | **$** | **203** |   |   | $ | 280 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Earnings                Per Share of Common Stock:**                                                                                                                          |   |   |   |   |   |   |   |   |
| Income                from Continuing Operations:                                                                                                                               |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                           |   | **$** | **0.59** |   |   | $ | 0.71 |   |
| Diluted                                                                                                                                                                         |   | **$** | **0.58** |   |   | $ | 0.70 |   |
| Net                Income:                                                                                                                                                      |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                           |   | **$** | **0.53** |   |   | $ | 0.74 |   |
| Diluted                                                                                                                                                                         |   | **$** | **0.52** |   |   | $ | 0.73 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| **Dividends                Declared Per Share of Common Stock**                                                                                                                 |   | **$** | **0.305** |   |   | $ | 0.275 |   |

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

----

| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH                FLOWS**                                                                                                     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Corporation and Subsidiaries**                                                                                                                                   |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2007** |   | **2006** |
| **Cash                Flows from Operating Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                             |   | **$** | **203** |   |   | $ | 280 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities                                                                        |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                          |   |   | **124** |   |   |   | 108 |   |
| Amortizations                - recoverable transition costs and other                                                                                                                 |   |   | **108** |   |   |   | 77 |   |
| Pension                and other postretirement benefits - net                                                                                                                        |   |   | **22** |   |   |   | (3 | ) |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **(32** | **)** |   |   | (48 | ) |
| Impairment                of assets held for sale                                                                                                                                     |   |   | **65** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **(33** | **)** |   |   | (34 | ) |
| Change                in current assets and current liabilities                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                    |   |   | **(48** | **)** |   |   | (99 | ) |
| Accounts                payable                                                                                                                                                       |   |   | **(29** | **)** |   |   | (15 | ) |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **58** |   |   |   | (20 | ) |
| Prepayments                                                                                                                                                                           |   |   | **(135** | **)** |   |   | (95 | ) |
| Other                                                                                                                                                                                 |   |   | **(21** | **)** |   |   | 147 |   |
| Other                operating activities                                                                                                                                             |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                           |   |   | **16** |   |   |   | (15 | ) |
| Other                liabilities                                                                                                                                                      |   |   | **(12** | **)** |   |   | 14 |   |
| Net                cash provided by operating activities                                                                                                                              |   |   | **286** |   |   |   | 297 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Expenditures                for property, plant and equipment                                                                                                                         |   |   | **(341** | **)** |   |   | (198 | ) |
| Purchases                of emission allowances                                                                                                                                       |   |   | **(4** | **)** |   |   | (53 | ) |
| Proceeds                from the sale of emission allowances                                                                                                                          |   |   | **30** |   |   |   | 29 |   |
| Purchases                of nuclear decommissioning trust investments                                                                                                                 |   |   | **(42** | **)** |   |   | (73 | ) |
| Proceeds                from the sale of nuclear decommissioning trust investments                                                                                                    |   |   | **38** |   |   |   | 69 |   |
| Purchases                of short-term investments                                                                                                                                    |   |   | **(127** | **)** |   |   | (39 | ) |
| Proceeds                from the sale of short-term investments                                                                                                                       |   |   | **132** |   |   |   | 97 |   |
| Net                decrease (increase) in restricted cash                                                                                                                             |   |   | **10** |   |   |   | (6 | ) |
| Other                investing activities                                                                                                                                             |   |   | **5** |   |   |   | 15 |   |
| Net                cash used in investing activities                                                                                                                                  |   |   | **(299** | **)** |   |   | (159 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Issuance                of long-term debt                                                                                                                                             |   |   | **505** |   |   |   |   |   |
| Retirement                of long-term debt                                                                                                                                           |   |   | **(201** | **)** |   |   | (225 | ) |
| Issuance                of common stock                                                                                                                                               |   |   | **5** |   |   |   | 2 |   |
| Payment                of common stock dividends                                                                                                                                      |   |   | **(105** | **)** |   |   | (95 | ) |
| Net                increase (decrease) in short-term debt                                                                                                                             |   |   | **29** |   |   |   | (36 | ) |
| Other                financing activities                                                                                                                                             |   |   | **(12** | **)** |   |   | (1 | ) |
| Net                cash provided by (used in) financing activities                                                                                                                    |   |   | **221** |   |   |   | (355 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Effect                of Exchange Rates on Cash and Cash Equivalents**                                                                                                              |   |   | **(1** | **)** |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Increase (Decrease) in Cash and Cash Equivalents**                                                                                                               |   |   | **207** |   |   |   | (217 | ) |
| Cash                and Cash Equivalents at Beginning of Period                                                                                                                       |   |   | **794** |   |   |   | 555 |   |
| Reclassification                of cash to assets held for sale                                                                                                                       |   |   | **(36** | **)** |   |   |   |   |
| Cash                and Cash Equivalents at End of Period                                                                                                                             |   | **$** | **965** |   |   | $ | 338 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Corporation and Subsidiaries**                                                                                                                                   |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **965** |   |   | $ | 794 |   |
| Short-term                investments                                                                                                                                                 |   |   | **354** |   |   |   | 359 |   |
| Restricted                cash                                                                                                                                                        |   |   | **96** |   |   |   | 102 |   |
| Accounts                receivable (less reserve: 2007, $44; 2006, $50)                                                                                                               |   |   | **542** |   |   |   | 591 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **413** |   |   |   | 469 |   |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **308** |   |   |   | 378 |   |
| Prepayments                                                                                                                                                                           |   |   | **242** |   |   |   | 79 |   |
| Deferred                income taxes                                                                                                                                                  |   |   | **196** |   |   |   | 162 |   |
| Price                risk management assets                                                                                                                                           |   |   | **497** |   |   |   | 551 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **126** |   |   |   | 124 |   |
| Assets                held for sale (Note 8)                                                                                                                                          |   |   | **849** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **18** |   |   |   | 21 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **4,606** |   |   |   | 3,630 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Investment                in unconsolidated affiliates - at equity                                                                                                                    |   |   | **44** |   |   |   | 47 |   |
| Nuclear                plant decommissioning trust funds                                                                                                                              |   |   | **520** |   |   |   | 510 |   |
| Other                                                                                                                                                                                 |   |   | **7** |   |   |   | 7 |   |
| Total                Investments                                                                                                                                                      |   |   | **571** |   |   |   | 564 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **8,281** |   |   |   | 8,836 |   |
| Generation                                                                                                                                                                            |   |   | **8,756** |   |   |   | 8,744 |   |
| General                                                                                                                                                                               |   |   | **809** |   |   |   | 779 |   |
|                                                                                                                                                                                  |   |   | **17,846** |   |   |   | 18,359 |   |
| Construction                work in progress                                                                                                                                          |   |   | **807** |   |   |   | 682 |   |
| Nuclear                fuel                                                                                                                                                           |   |   | **381** |   |   |   | 354 |   |
| Electric                plant                                                                                                                                                         |   |   | **19,034** |   |   |   | 19,395 |   |
| Gas                and oil plant                                                                                                                                                      |   |   | **377** |   |   |   | 373 |   |
| Other                property                                                                                                                                                         |   |   | **189** |   |   |   | 311 |   |
|                                                                                                                                                                                  |   |   | **19,600** |   |   |   | 20,079 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **7,885** |   |   |   | 8,010 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **11,715** |   |   |   | 12,069 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Regulatory                and Other Noncurrent Assets**                                                                                                                             |   |   |   |   |   |   |   |   |
| Recoverable                transition costs                                                                                                                                           |   |   | **803** |   |   |   | 884 |   |
| Goodwill                                                                                                                                                                              |   |   | **1,004** |   |   |   | 1,154 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **324** |   |   |   | 367 |   |
| Price                risk management assets                                                                                                                                           |   |   | **176** |   |   |   | 144 |   |
| Other                                                                                                                                                                                 |   |   | **908** |   |   |   | 935 |   |
| Total                Regulatory and Other Noncurrent Assets                                                                                                                           |   |   | **3,215** |   |   |   | 3,484 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **20,107** |   |   | $ | 19,747 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Corporation and Subsidiaries**                                                                                                                                   |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Liabilities                and Equity**                                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                                                                                                                |   |   |   |   |   |   |   |   |
| Short-term                debt                                                                                                                                                        |   | **$** | **71** |   |   | $ | 42 |   |
| Long-term                debt                                                                                                                                                         |   |   | **1,015** |   |   |   | 1,018 |   |
| Long-term                debt with affiliate trust                                                                                                                                    |   |   |   |   |   |   | 89 |   |
| Accounts                payable                                                                                                                                                       |   |   | **592** |   |   |   | 667 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **59** |   |   |   | 65 |   |
| Taxes                                                                                                                                                                                 |   |   | **88** |   |   |   | 194 |   |
| Interest                                                                                                                                                                              |   |   | **129** |   |   |   | 109 |   |
| Dividends                                                                                                                                                                             |   |   | **123** |   |   |   | 111 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **379** |   |   |   | 550 |   |
| Liabilities                held for sale and related minority interest (Note 8)                                                                                                       |   |   | **394** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **408** |   |   |   | 503 |   |
| Total                Current Liabilities                                                                                                                                              |   |   | **3,258** |   |   |   | 3,348 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                                                                                                                     |   |   | **6,933** |   |   |   | 6,728 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                                                                                                                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **2,271** |   |   |   | 2,331 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **458** |   |   |   | 459 |   |
| Accrued                pension obligations                                                                                                                                            |   |   | **354** |   |   |   | 364 |   |
| Asset                retirement obligations                                                                                                                                           |   |   | **342** |   |   |   | 336 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **60** |   |   |   | 71 |   |
| Other                                                                                                                                                                                 |   |   | **831** |   |   |   | 627 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                                                                                                                |   |   | **4,316** |   |   |   | 4,188 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities (Note 10)**                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Minority                Interest**                                                                                                                                                  |   |   | **26** |   |   |   | 60 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Preferred                Securities of a Subsidiary**                                                                                                                               |   |   | **301** |   |   |   | 301 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Shareowners'                Common Equity**                                                                                                                                         |   |   |   |   |   |   |   |   |
| Common                stock - $0.01 par value (a)                                                                                                                                     |   |   | **4** |   |   |   | 4 |   |
| Capital                in excess of par value                                                                                                                                         |   |   | **2,829** |   |   |   | 2,810 |   |
| Earnings                reinvested                                                                                                                                                    |   |   | **2,711** |   |   |   | 2,626 |   |
| Accumulated                other comprehensive loss                                                                                                                                   |   |   | **(271** | **)** |   |   | (318 | ) |
| Total                Shareowners' Common Equity                                                                                                                                       |   |   | **5,273** |   |   |   | 5,122 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                                                                                                                       |   | **$** | **20,107** |   |   | $ | 19,747 |   |
|                                                                                                                                                                                  |
| (a)                                                                                                                                                                                   |   | 780                million shares authorized; 385 million shares outstanding at March                31,                2007 and December 31, 2006. |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED STATEMENTS OF INCOME**                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2007** |   | **2006** |
| **Operating                Revenues**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Wholesale                energy marketing                                                                                                                                             |   | **$** | **249** |   |   | $ | 335 |   |
| Wholesale                energy marketing to affiliate                                                                                                                                |   |   | **481** |   |   |   | 446 |   |
| Utility                                                                                                                                                                               |   |   | **216** |   |   |   | 203 |   |
| Unregulated                retail electric                                                                                                                                            |   |   | **22** |   |   |   | 25 |   |
| Net                energy trading margins                                                                                                                                             |   |   | **7** |   |   |   | 10 |   |
| Energy-related                businesses                                                                                                                                              |   |   | **183** |   |   |   | 160 |   |
| Total                                                                                                                                                                                 |   |   | **1,158** |   |   |   | 1,179 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Fuel                                                                                                                                                                                  |   |   | **233** |   |   |   | 168 |   |
| Energy                purchases                                                                                                                                                       |   |   | **69** |   |   |   | 169 |   |
| Energy                purchases from affiliate                                                                                                                                        |   |   | **37** |   |   |   | 39 |   |
| Other                operation and maintenance                                                                                                                                        |   |   | **244** |   |   |   | 222 |   |
| Depreciation                                                                                                                                                                          |   |   | **81** |   |   |   | 68 |   |
| Taxes,                other than income                                                                                                                                               |   |   | **24** |   |   |   | 21 |   |
| Energy-related                businesses (Note 8)                                                                                                                                     |   |   | **201** |   |   |   | 151 |   |
| Total                                                                                                                                                                                 |   |   | **889** |   |   |   | 838 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                                   |   |   | **269** |   |   |   | 341 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                                     |   |   | **24** |   |   |   | 8 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                       |   |   | **72** |   |   |   | 56 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense with Affiliates                                                                                                                                       |   |   | **4** |   |   |   | 3 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations Before Income Taxes and Minority                Interest**                                                                         |   |   | **217** |   |   |   | 290 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                           |   |   | **44** |   |   |   | 69 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Minority                Interest                                                                                                                                                      |   |   | **1** |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                from Continuing Operations**                                                                                                                                  |   |   | **172** |   |   |   | 221 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| (Loss)                Income from Discontinued Operations (net of income taxes) (Note                8)                                                                               |   |   | **(25** | **)** |   |   | 9 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Income**                                                                                                                                                         |   | **$** | **147** |   |   | $ | 230 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                                                                    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2007** |   | **2006** |
| **Cash                Flows from Operating Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Net                income                                                                                                                                                             |   | **$** | **147** |   |   | $ | 230 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities                                                                        |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                          |   |   | **87** |   |   |   | 75 |   |
| Pension                and other postretirement benefits - net                                                                                                                        |   |   | **12** |   |   |   | (12 | )  |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **5** |   |   |   | (1 | ) |
| Impairment                of assets held for sale                                                                                                                                     |   |   | **65** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **(15** | **)** |   |   | (42 | ) |
| Change                in current assets and current liabilities                                                                                                                       |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                                                                    |   |   | **(28** | **)** |   |   | (64 | ) |
| Accounts                payable                                                                                                                                                       |   |   | **(66** | **)** |   |   | (1 | ) |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **35** |   |   |   | (36 | ) |
| Other                                                                                                                                                                                 |   |   | **(8** | **)** |   |   | 85 |   |
| Other                operating activities                                                                                                                                             |   |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                           |   |   | **8** |   |   |   | (11 | ) |
| Other                liabilities                                                                                                                                                      |   |   | **(19** | **)** |   |   | 2 |   |
| Net                cash provided by operating activities                                                                                                                              |   |   | **223** |   |   |   | 225 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Investing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Expenditures                for property, plant and equipment                                                                                                                         |   |   | **(270** | **)** |   |   | (147 | ) |
| Purchases                of emission allowances                                                                                                                                       |   |   | **(4** | **)** |   |   | (53 | ) |
| Proceeds                from the sale of emission allowances                                                                                                                          |   |   | **30** |   |   |   | 29 |   |
| Purchases                of nuclear decommissioning trust investments                                                                                                                 |   |   | **(42** | **)** |   |   | (73 | ) |
| Proceeds                from the sale of nuclear decommissioning trust investments                                                                                                    |   |   | **38** |   |   |   | 69 |   |
| Purchases                of short-term investments                                                                                                                                    |   |   | **(93** | **)** |   |   |   |   |
| Proceeds                from the sale of short-term investments                                                                                                                       |   |   | **72** |   |   |   | 33 |   |
| Net                decrease (increase) in restricted cash                                                                                                                             |   |   | **3** |   |   |   | (7 | ) |
| Other                investing activities                                                                                                                                             |   |   | **2** |   |   |   | 13 |   |
| Net                cash used in investing activities                                                                                                                                  |   |   | **(264** | **)** |   |   | (136 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows from Financing Activities**                                                                                                                               |   |   |   |   |   |   |   |   |
| Issuance                of long-term debt                                                                                                                                             |   |   | **6** |   |   |   |   |   |
| Retirement                of long-term debt                                                                                                                                           |   |   | **(121** | **)** |   |   | (3 | ) |
| Contributions                from Member                                                                                                                                              |   |   | **500** |   |   |   | 15 |   |
| Distributions                to Member                                                                                                                                                |   |   | **(72** | **)** |   |   | (58 | ) |
| Net                decrease in short-term debt                                                                                                                                        |   |   |   |   |   |   | (136 | ) |
| Other                financing activities                                                                                                                                             |   |   | **(2** | **)** |   |   | (2 | ) |
| Net                cash provided by (used in) financing activities                                                                                                                    |   |   | **311** |   |   |   | (184 | ) |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Effect                of Exchange Rates on Cash and Cash Equivalents**                                                                                                              |   |   | **(1** | **)** |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Increase (Decrease) in Cash and Cash Equivalents**                                                                                                               |   |   | **269** |   |   |   | (95 | ) |
| Cash                and Cash Equivalents at Beginning of Period                                                                                                                       |   |   | **524** |   |   |   | 227 |   |
| Reclassification                of cash to assets held for sale                                                                                                                       |   |   | **(36** | **)** |   |   |   |   |
| Cash                and Cash Equivalents at End of Period                                                                                                                             |   | **$** | **757** |   |   | $ | 132 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED****CONSOLIDATED                BALANCE SHEETS**                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **757** |   |   | $ | 524 |   |
| Short-term                investments                                                                                                                                                 |   |   | **348** |   |   |   | 328 |   |
| Restricted                cash                                                                                                                                                        |   |   | **49** |   |   |   | 51 |   |
| Accounts                receivable (less reserve: 2007, $24; 2006, $29)                                                                                                               |   |   | **248** |   |   |   | 354 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **248** |   |   |   | 301 |   |
| Accounts                receivable from affiliates                                                                                                                                    |   |   | **172** |   |   |   | 136 |   |
| Collateral                on PLR energy supply to affiliate                                                                                                                           |   |   | **300** |   |   |   | 300 |   |
| Fuel,                materials and supplies                                                                                                                                           |   |   | **281** |   |   |   | 330 |   |
| Prepayments                                                                                                                                                                           |   |   | **112** |   |   |   | 66 |   |
| Deferred                income taxes                                                                                                                                                  |   |   | **176** |   |   |   | 117 |   |
| Price                risk management assets                                                                                                                                           |   |   | **496** |   |   |   | 551 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **126** |   |   |   | 124 |   |
| Assets                held for sale (Note 8)                                                                                                                                          |   |   | **849** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **6** |   |   |   | 10 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **4,168** |   |   |   | 3,192 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Investments**                                                                                                                                                                       |   |   |   |   |   |   |   |   |
| Investment                in unconsolidated affiliates - at equity                                                                                                                    |   |   | **44** |   |   |   | 47 |   |
| Nuclear                plant decommissioning trust funds                                                                                                                              |   |   | **520** |   |   |   | 510 |   |
| Other                                                                                                                                                                                 |   |   | **3** |   |   |   | 4 |   |
| Total                Investments                                                                                                                                                      |   |   | **567** |   |   |   | 561 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **4,081** |   |   |   | 4,673 |   |
| Generation                                                                                                                                                                            |   |   | **8,756** |   |   |   | 8,744 |   |
| General                                                                                                                                                                               |   |   | **324** |   |   |   | 318 |   |
|                                                                                                                                                                                  |   |   | **13,161** |   |   |   | 13,735 |   |
| Construction                work in progress                                                                                                                                          |   |   | **713** |   |   |   | 578 |   |
| Nuclear                fuel                                                                                                                                                           |   |   | **381** |   |   |   | 354 |   |
| Electric                plant                                                                                                                                                         |   |   | **14,255** |   |   |   | 14,667 |   |
| Gas                and oil plant                                                                                                                                                      |   |   | **64** |   |   |   | 64 |   |
| Other                property                                                                                                                                                         |   |   | **188** |   |   |   | 309 |   |
|                                                                                                                                                                                  |   |   | **14,507** |   |   |   | 15,040 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **5,958** |   |   |   | 6,115 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **8,549** |   |   |   | 8,925 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Other                Noncurrent Assets**                                                                                                                                            |   |   |   |   |   |   |   |   |
| Goodwill                                                                                                                                                                              |   |   | **949** |   |   |   | 1,099 |   |
| Other                acquired intangibles                                                                                                                                             |   |   | **196** |   |   |   | 245 |   |
| Price                risk management assets                                                                                                                                           |   |   | **169** |   |   |   | 135 |   |
| Other                                                                                                                                                                                 |   |   | **470** |   |   |   | 498 |   |
| Total                Other Noncurrent Assets                                                                                                                                          |   |   | **1,784** |   |   |   | 1,977 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **15,068** |   |   | $ | 14,655 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED****CONSOLIDATED                BALANCE SHEETS**                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Energy Supply, LLC and Subsidiaries**                                                                                                                            |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Liabilities                and Equity**                                                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                                                                                                                |   |   |   |   |   |   |   |   |
| Long-term                debt                                                                                                                                                         |   | **$** | **176** |   |   | $ | 181 |   |
| Long-term                debt with affiliate trust                                                                                                                                    |   |   |   |   |   |   | 89 |   |
| Accounts                payable                                                                                                                                                       |   |   | **475** |   |   |   | 571 |   |
| Accounts                payable to affiliates                                                                                                                                         |   |   | **32** |   |   |   | 36 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **59** |   |   |   | 65 |   |
| Taxes                                                                                                                                                                                 |   |   | **42** |   |   |   | 151 |   |
| Interest                                                                                                                                                                              |   |   | **107** |   |   |   | 82 |   |
| Deferred                revenue on PLR energy supply to affiliate                                                                                                                     |   |   | **12** |   |   |   | 12 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **371** |   |   |   | 541 |   |
| Liabilities                held for sale and related minority interest (Note 8)                                                                                                       |   |   | **394** |   |   |   |   |   |
| Other                                                                                                                                                                                 |   |   | **287** |   |   |   | 325 |   |
| Total                Current Liabilities                                                                                                                                              |   |   | **1,955** |   |   |   | 2,053 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                                                                                                                     |   |   | **4,890** |   |   |   | 5,106 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                                                                                                                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                                                                                                                       |   |   | **1,387** |   |   |   | 1,363 |   |
| Price                risk management liabilities                                                                                                                                      |   |   | **443** |   |   |   | 437 |   |
| Accrued                pension obligations                                                                                                                                            |   |   | **273** |   |   |   | 279 |   |
| Asset                retirement obligations                                                                                                                                           |   |   | **342** |   |   |   | 336 |   |
| Above                market NUG contracts                                                                                                                                             |   |   | **60** |   |   |   | 71 |   |
| Deferred                revenue on PLR energy supply to affiliate                                                                                                                     |   |   | **20** |   |   |   | 23 |   |
| Other                                                                                                                                                                                 |   |   | **519** |   |   |   | 393 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                                                                                                                |   |   | **3,044** |   |   |   | 2,902 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities (Note 10)**                                                                                                                   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Minority                Interest**                                                                                                                                                  |   |   | **26** |   |   |   | 60 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Member's                Equity**                                                                                                                                                    |   |   | **5,153** |   |   |   | 4,534 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                                                                                                                       |   | **$** | **15,068** |   |   | $ | 14,655 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED STATEMENTS OF INCOME**                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Electric Utilities Corporation and                Subsidiaries**                                                                                                 |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **Three                Months Ended****March                31,** |
|                                                                                                                                                                                  |   | **2007** |   | **2006** |
| **Operating                Revenues**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Retail                electric                                                                                                                                                        |   | **$** | **864** |   |   | $ | 812 |   |
| Wholesale                electric                                                                                                                                                     |   |   | **1** |   |   |   | 1 |   |
| Wholesale                electric to affiliate                                                                                                                                        |   |   | **37** |   |   |   | 39 |   |
| Total                                                                                                                                                                                 |   |   | **902** |   |   |   | 852 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Expenses**                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Operation                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Energy                purchases                                                                                                                                                       |   |   | **51** |   |   |   | 53 |   |
| Energy                purchases from affiliate                                                                                                                                        |   |   | **481** |   |   |   | 446 |   |
| Other                operation and maintenance                                                                                                                                        |   |   | **92** |   |   |   | 89 |   |
| Amortization                of recoverable transition costs                                                                                                                           |   |   | **81** |   |   |   | 72 |   |
| Depreciation                                                                                                                                                                          |   |   | **32** |   |   |   | 29 |   |
| Taxes,                other than income                                                                                                                                               |   |   | **54** |   |   |   | 49 |   |
| Total                                                                                                                                                                                 |   |   | **791** |   |   |   | 738 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Operating                Income**                                                                                                                                                   |   |   | **111** |   |   |   | 114 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Other                Income - net                                                                                                                                                     |   |   | **12** |   |   |   | 9 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense                                                                                                                                                       |   |   | **32** |   |   |   | 38 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Interest                Expense with Affiliate                                                                                                                                        |   |   | **4** |   |   |   | 4 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                Before Income Taxes**                                                                                                                                         |   |   | **87** |   |   |   | 81 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Income                Taxes                                                                                                                                                           |   |   | **30** |   |   |   | 29 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Net                Income**                                                                                                                                                         |   |   | **57** |   |   |   | 52 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Dividends                on Preferred Securities                                                                                                                                      |   |   | **5** |   |   |   | 1 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Income                Available to PPL**                                                                                                                                            |   | **$** | **52** |   |   | $ | 51 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                  CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                                                                          |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                  Electric Utilities Corporation and                  Subsidiaries**                                                                                                     |
| (Unaudited)                                                                                                                                                                                   |
| *(Millions                  of Dollars)*                                                                                                                                                      |
|                                                                                                                                                                                          |   | **Three                  Months Ended****March                  31,** |
|                                                                                                                                                                                          |   | **2007** |   | **2006** |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Operating Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                                                                                   |   | **$** | **57** |   |   | $ | 52 |   |
| Adjustments                  to                  reconcile net income to net cash provided by operating                  activities                                                           |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                                                  |   |   | **32** |   |   |   | 29 |   |
| Amortizations                  - recoverable transition costs and other                                                                                                                       |   |   | **86** |   |   |   | 78 |   |
| Other                                                                                                                                                                                         |   |   | **3** |   |   |   |   |   |
| Change                  in current assets and current liabilities                                                                                                                             |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                                          |   |   | **(46** | **)** |   |   | (27 | ) |
| Accounts                  payable                                                                                                                                                             |   |   | **2** |   |   |   | (35 | ) |
| Prepayments                                                                                                                                                                                   |   |   | **(118** | **)** |   |   | (101 | ) |
| Other                                                                                                                                                                                         |   |   | **3** |   |   |   | 16 |   |
| Other                  operating activities                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Other                  assets                                                                                                                                                                 |   |   | **3** |   |   |   | (7 | ) |
| Other                  liabilities                                                                                                                                                            |   |   | **8** |   |   |   | 10 |   |
| Net                  cash provided by operating activities                                                                                                                                    |   |   | **30** |   |   |   | 15 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Investing Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Expenditures                  for property, plant and equipment                                                                                                                               |   |   | **(63** | **)** |   |   | (43 | ) |
| Purchases                  of short-term investments                                                                                                                                          |   |   | **(32** | **)** |   |   | (39 | ) |
| Proceeds                  from the sale of short-term investments                                                                                                                             |   |   | **57** |   |   |   | 64 |   |
| Net                  increase in note receivable from affiliate                                                                                                                               |   |   |   |   |   |   | (100 | ) |
| Net                  decrease in restricted cash                                                                                                                                              |   |   | **5** |   |   |   | 2 |   |
| Other                  investing activities                                                                                                                                                   |   |   | **3** |   |   |   | 3 |   |
| Net                  cash used in investing activities                                                                                                                                        |   |   | **(30** | **)** |   |   | (113 | ) |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                                                                                                                     |   |   |   |   |   |   |   |   |
| Retirement                  of long-term debt                                                                                                                                                 |   |   | **(80** | **)** |   |   | (222 | ) |
| Payment                  of common dividends to PPL                                                                                                                                           |   |   | **(40** | **)** |   |   | (38 | ) |
| Net                  increase in short-term debt                                                                                                                                              |   |   | **29** |   |   |   | 100 |   |
| Other                  financing activities                                                                                                                                                   |   |   | **(5** | **)** |   |   | (1 | ) |
| Net                  cash used in financing activities                                                                                                                                        |   |   | **(96** | **)** |   |   | (161 | ) |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| **Net                  Decrease in Cash and Cash Equivalents**                                                                                                                                |   |   | **(96** | **)** |   |   | (259 | ) |
| Cash                  and Cash Equivalents at Beginning of Period                                                                                                                             |   |   | **150** |   |   |   | 298 |   |
| Cash                  and Cash Equivalents at End of Period                                                                                                                                   |   | **$** | **54** |   |   | $ | 39 |   |
|                                                                                                                                                                                          |   |   |   |   |   |   |   |   |
| *The                  accompanying Notes to Condensed Consolidated Financial Statements                  are an                  integral part of the financial                  statements.* |

----

| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PPL                Electric Utilities Corporation and                Subsidiaries**                                                                                                 |
| (Unaudited)                                                                                                                                                                           |
| *(Millions                of Dollars)*                                                                                                                                                |
|                                                                                                                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Assets**                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Assets**                                                                                                                                                     |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                              |   | **$** | **54** |   |   | $ | 150 |   |
| Restricted                cash                                                                                                                                                        |   |   | **42** |   |   |   | 43 |   |
| Accounts                receivable (less reserve: 2007, $18; 2006, $19)                                                                                                               |   |   | **262** |   |   |   | 219 |   |
| Unbilled                revenues                                                                                                                                                      |   |   | **158** |   |   |   | 163 |   |
| Accounts                receivable from affiliates                                                                                                                                    |   |   | **6** |   |   |   | 6 |   |
| Note                receivable from affiliate                                                                                                                                         |   |   | **300** |   |   |   | 300 |   |
| Prepayments                                                                                                                                                                           |   |   | **121** |   |   |   | 3 |   |
| Prepayment                on PLR energy supply from affiliate                                                                                                                         |   |   | **12** |   |   |   | 12 |   |
| Other                                                                                                                                                                                 |   |   | **46** |   |   |   | 101 |   |
| Total                Current Assets                                                                                                                                                   |   |   | **1,001** |   |   |   | 997 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Property,                Plant and Equipment**                                                                                                                                      |   |   |   |   |   |   |   |   |
| Electric                plant in service                                                                                                                                              |   |   |   |   |   |   |   |   |
| Transmission                and distribution                                                                                                                                          |   |   | **4,200** |   |   |   | 4,163 |   |
| General                                                                                                                                                                               |   |   | **435** |   |   |   | 412 |   |
|                                                                                                                                                                                  |   |   | **4,635** |   |   |   | 4,575 |   |
| Construction                work in progress                                                                                                                                          |   |   | **84** |   |   |   | 95 |   |
| Electric                plant                                                                                                                                                         |   |   | **4,719** |   |   |   | 4,670 |   |
| Other                property                                                                                                                                                         |   |   | **2** |   |   |   | 3 |   |
|                                                                                                                                                                                  |   |   | **4,721** |   |   |   | 4,673 |   |
| Less:                accumulated depreciation                                                                                                                                         |   |   | **1,821** |   |   |   | 1,793 |   |
| Total                Property, Plant and Equipment                                                                                                                                    |   |   | **2,900** |   |   |   | 2,880 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Regulatory                and Other Noncurrent Assets**                                                                                                                             |   |   |   |   |   |   |   |   |
| Recoverable                transition costs                                                                                                                                           |   |   | **803** |   |   |   | 884 |   |
| Acquired                intangibles                                                                                                                                                   |   |   | **124** |   |   |   | 118 |   |
| Prepayment                on PLR energy supply from affiliate                                                                                                                         |   |   | **20** |   |   |   | 23 |   |
| Other                                                                                                                                                                                 |   |   | **402** |   |   |   | 413 |   |
| Total                Regulatory and Other Noncurrent Assets                                                                                                                           |   |   | **1,349** |   |   |   | 1,438 |   |
|                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Assets**                                                                                                                                                       |   | **$** | **5,250** |   |   | $ | 5,315 |   |
|                                                                                                                                                                                  |
| *The                accompanying Notes to Condensed Consolidated Financial Statements                are an                integral part of the financial                statements.* |

----

| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                              |
|---------------------------------------------------------------------------------------|
| **PPL                Electric Utilities Corporation and                Subsidiaries** |
| (Unaudited)                                                                           |
| *(Millions                of Dollars)*                                                |
|                                                                                  |   | **March                31,****2007** |   | **December                31,****2006** |
| **Liabilities                and Equity**                                             |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Current                Liabilities**                                                |   |   |   |   |   |   |   |   |
| Short-term                debt                                                        |   | **$** | **71** |   |   | $ | 42 |   |
| Long-term                debt                                                         |   |   | **556** |   |   |   | 555 |   |
| Accounts                payable                                                       |   |   | **84** |   |   |   | 53 |   |
| Accounts                payable to affiliates                                         |   |   | **178** |   |   |   | 164 |   |
| Taxes                                                                                 |   |   | **36** |   |   |   | 58 |   |
| Collateral                on PLR energy supply from affiliate                         |   |   | **300** |   |   |   | 300 |   |
| Other                                                                                 |   |   | **82** |   |   |   | 141 |   |
| Total                Current Liabilities                                              |   |   | **1,307** |   |   |   | 1,313 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Long-term                Debt**                                                     |   |   | **1,342** |   |   |   | 1,423 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Deferred                Credits and Other Noncurrent Liabilities**                  |   |   |   |   |   |   |   |   |
| Deferred                income taxes and investment tax credits                       |   |   | **758** |   |   |   | 814 |   |
| Other                                                                                 |   |   | **270** |   |   |   | 206 |   |
| Total                Deferred Credits and Other Noncurrent Liabilities                |   |   | **1,028** |   |   |   | 1,020 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Commitments                and Contingent Liabilities (Note 10)**                   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Shareowners'                Equity**                                                |   |   |   |   |   |   |   |   |
| Preferred                securities                                                   |   |   | **301** |   |   |   | 301 |   |
| Common                stock - no par value (a)                                        |   |   | **364** |   |   |   | 364 |   |
| Additional                paid-in capital                                             |   |   | **424** |   |   |   | 424 |   |
| Earnings                reinvested                                                    |   |   | **484** |   |   |   | 470 |   |
| Total                Shareowners' Equity                                              |   |   | **1,573** |   |   |   | 1,559 |   |
|                                                                                  |   |   |   |   |   |   |   |   |
| **Total                Liabilities and Equity**                                       |   | **$** | **5,250** |   |   | $ | 5,315 |   |

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

----

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

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

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

*(PPL      and PPL Energy Supply)*

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

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

**Income      Taxes**

**New      Accounting Standards **

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

*(PPL      and PPL Energy Supply)*

|                                            |   | **Three                Months Ended March 31,** |
|-------------------------------------------------|--------|-------------------------------------------------|
|                                            |   | **PPL**                                         |   | **PPL                Energy Supply** |
|                                            |   | **2007**                                        |   | **2006** |   | **2007** |   | **2006** |
| **Income                Statement Data**        |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                from external customers |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                          |   | $                                               | 453 |   |   | $ | 528 |   |   | $ | 932 |   |   | $ | 966 |   |
| International                Delivery           |   |                                            | 226 |   |   |   | 213 |   |   |   | 226 |   |   |   | 213 |   |
| Pennsylvania                Delivery            |   |                                            | 959 |   |   |   | 909 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            | 1,638 |   |   |   | 1,650 |   |   |   | 1,158 |   |   |   | 1,179 |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intersegment                revenues            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                          |   |                                            | 481 |   |   |   | 446 |   |   |   |   |   |   |   |   |   |
| Pennsylvania                Delivery            |   |                                            | 37 |   |   |   | 41 |   |   |   |   |   |   |   |   |   |
|                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                Income                       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                (a)                       |   |                                            | 117 |   |   |   | 143 |   |   |   | 119 |   |   |   | 149 |   |
| International                Delivery (b)       |   |                                            | 28 |   |   |   | 81 |   |   |   | 28 |   |   |   | 81 |   |
| Pennsylvania                Delivery            |   |                                            | 58 |   |   |   | 56 |   |   |   |   |   |   |   |   |   |
|                                            |   | $                                               | 203 |   |   | $ | 280 |   |   | $ | 147 |   |   | $ | 230 |   |

|                                  |   | **PPL**                              |   | **PPL                Energy Supply**    |
|---------------------------------------|--------|--------------------------------------|--------|-----------------------------------------|
|                                  |   | **March                31,****2007** |   | **December                31,****2006** |   | **March                31,****2007** |   | **December                31,****2006** |
| **Balance                Sheet Data** |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                assets           |   |                                 |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Supply                                |   | $                                    | 8,635  |                                    |   | $ | 8,039 |   |   | $ | 9,015 |   |   | $ | 8,447 |   |
| International                Delivery |   |                                 | 6,053  |                                    |   |   | 6,208 |   |   |   | 6,053 |   |   |   | 6,208 |   |
| Pennsylvania                Delivery  |   |                                 | 5,419  |                                    |   |   | 5,500 |   |   |   |   |   |   |   |   |   |
|                                  |   | $                                    | 20,107 |                                    |   | $ | 19,747 |   |   | $ | 15,068 |   |   | $ | 14,655 |   |

| (a) |   | 2006                includes the results of discontinued operations of the Griffith plant.                See                Note 8 for additional information.                    |
|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | 2007                and 2006 include the results of discontinued operations of the Latin                American businesses. See Note 8 for additional                information. |

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

*(PPL)*

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

|                                                                            |   | **Three                Months****Ended                March 31,** |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                            |   | **2007**                                                          |   | **2006** |
| **Income                (Numerator)**                                           |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                                |   | $                                                                 | 228 |   |   | $ | 271 |   |
| (Loss)                income from discontinued operations (net of income taxes) |   |                                                              | (25 | ) |   |   | 9 |   |
| Net                Income                                                       |   | $                                                                 | 203 |   |   | $ | 280 |   |
|                                                                            |   |                                                              |   |   |   |   |   |   |
| **Shares                (Denominator)**                                         |   |                                                              |   |   |   |   |   |   |
| Shares                for Basic EPS                                             |   |                                                              | 384,793 |   |   |   | 379,838 |   |
| Add incremental                shares:                                     |   |                                                              |   |   |   |   |   |   |
| Convertible                Senior Notes                                         |   |                                                              | 1,354 |   |   |   | 2,980 |   |
| Restricted                stock, stock options and other share-based awards     |   |                                                              | 3,021 |   |   |   | 2,787 |   |
| Shares                for Diluted EPS                                           |   |                                                              | 389,168 |   |   |   | 385,605 |   |
|                                                                            |   |                                                              |   |   |   |   |   |   |
| **Basic                EPS**                                                    |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                                |   | $                                                                 | 0.59 |   |   | $ | 0.71 |   |
| (Loss)                income from discontinued operations (net of income taxes) |   |                                                              | (0.06 | ) |   |   | 0.03 |   |
| Net                Income                                                       |   | $                                                                 | 0.53 |   |   | $ | 0.74 |   |
|                                                                            |   |                                                              |   |   |   |   |   |   |
| **Diluted                EPS**                                                  |   |                                                              |   |   |   |   |   |   |
| Income                from continuing operations                                |   | $                                                                 | 0.58 |   |   | $ | 0.70 |   |
| (Loss)                income from discontinued operations (net of income taxes) |   |                                                              | (0.06 | ) |   |   | 0.03 |   |
| Net                Income                                                       |   | $                                                                 | 0.52 |   |   | $ | 0.73 |   |

|                                      |   | **Three                Months****Ended                March 31,** |   |
|-------------------------------------------|--------|-------------------------------------------------------------------|--------|
| *(Thousands                of Shares)*    |   | **2007**                                                          |   |   | **2006** |   |
|                                      |   |                                                              |   |   |   |   |
| Antidilutive                stock options |   |                                                              |   |   | 1,335 |   |

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

*(PPL      and PPL Energy Supply)*

|                                                                                                                                                                                                                                         |   | **Three                Months****Ended                March 31,** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| **PPL**                                                                                                                                                                                                                                      |   | **2007**                                                          |   | **2006** |
|                                                                                                                                                                                                                                         |   |                                                              |   |   |
| **Reconciliation                of Income Tax Expense**                                                                                                                                                                                      |   |                                                              |   |   |   |   |   |   |
| Federal                income tax on Income from Continuing Operations Before Income Taxes,                Minority Interest and Dividends on Preferred Securities of a Subsidiary                at                statutory tax rate - 35% |   | $                                                                 | 108 |   |   | $ | 128 |   |
| Increase                (decrease) due to:                                                                                                                                                                                                   |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                                                                                                                                                            |   |                                                              | 6 |   |   |   | 9 |   |
| Amortization                of investment tax credit                                                                                                                                                                                         |   |                                                              | (3 | ) |   |   | (3 | ) |
| Difference                related to income recognition of foreign affiliates (net of foreign                income                taxes)                                                                                                    |   |                                                              | (9 | ) |   |   | 1 |   |
| Transfer                of WPD tax items (a)                                                                                                                                                                                                 |   |                                                              |   |   |   |   | (20 | ) |
| Stranded                costs securitization                                                                                                                                                                                                 |   |                                                              | (1 | ) |   |   | (1 | ) |
| Federal                income tax credits                                                                                                                                                                                                    |   |                                                              | (26 | ) |   |   | (16 | ) |
| Other                                                                                                                                                                                                                                        |   |                                                              | (1 | ) |   |   | (3 | ) |
|                                                                                                                                                                                                                                         |   |                                                              | (34 | ) |   |   | (33 | ) |
| **Total                income tax expense**                                                                                                                                                                                                  |   | $                                                                 | 74 |   |   | $ | 95 |   |
|                                                                                                                                                                                                                                         |   |                                                              |   |   |   |   |   |   |
| **Effective                income tax rate**                                                                                                                                                                                                 |   |                                                              | 24.0% |   |   |   | 25.9% |   |
|                                                                                                                                                                                                                                         |   |                                                              |
| **PPL                Energy Supply**                                                                                                                                                                                                         |   |                                                              |   |   |
|                                                                                                                                                                                                                                         |   |                                                              |   |   |   |   |   |   |
| **Reconciliation                of Income Tax Expense**                                                                                                                                                                                      |   |                                                              |   |   |   |   |   |   |
| Federal                income tax on Income from Continuing Operations Before Income Taxes                and                Minority Interest at statutory tax rate - 35%                                                                   |   | $                                                                 | 76 |   |   | $ | 102 |   |
| Increase                (decrease) due to:                                                                                                                                                                                                   |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                                                                                                                                                            |   |                                                              | 4 |   |   |   | 8 |   |
| Amortization                of investment tax credit                                                                                                                                                                                         |   |                                                              | (2 | ) |   |   | (2 | ) |
| Difference                related to income recognition of foreign affiliates (net of foreign                income                taxes)                                                                                                    |   |                                                              | (9 | ) |   |   | 1 |   |
| Transfer                of WPD tax items (a)                                                                                                                                                                                                 |   |                                                              |   |   |   |   | (20 | ) |
| Federal                income tax credits                                                                                                                                                                                                    |   |                                                              | (26 | ) |   |   | (16 | ) |
| Other                                                                                                                                                                                                                                        |   |                                                              | 1 |   |   |   | (4 | ) |
|                                                                                                                                                                                                                                         |   |                                                              | (32 | ) |   |   | (33 | ) |
| **Total                income tax expense**                                                                                                                                                                                                  |   | $                                                                 | 44 |   |   | $ | 69 |   |
|                                                                                                                                                                                                                                         |   |                                                              |   |   |   |   |   |   |
| **Effective                income tax rate**                                                                                                                                                                                                 |   |                                                              | 20.3% |   |   |   | 23.8% |   |

| (a) |   | In                January 2006, WPD, Hyder's liquidator and a former Hyder affiliate                signed                an agreement to transfer to the affiliate a future tax liability                from WPD                and certain surplus tax losses from Hyder. The U.K. taxing authority                subsequently confirmed this agreement. This transfer resulted in                a net                reduction of income tax expense of $20 million for the three months                ended                March 31, 2006, and a decrease to goodwill of $12 million from the                resolution of a pre-acquisition tax contingency pursuant to EITF                Issue                93-7, "Uncertainties Related to Income Taxes in a Purchase Business                Combination." |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*(PPL      Electric)*

|                                                                                                            |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                            |   | **2007**                                                          |   | **2006** |
| **Reconciliation                of Income Tax Expense**                                                         |   |                                                              |   |   |   |   |   |   |
| Federal                income tax on Income Before Income Taxes at statutory tax rate -                35% |   | $                                                                 | 30 |   |   | $ | 28 |   |
| Increase                (decrease) due to:                                                                      |   |                                                              |   |   |   |   |   |   |
| State                income taxes                                                                               |   |                                                              | 3 |   |   |   | 2 |   |
| Amortization                of investment tax credit                                                            |   |                                                              | (1 | ) |   |   | (1 | ) |
| Stranded                costs securitization                                                                    |   |                                                              | (1 | ) |   |   | (1 | ) |
| Other                                                                                                           |   |                                                              | (1 | ) |   |   | 1 |   |
|                                                                                                            |   |                                                              |   |   |   |   | 1 |   |
| **Total                income tax expense**                                                                     |   | $                                                                 | 30 |   |   | $ | 29 |   |
| **Effective                income tax rate**                                                                    |   |                                                              | 34.5% |   |   |   | 35.8% |   |

**Unrecognized      Tax Benefits**

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

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

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

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

|                                                |   | **PPL** |   | **PPL                Energy Supply** |   | **PPL                Electric** |
|-----------------------------------------------------|--------|---------|--------|--------------------------------------|--------|---------------------------------|
|                                                |   |    |   |                                 |   |                            |   |   |   |   |   |   |
| Accrued                interest                     |   | $       | 37     |                                 |   | $                               | 29 |   |   | $ | 8 |   |
| Accrued                penalties                    |   |    | 1      |                                 |   |                            | 1 |   |   |   |   |   |
| Total                accrued interest and penalties |   | $       | 38     |                                 |   | $                               | 30 |   |   | $ | 8 |   |

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

*(PPL      and PPL Energy Supply)*

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

*(PPL      and PPL Energy Supply)*

|                                                                       | **Three                Months Ended March 31,** |
|----------------------------------------------------------------------------|-------------------------------------------------|
|                                                                       | **PPL**                                         |   | **PPL                Energy Supply** |
|                                                                       | **2007**                                        |   | **2006** |   | **2007** |   | **2006** |
|                                                                       |                                            |   |   |   |   |   |   |
| Net                Income                                                  | $                                               | 203 |   |   | $ | 280 |   |   | $ | 147 |   |   | $ | 230 |   |
| Other                comprehensive income:                                 |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation adjustments                    |                                            |   |   |   |   | 12 |   |   |   |   |   |   |   | 12 |   |
| Defined                benefit plans amortization:                         |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior                service cost                                          |                                            | 4 |   |   |   |   |   |   |   | 3 |   |   |   |   |   |
| Actuarial                loss                                              |                                            | 10 |   |   |   |   |   |   |   | 10 |   |   |   |   |   |
| Net                unrealized gain (loss) on available-for-sale securities |                                            | 1 |   |   |   | (5 | ) |   |   | 1 |   |   |   | (5 | ) |
| Net                unrealized gain on qualifying derivatives               |                                            | 32 |   |   |   | 102 |   |   |   | 33 |   |   |   | 94 |   |
| Total                other comprehensive income                            |                                            | 47 |   |   |   | 109 |   |   |   | 47 |   |   |   | 101 |   |
| Comprehensive                Income                                        | $                                               | 250 |   |   | $ | 389 |   |   | $ | 194 |   |   | $ | 331 |   |

*(PPL      Electric)*

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

**Credit      Arrangements**

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Electric)*

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

**Financing      Activities**

*(PPL)*

*(PPL      and PPL Energy Supply)*

*(PPL      Energy Supply)*

*(PPL      and PPL Electric)*

**Dividends**

*(PPL)*

*(PPL      Electric)*

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

*(PPL        and PPL Energy Supply)*

**Domestic**

|                                                             |   | **March                31, 2007** |   | **December                31, 2006** |
|------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|
|                                                             |   |                              |   |                                 |
| Current                assets                                    |   | $                                 | 2      |                                 |   | $ | 3 |   |
| PP&E                and other acquired intangibles           |   |                              | 59     |                                 |   |   | 89 |   |
| Total                assets held for sale                        |   | $                                 | 61     |                                 |   | $ | 92 |   |
|                                                             |   |                              |   |                                 |   |   |   |   |
| Current                liabilities                               |   | $                                 | 4      |                                 |   | $ | 6 |   |
| Long-term                debt                                    |   |                              | 1      |                                 |   |   | 1 |   |
| Deferred                credits and other noncurrent liabilities |   |                              | 11     |                                 |   |   | 13 |   |
| Total                liabilities held for sale                   |   | $                                 | 16     |                                 |   | $ | 20 |   |

**International**

**Discontinued      Operations**

|                                                                            |   | **Three                Months Ended****March                31,** |   |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                                            |   | **2007**                                                          |   | **2006** |   |
| Operating                revenues                                               |   | $                                                                 | 155    |   |   | $ | 131 |   |   |
| Operating                expenses (a)                                           |   |                                                              | 169    |   |   |   | 115 |   |   |
| Operating                (loss) income                                          |   |                                                              | (14    | ) |   |   | 16 |   |   |
| Other                income -                net                                |   |                                                              | 3      |   |   |   | 2 |   |   |
| Interest                expense (b)                                             |   |                                                              | 5      |   |   |   | 6 |   |   |
| (Loss)                income before income taxes and minority interest          |   |                                                              | (16    | ) |   |   | 12 |   |   |
| Income                tax expense (c)                                           |   |                                                              | 7      |   |   |   | 1 |   |   |
| Minority                interest                                                |   |                                                              | 2      |   |   |   | 1 |   |   |
| (Loss)                Income from Discontinued Operations (net of income taxes) |   | $                                                                 | (25    | ) |   | $ | 10 |   |   |

| (a) |   | 2007                includes the write-down in the carrying value of the Bolivian                businesses.                                                                                                                                                                                                                                                                                              |
|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Both                periods include $2 million of interest expense allocated pursuant                to EITF                87-24, "Allocation of Interest to Discontinued Operations," based                on the                discontinued operation's share of the net assets of PPL Energy                Supply.                                                                                  |
| (c) |   | 2007                includes an additional $18 million U.S. deferred tax charge. As a                result                of PPL's decision to sell its Latin American businesses, it no longer                qualifies for the permanently reinvested exception to recording deferred                taxes pursuant to APB Opinion No. 23, "Accounting for Income Taxes-Special                Areas." |

|                                                                         |   | **March                31, 2007** |   | **December                31, 2006** |
|------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|
| Current                Assets                                                |   |                              |   |                                 |   |   |   |   |
| Cash                and cash equivalents                                     |   | $                                 | 36     |                                 |   | $ | 27 |   |
| Accounts                receivable                                           |   |                              | 98     |                                 |   |   | 92 |   |
| Current                assets - other                                        |   |                              | 51     |                                 |   |   | 49 |   |
| Total                Current Assets                                          |   |                              | 185    |                                 |   |   | 168 |   |
| PP&E                                                                     |   |                              | 432    |                                 |   |   | 475 |   |
| Regulatory                and Other Noncurrent Assets                        |   |                              |   |                                 |   |   |   |   |
| Goodwill                                                                     |   |                              | 144    |                                 |   |   | 148 |   |
| Other                                                                        |   |                              | 27     |                                 |   |   | 27 |   |
| Total                Regulatory and Other Noncurrent Assets                  |   |                              | 171    |                                 |   |   | 175 |   |
| Total                assets held for sale                                    |   | $                                 | 788    |                                 |   | $ | 818 |   |
|                                                                         |   |                              |   |                                 |   |   |   |   |
| Current                Liabilities                                           |   |                              |   |                                 |   |   |   |   |
| Accounts                payable                                              |   | $                                 | 50     |                                 |   | $ | 55 |   |
| Current                liabilities - other                                   |   |                              | 36     |                                 |   |   | 48 |   |
| Total                Current Liabilities                                     |   |                              | 86     |                                 |   |   | 103 |   |
| Long-term                Debt                                                |   |                              | 209    |                                 |   |   | 215 |   |
| Deferred                Credits and Other Noncurrent Liabilities             |   |                              | 49     |                                 |   |   | 46 |   |
| Minority                Interest                                             |   |                              | 34     |                                 |   |   | 33 |   |
| Total                liabilities held for sale and related minority interest |   | $                                 | 378    |                                 |   | $ | 397 |   |

|                                                                   | **Three                Months Ended****March                31, 2006** |
|------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                                   |                                                                   |   |   |   |   |
| Operating                revenues                                      |                                                                   | $ | 2 |   |   |
| Operating                expenses                                      |                                                                   |   | 3 |   |   |
| Loss                from operations before income taxes                |                                                                   |   | (1 | ) |   |
| Income                tax expense                                      |                                                                   |   |   |   |   |
| Loss                from Discontinued Operations (net of income taxes) |                                                                   | $ | (1 | ) |   |

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

*(PPL      and PPL Energy Supply)*

|                                                                       |   | **Three                Months Ended March 31,** |
|----------------------------------------------------------------------------|--------|-------------------------------------------------|
|                                                                       |   | **Pension                Benefits**             |   | **Other                Postretirement****Benefits** |
|                                                                       |   | **Domestic**                                    |   | **International** |   |   |   |   |
|                                                                       |   | **2007**                                        |   | **2006** |   | **2007** |   | **2006** |   | **2007** |   | **2006** |
| **PPL**                                                                    |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                |   | $                                               | 16 |   |   | $ | 16 |   |   | $ | 6 |   |   | $ | 5 |   |   | $ | 2 |   |   | $ | 2 |   |
| Interest                cost                                               |   |                                            | 33 |   |   |   | 31 |   |   |   | 42 |   |   |   | 34 |   |   |   | 8 |   |   |   | 7 |   |
| Expected                return on plan assets                              |   |                                            | (44 | ) |   |   | (41 | ) |   |   | (56 | ) |   |   | (48 | ) |   |   | (5 | ) |   |   | (5 | ) |
| Amortization                of:                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transition                (asset) obligation                               |   |                                            | (1 | ) |   |   | (1 | ) |   |   |   |   |   |   |   |   |   |   | 2 |   |   |   | 2 |   |
| Prior                service cost                                          |   |                                            | 5 |   |   |   | 4 |   |   |   | 1 |   |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
| Actuarial                loss                                              |   |                                            |   |   |   |   |   |   |   |   | 13 |   |   |   | 11 |   |   |   | 2 |   |   |   | 2 |   |
| Net                periodic pension and other postretirement benefit costs |   | $                                               | 9 |   |   | $ | 9 |   |   | $ | 6 |   |   | $ | 3 |   |   | $ | 11 |   |   | $ | 10 |   |
|                                                                       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **PPL                Energy Supply**                                       |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                |   | $                                               | 1 |   |   | $ | 1 |   |   | $ | 6 |   |   | $ | 5 |   |   |   |   |   |   |   |   |   |
| Interest                cost                                               |   |                                            | 1 |   |   |   | 1 |   |   |   | 42 |   |   |   | 34 |   |   |   |   |   |   |   |   |   |
| Expected                return on plan assets                              |   |                                            | (2 | ) |   |   | (1 | ) |   |   | (56 | ) |   |   | (48 | ) |   |   |   |   |   |   |   |   |
| Amortization                of:                                            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prior                service cost                                          |   |                                            |   |   |   |   |   |   |   |   | 1 |   |   |   | 1 |   |   |   |   |   |   |   |   |   |
| Actuarial                loss                                              |   |                                            |   |   |   |   |   |   |   |   | 13 |   |   |   | 11 |   |   |   |   |   |   |   |   |   |
| Net                periodic pension and other postretirement benefit costs |   | $                                               |   |   |   | $ | 1 |   |   | $ | 6 |   |   | $ | 3 |   |   |   |   |   |   |   |   |   |

| **10.  ** | **Commitments                and Contingent Liabilities** |
|---------------------|-----------------------------------------------------------|

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

*(PPL and PPL Energy Supply)*

*(PPL      and PPL Energy Supply)*

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

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

**Legal      Matters**

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

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

*(PPL      and PPL Energy Supply)*

**Regulatory      Issues**

*(PPL      and PPL Energy Supply)*

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

*(PPL      and PPL Energy Supply)*

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

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Energy Supply)*

*PPL      and PPL Energy Supply)*

*(PPL      and PPL Energy Supply)*

*(PPL      and PPL Energy Supply)*

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

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

**Environmental      Matters - Domestic**

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

*      (PPL      and PPL Energy Supply)*

*      (PPL      and PPL Energy Supply)*

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

*(PPL      and PPL Energy Supply)*

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

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

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

**Other**

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

*(PPL)*

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

|                                                                                                                                    |   |   | **Recorded                Liability at** |   | **Exposure                at**       |   |                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------|--------|--------------------------------------|--------|---------------------------------------|
|                                                                                                                                    |   |   | **March                31, 2007**        |   | **December                31, 2006** |   | **March                31, 2007 (a)** |   | **Expiration                Date** |
| **PPL                Energy Supply**                (b)                                                                                 |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| WPD                LLP guarantee of obligations under SIUK Capital Trust I preferred                securities (c)                      |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Letters                of credit issued on behalf of affiliates                                                                         |   |   |                                     |   |                                 |   |                                  | $ | 8 | (d) |   | 2008 |   |
| Support                agreements to guarantee partnerships' obligations for the sale of                coal                            |   |   |                                     |   |                                 |   |                                  |   | 6 |   |   | 2007 |   |
| Retroactive                premiums under nuclear insurance programs                                                                    |   |   |                                     |   |                                 |   |                                  |   | 38 |   |   |   |   |
| Nuclear                claims under The Price-Anderson Act Amendments under The Energy Policy                Act                of 2005 |   |   |                                     |   |                                 |   |                                  |   | 201 | (e) |   |   |   |
| Contingent                purchase price payments to former owners of synfuel                projects                                   |   |   |                                     |   |                                 |   |                                  |   | 14 | (g) |   | 2007 |   |
| Indemnifications                for entities in liquidation and sales of assets                                                         |   |   |                                     |   | $                                    | 1      |                                  |   | 309 | (h) |   | 2008                to 2012 |   |
| Assignment                of Enron claims                                                                                               |   |   |                                     |   |                                 |   |                                  |   | 11 | (i) |   |   | (i) |
| WPD                guarantee of pension and other obligations of unconsolidated                entities                                 |   | $      | 4                                        |   |                                 | 4      |                                  |   | 33 | (f) |   | 2017 |   |
| Tax                indemnification related to unconsolidated WPD affiliates                                                             |   |   |                                     |   |                                 |   |                                  |   | 10 | (j) |   | 2012 |   |
|                                                                                                                                    |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| **PPL                Electric**** **(b)                                                                                            |   |   |                                     |   |                                 |   |                                  |   |   |   |   |   |   |
| Guarantee                of a portion of an unconsolidated entity's debt                                                                |   |   |                                     |   |                                 |   |                                  |   | 7 | (k) |   | 2008 |   |

| (a) |   | Represents                the estimated maximum potential amount of future payments that could                be                required to be made under the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) |   | Other                than the exceptions noted in (d) below, all guarantees of PPL Energy                Supply and PPL Electric also apply to PPL on a consolidated                basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (c) |   | These                securities were redeemed during February 2007 and, as a result, the                guarantee no longer exists. See Note 7 for additional information                on the                redemption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (d) |   | Represents                letters of credit issued at the direction of PPL Energy Supply for                the                benefit of third parties for assurance against nonperformance by                PPL and                PPL Gas Utilities. This is not a guarantee by PPL on a consolidated                basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (e) |   | Amount                is per incident.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (f) |   | Neither                the expiration date nor the maximum amount of potential payments                for                certain obligations is explicitly stated in the related agreements.                Therefore, they have been estimated based on the types of                obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (g) |   | Actual                payments are based primarily upon production levels of the synfuel                projects. See "IRS Synthetic Fuels Tax Credits" within this note                for                further discussion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (h) |   | PPL                Energy Supply's maximum exposure with respect to certain indemnifications                and the expiration of the indemnifications cannot be estimated because,                in                the case of certain of the indemnification provisions, the maximum                potential liability is not capped by the transaction documents and                the                expiration date is based on the applicable statute of limitations.                The                exposure noted is only for those cases in which the agreements provide                for                a specific limit on the amount of the indemnification.  In                connection with the liquidation of wholly owned subsidiaries that                have                been deconsolidated upon turning the entities over to the liquidators,                certain affiliates of PPL Global have agreed to indemnify the liquidators,                directors and/or the entities themselves for any liabilities or expenses                arising during the liquidation process, including liabilities and                expenses                of the entities placed into liquidation. In some cases, the                indemnifications are limited to a maximum amount that is based on                distributions made from the subsidiary to its parent either prior                or                subsequent to being placed into liquidation. In other cases, the                maximum                amount of the indemnifications is not explicitly stated in the agreements.                The indemnifications generally expire two to seven years subsequent                to the                date of dissolution of the entities. The exposure noted only includes                those cases in which the agreements provide for a specific limit                on the                amount of the indemnification, and the expiration date was based                on an                estimate of the dissolution date of the entities. Certain                of the indemnifications provided to the purchaser of the Sundance                plant                are triggered only if the purchaser's losses reach $1 million in                the                aggregate, are capped at 50% of the purchase price (or $95 million),                and                survive for a period of only 24 months after the May 13, 2005, transaction                closing. The indemnification provision for unknown environmental                and tort                liabilities related to periods prior to the ownership by PPL Sundance                Energy, LLC of the real property on which the Sundance plant is located                are capped at $4 million in the aggregate and survive for a maximum                period                of five years after the transaction closing. Certain                of the indemnifications provided to the purchaser of the interest                of PPL                Southwest Generation Holdings, LLC in the Griffith plant are triggered                only if the purchaser's losses reach $750,000 in the aggregate, are                capped                at 35% of the purchase price (or $41 million), and survive for a                period of                only 18 months after the June 30, 2006, transaction closing. In the                case                of most such indemnification obligations, the purchaser's existing                50%                ownership of the Griffith plant prior to closing is taken into account                for                purposes of determining and calculating the purchaser's losses, and                such                indemnification obligations are therefore limited to 50% of any such                purchaser losses. |
| (i) |   | In                July 2006, two subsidiaries of PPL Energy Supply assigned their Enron                claims to an independent third party (claims purchaser). In connection                with the assignment, the subsidiaries agreed to repay a pro rata                share of                the purchase price paid by the claims purchaser, plus interest, in                the                event that any of the assigned claims are disallowed under certain                circumstances. The bankruptcy court overseeing the Enron bankruptcy                approved the assigned claims prior to their assignment to the claims                purchaser. The subsidiaries' repayment obligations will remain in                effect                until the claims purchaser has received all distributions with respect                to                the assigned claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (j) |   | Two                WPD unconsolidated affiliates were refinanced during 2005. Under                the terms                of the refinancing, WPD has indemnified the lender against certain                tax and                other liabilities. At this time, WPD believes that the likelihood                of such                liabilities arising is remote.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (k) |   | Reflects                principal payments only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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

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

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

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

**Allocations      of Corporate Service Costs**
** **
*(PPL      Energy Supply and PPL Electric*

|                             | **Three                Months****Ended                March 31,** |   |
|----------------------------------|-------------------------------------------------------------------|--------|
|                             | **2007**                                                          |   | **2006** |   |
|                             |                                                              |   |   |   |
| PPL                Energy Supply | $                                                                 | 59     |   | $ | 61 |   |
| PPL                Electric      |                                                              | 32     |   |   | 32 |   |

**Divestiture      of Latin American Businesses**
** **
*(PPL      and PPL Energy Supply*

**Intercompany      Borrowings**

*(PPL      Energy Supply)*

*PPL      Electric)*

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

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

| **12.  ** | **Other                Income - net** |
|---------------------|---------------------------------------|

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

|                                                                                             | **Three                Months Ended****March                31,** |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
| **PPL**                                                                                          | **2007**                                                          |   | **2006** |
| **Other****Income**                                                                              |                                                              |   |   |   |   |   |   |
| Interest                income                                                                   | $                                                                 | 12 |   |   | $ | 6 |   |
| Equity                earnings                                                                   |                                                              | 1 |   |   |   | 1 |   |
| Earnings                on nuclear decommissioning trust                                         |                                                              | 2 |   |   |   | 3 |   |
| Gain                on sale of real estate                                                       |                                                              | 5 |   |   |   |   |   |
| Gain                on sale of investment in an unconsolidated affiliate (Note                8) |                                                              |   |   |   |   | 4 |   |
| Hyder                liquidation distribution (Note 8)                                           |                                                              | 4 |   |   |   |   |   |
| Gain                on transfer of international equity investment (Note 8)                      |                                                              | 5 |   |   |   |   |   |
| Miscellaneous                - International                                                     |                                                              |   |   |   |   | 2 |   |
| Miscellaneous                - Domestic                                                          |                                                              | 3 |   |   |   | 4 |   |
| Total                                                                                            |                                                              | 32 |   |   |   | 20 |   |
| **Other                Deductions**                                                              |                                                              |   |   |   |   |   |   |
| Impairment                of investment in U.K. real estate (Note 8)                             |                                                              |   |   |   |   | 8 |   |
| Charitable                contributions                                                          |                                                              | 2 |   |   |   | 1 |   |
| Miscellaneous                - International                                                     |                                                              | 1 |   |   |   |   |   |
| Miscellaneous                - Domestic                                                          |                                                              | 3 |   |   |   | 3 |   |
| **Other                Income - net**                                                            | $                                                                 | 26 |   |   | $ | 8 |   |
|                                                                                             |                                                              |   |   |   |
| **PPL                Energy Supply**                                                             |                                                              |   |   |   |
| **Other****Income**                                                                              |                                                              |   |   |   |   |   |   |
| Interest                income                                                                   | $                                                                 | 8 |   |   | $ | 2 |   |
| Affiliated                interest income (Note 11)                                              |                                                              | 5 |   |   |   | 5 |   |
| Equity                earnings                                                                   |                                                              | 1 |   |   |   | 1 |   |
| Earnings                on nuclear decommissioning trust                                         |                                                              | 2 |   |   |   | 3 |   |
| Gain                on sale of real estate                                                       |                                                              | 1 |   |   |   |   |   |
| Gain                on sale of investment in an unconsolidated affiliate (Note                8) |                                                              |   |   |   |   | 4 |   |
| Hyder                liquidation distribution (Note 8)                                           |                                                              | 4 |   |   |   |   |   |
| Gain                on transfer of international equity investment (Note 8)                      |                                                              | 5 |   |   |   |   |   |
| Miscellaneous                - International                                                     |                                                              |   |   |   |   | 2 |   |
| Miscellaneous                - Domestic                                                          |                                                              | 2 |   |   |   | 2 |   |
| Total                                                                                            |                                                              | 28 |   |   |   | 19 |   |

| **Other                Deductions**                                  |   |   |   |   |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Impairment                of investment in U.K. real estate (Note 8) |   |   |   |   |   | 8      |   |
| Miscellaneous                - International                         |   | 1      |   |   |   |   |   |
| Miscellaneous                - Domestic                              |   | 3      |   |   |   | 3      |   |
| **Other                Income - net**                                | $      | 24     |   |   | $      | 8      |   |
|                                                                 |   |   |   |   |
| **PPL                Electric**                                      |   |   |   |   |   |   |   |
| **Other****Income**                                                  |   |   |   |   |   |   |   |
| Interest                income                                       | $      | 3      |   |   | $      | 3      |   |
| Affiliated                interest income (Note 11)                  |   | 5      |   |   |   | 5      |   |
| Gain                on sale of real estate                           |   | 4      |   |   |   |   |   |
| Miscellaneous                                                        |   |   |   |   |   | 1      |   |
| Total                                                                |   | 12     |   |   |   | 9      |   |
| **Other                Deductions**                                  |   |   |   |   |   |   |   |
| **Other                Income - net**                                | $      | 12     |   |   | $      | 9      |   |

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

*(PPL      and PPL Energy Supply)*

**Fair      Value Hedges**

**Cash      Flow Hedges**

|                                                                                                 |   | **Three                Months Ended****March                31,** |
|------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                                 |   | **2007**                                                          |   | **2006** |
| **PPL**                                                                                              |   |                                                              |   |   |   |   |   |   |
| Beginning                of period                                                                   |   | $                                                                 | (51 | ) |   | $ | (246 | ) |
| Net                change associated with current period hedging activities and                other |   |                                                              | 26 |   |   |   | 77 |   |
| Net                change from reclassification into earnings                                        |   |                                                              | 6 |   |   |   | 25 |   |
| End                of period                                                                         |   | $                                                                 | (19 | ) |   | $ | (144 | ) |

| **PPL                Energy Supply**                                                                 |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Beginning                of period                                                                   |   | $      | (52    | )      |   | $      | (237   | )      |
| Net                change associated with current period hedging activities and                other |   |   | 29     |   |   |   | 70     |   |
| Net                change from reclassification into earnings                                        |   |   | 4      |   |   |   | 24     |   |
| End                of period                                                                         |   | $      | (19    | )      |   | $      | (143   | )      |

**Normal      Purchase / Normal Sale Exception**

|                             |   | **Gains                (Losses)** |
|----------------------------------|--------|-----------------------------------|
|                             |   | **March                31, 2007** |   | **December                31, 2006** |
|                             |   |                              |   |   |   |   |   |   |
| PPL                              |   | $                                 | (94 | ) |   | $ | 146 |   |
| PPL                Energy Supply |   |                              | (94 | ) |   |   | 154 |   |

**Economic**
**      Hedging Activity**

**Credit      Concentration**

*(PPL      Electric)*

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

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

|                                                              |   | **March                31, 2007** |
|-------------------------------------------------------------------|--------|-----------------------------------|
|                                                              |   | **PPL**                           |   | **PPL                Energy Supply** |   | **PPL                Electric** |
| **Current:**                                                      |   |                              |   |   |   |   |   |   |   |   |   |   |
| Collateral                for letters of credit (a)               |   | $                                 | 41 |   |   |   |   |   |   | $ | 41 |   |
| Deposits                for trading purposes with NYMEX broker    |   |                              | 48 |   |   | $ | 48 |   |   |   |   |   |
| Client                deposits                                    |   |                              | 6 |   |   |   |   |   |   |   |   |   |
| Miscellaneous                                                     |   |                              | 1 |   |   |   | 1 |   |   |   | 1 |   |
| Restricted                cash - current                          |   |                              | 96 |   |   |   | 49 |   |   |   | 42 |   |
|                                                              |   |                              |   |   |   |   |   |   |   |   |   |   |
| **Noncurrent:**                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |
| Required                deposits of WPD (b)                       |   |                              | 19 |   |   |   | 19 |   |   |   |   |   |
| PPL                Transition Bond Company Indenture reserves (c) |   |                              | 29 |   |   |   |   |   |   |   | 29 |   |
| Restricted                cash - noncurrent                       |   |                              | 48 |   |   |   | 19 |   |   |   | 29 |   |
| Total                restricted cash                              |   | $                                 | 144 |   |   | $ | 68 |   |   | $ | 71 |   |

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

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

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

*(PPL      and PPL Energy Supply)*

|                                                     | **PPL                Energy Supply** |   |                          |   | **PPL**   |
|----------------------------------------------------------|--------------------------------------|--------|-------------------------------|--------|-----------|
|                                                     | **Supply**                           |   | **International****Delivery** |   | **Total** |   | **Pennsylvania                Delivery** |   | **Total** |
|                                                     |                                 |   |                          |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at December 31, 2006         | $                                    | 94     |                          |   | $         | 1,005 |   |   | $ | 1,099 |   |   | $ | 55 |   |   | $ | 1,154 |   |
| Effect                of foreign currency exchange rates |                                 |   |                          |   |      | (7 | ) |   |   | (7 | ) |   |   |   |   |   |   | (7 | ) |
| Reclassification                (a)                      |                                 |   |                          |   |      | (144 | ) |   |   | (144 | ) |   |   |   |   |   |   | (144 | ) |
| Other                                                    |                                 |   |                          |   |      | 1 |   |   |   | 1 |   |   |   |   |   |   |   | 1 |   |
| Balance                at March 31, 2007       | $                                    | 94     |                          |   | $         | 855 |   |   | $ | 949 |   |   | $ | 55 |   |   | $ | 1,004 |   |

| (a) |   | This                amount relates to Latin American businesses and has been transferred                to                "Assets held for sale" as a result of the anticipated sale of these                businesses. See Note 8 for additional                information. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*(PPL      and PPL Energy Supply)*

| AROs                  at December 31, 2006               |   | $      | 336 |   |   |
|----------------------------------------------------------|--------|--------|-----|--------|--------|
| Accretion                  expense                       |   |   | 7   |   |   |
| Obligations                  settled                     |   |   | (1  | )      |   |
| AROs                  at                  March 31, 2007 |   | $      | 342 |   |   |

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

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

**FIN      48**

**SFAS      155 **

**SFAS      157 **

**SFAS      159**

----

**PPL      CORPORATION AND SUBSIDIARIES**

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

**Overview**

**Results      of Operations**

**Earnings**

|                         |   | **Three                Months Ended****March                31****,** |
|------------------------------|--------|-----------------------------------------------------------------------|
|                         |   | **2007**                                                              |   |   | **2006** |
|                         |   |                                                                  |   |   |   |
| Net                income    |   | $                                                                     | 203 |   |   |   | $ | 280 |   |
| EPS                - basic   |   | $                                                                     | 0.53 |   |   |   | $ | 0.74 |   |
| EPS                - diluted |   | $                                                                     | 0.52 |   |   |   | $ | 0.73 |   |

**Segment      Results **

|                                  |   | **Three                Months****Ended                March 31,** |
|---------------------------------------|--------|-------------------------------------------------------------------|
|                                  |   | **2007**                                                          |   | **2006** |
|                                  |   |                                                              |   |   |
| Supply                                |   | $                                                                 | 117 |   |   | $ | 143 |   |
| International                Delivery |   |                                                              | 28 |   |   |   | 81 |   |
| Pennsylvania                Delivery  |   |                                                              | 58 |   |   |   | 56 |   |
| Total                                 |   | $                                                                 | 203 |   |   | $ | 280 |   |

|                                             |   | **Three                Months****Ended                March 31,** |
|--------------------------------------------------|--------|-------------------------------------------------------------------|
|                                             |   | **2007**                                                          |   | **2006** |
| Energy                revenues                   |   |                                                              |   |   |   |   |   |   |
| External                                         |   | $                                                                 | 278 |   |   | $ | 370 |   |
| Intersegment                                     |   |                                                              | 481 |   |   |   | 446 |   |
| Energy-related                businesses         |   |                                                              | 175 |   |   |   | 158 |   |
| Total                operating revenues          |   |                                                              | 934 |   |   |   | 974 |   |
| Fuel                and energy purchases         |   |                                                              |   |   |   |   |   |   |
| External                                         |   |                                                              | 301 |   |   |   | 338 |   |
| Intersegment                                     |   |                                                              | 37 |   |   |   | 41 |   |
| Other                operation and maintenance   |   |                                                              | 175 |   |   |   | 164 |   |
| Depreciation                                     |   |                                                              | 41 |   |   |   | 37 |   |
| Taxes,                other than income          |   |                                                              | 9 |   |   |   | 9 |   |
| Energy-related                businesses         |   |                                                              | 197 |   |   |   | 154 |   |
| Total                operating expenses          |   |                                                              | 760 |   |   |   | 743 |   |
| Other                Income - net                |   |                                                              | 3 |   |   |   |   |   |
| Interest                Expense                  |   |                                                              | 35 |   |   |   | 27 |   |
| Income                Taxes                      |   |                                                              | 24 |   |   |   | 60 |   |
| Minority                Interest                 |   |                                                              | 1 |   |   |   |   |   |
| Loss                from Discontinued Operations |   |                                                              |   |   |   |   | (1 | ) |
| Net                income                        |   | $                                                                 | 117 |   |   | $ | 143 |   |

| Eastern                U.S. non-trading margins         |   | $      | (3  | )      |   |
|---------------------------------------------------------|--------|--------|-----|--------|--------|
| Western                U.S. non-trading margins         |   |   | (5  | )      |   |
| Other                operation and maintenance expenses |   |   | (1  | )      |   |
| Depreciation                                            |   |   | (2  | )      |   |
| Earnings                from synfuel projects           |   |   | 11  |   |   |
| Interest                expense                         |   |   | (3  | )      |   |
| Other                                                   |   |   | 2   |   |   |
| Special                items                            |   |   | (25 | )      |   |
|                                                    |   | $      | (26 | )      |   |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                  |
| · | The                improved earnings contribution from synfuel projects was primarily                the                result of lower assumed phase-out of synthetic fuel tax credits for                the                three months ended March 31, 2007, compared with the same period                in                2006. |

|                                                                                |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                |   | **2007**                                                          |   | **2006** |
|                                                                                |   |                                                              |   |   |
| Mark-to-market                adjustments from certain economic, non-trading hedges |   | $                                                                 | 10 |   |   | $ | 7 |   |
| Impairment                of telecommunications assets (Note 8)                     |   |                                                              | (18 | ) |   |   |   |   |
| Reduction                in Enron reserve (Note 10)                                 |   |                                                              |   |   |   |   | 9 |   |
| Off-site                remediation of ash basin leak (Note                10)      |   |                                                              |   |   |   |   | 1 |   |
| Total                                                                               |   | $                                                                 | (8 | ) |   | $ | 17 |   |

*2007      Outlook*

|                                                      |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                      |   | **2007**                                                          |   | **2006** |
|                                                      |   |                                                              |   |   |
| Utility                revenues                           |   | $                                                                 | 216 |   |   | $ | 203 |   |
| Energy-related                businesses                  |   |                                                              | 10 |   |   |   | 10 |   |
| Total                operating revenues                   |   |                                                              | 226 |   |   |   | 213 |   |
| Other                operation and maintenance            |   |                                                              | 56 |   |   |   | 45 |   |
| Depreciation                                              |   |                                                              | 43 |   |   |   | 35 |   |
| Taxes,                other than income                   |   |                                                              | 16 |   |   |   | 11 |   |
| Energy-related                businesses                  |   |                                                              | 5 |   |   |   | 4 |   |
| Total                operating expenses                   |   |                                                              | 120 |   |   |   | 95 |   |
| Other                Income - net                         |   |                                                              | 11 |   |   |   | (1 | ) |
| Interest                Expense                           |   |                                                              | 49 |   |   |   | 43 |   |
| Income                Taxes                               |   |                                                              | 15 |   |   |   | 3 |   |
| (Loss)                Income from Discontinued Operations |   |                                                              | (25 | ) |   |   | 10 |   |
| Net                income                                 |   | $                                                                 | 28 |   |   | $ | 81 |   |

| U.K.:                                                                                               |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Delivery                margins                                                                     |   | $      | (7     | )      |   |
| Depreciation                                                                                        |   |   | (3     | )      |   |
| Operating                expenses                                                                   |   |   | (3     | )      |   |
| Interest                expense                                                                     |   |   | (3     | )      |   |
| Income                taxes                                                                         |   |   | (20    | )      |   |
| Impact                of changes in foreign currency exchange rates                                 |   |   | 7      |   |   |
| Hyder                liquidation distributions (Note 8)                                        |   |   | 4      |   |   |
| Gain                on transfer of equity investment (Note 8)                                       |   |   | 5      |   |   |
| Impairment                of investment in U.K. real estate (Note 8)                                |   |   | 6      |   |   |
| Other                                                                                               |   |   | (2     | )      |   |
| Latin                American results of operations excluding special items (Note                8) |   |   | 6      |   |   |
| Other                                                                                               |   |   | (2     | )      |   |
| Special                items                                                                        |   |   | (41    | )      |   |
|                                                                                                |   | $      | (53    | )      |   |

| · | The                U.K.'s earnings were negatively impacted by lower delivery margins,                primarily due to a 4% decrease in sales volumes as a result of milder                weather in 2007.                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                       |
| · | Higher                U.K. income taxes were due to the transfer of WPD tax items in the                first                quarter of 2006. See Note 5 to the Financial Statements for additional                information.                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |
| · | Changes                in foreign exchange rates increased WPD's portion of revenue and                expense                line items by 12% in the three months ended March 31, 2007, compared                with                the same period in 2006, which resulted in $7 million of additional                earnings in 2007. |

|                                                                  |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                  |   | **2007**                                                          |   | **2006** |
| Divestiture                of Latin American businesses (Note 8) |   | $                                                                 | (40 | ) |   |   |   |   |
| Reduction                in Enron reserve                             |   |                                                              |   |   |   | $ | 1 |   |
| Total                                                                 |   | $                                                                 | (40 | ) |   | $ | 1 |   |

*2007      Outlook*

|                                                        |   | **Three                Months****Ended                March 31,** |
|-------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                        |   | **2007**                                                          |   | **2006** |
| Operating                revenues                           |   |                                                              |   |   |   |   |   |   |
| External                                                    |   | $                                                                 | 959 |   |   | $ | 909 |   |
| Intersegment                                                |   |                                                              | 37 |   |   |   | 41 |   |
| Total                operating revenues                     |   |                                                              | 996 |   |   |   | 950 |   |
| Fuel                and energy purchases                    |   |                                                              |   |   |   |   |   |   |
| External                                                    |   |                                                              | 118 |   |   |   | 126 |   |
| Intersegment                                                |   |                                                              | 481 |   |   |   | 446 |   |
| Other                operation and maintenance              |   |                                                              | 105 |   |   |   | 102 |   |
| Amortization                of recoverable transition costs |   |                                                              | 81 |   |   |   | 72 |   |
| Depreciation                                                |   |                                                              | 34 |   |   |   | 30 |   |
| Taxes,                other than income                     |   |                                                              | 54 |   |   |   | 50 |   |
| Total                operating expenses                     |   |                                                              | 873 |   |   |   | 826 |   |
| Other                Income - net                           |   |                                                              | 12 |   |   |   | 9 |   |
| Interest                Expense                             |   |                                                              | 37 |   |   |   | 44 |   |
| Income                Taxes                                 |   |                                                              | 35 |   |   |   | 32 |   |
| Dividends                on Preferred Securities            |   |                                                              | 5 |   |   |   | 1 |   |
| Net                income                                   |   | $                                                                 | 58 |   |   | $ | 56 |   |

| Delivery                revenues (net of CTC/ITC amortization, interest expense on transition                bonds and ancillary charges) |   | $      | 5  |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----|--------|--------|
| Other                operation and maintenance expenses                                                                                   |   |   | (2 | )      |   |
| Depreciation                                                                                                                              |   |   | (3 | )      |   |
| Other                                                                                                                                     |   |   | 2  |   |   |
|                                                                                                                                      |   | $      | 2  |   |   |

*2007      Outlook*

**Statement      of Income Analysis -- **

**Domestic      Gross Energy Margins**

|                                               | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|----------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                               |                                                                                      |
| Utility                                            |                                                                                      | $ | 63 |   |   |
| Unregulated                retail electric and gas |                                                                                      |   | (3 | ) |   |
| Wholesale                energy marketing          |                                                                                      |   | (86 | ) |   |
| Net                energy trading margins          |                                                                                      |   | (3 | ) |   |
| Other                revenue adjustments (a)       |                                                                                      |   | (14 | ) |   |
| Total                revenues                      |                                                                                      |   | (43 | ) |   |
| Fuel                                               |                                                                                      |   | 58 |   |   |
| Energy                purchases                    |                                                                                      |   | (103 | ) |   |
| Other                cost adjustments (a)          |                                                                                      |   | 11 |   |   |
| Total                cost of sales                 |                                                                                      |   | (34 | ) |   |
| Domestic                gross energy margins       |                                                                                      | $ | (9 | ) |   |

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

|                                         | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
| Non-trading                                  |                                                                                      |   |   |   |   |
| Eastern                U.S.                  |                                                                                      | $ | 1 |   |   |
| Western                U.S.                  |                                                                                      |   | (7 | ) |   |
| Net                energy trading            |                                                                                      |   | (3 | ) |   |
| Domestic                gross energy margins |                                                                                      | $ | (9 | ) |   |

*Eastern      U.S.*

*Western      U.S.*

*Net      Energy Trading*

|   |   | **Three                Months****Ended                March 31,** |
|--------|--------|-------------------------------------------------------------------|
|   |   | **2007**                                                          |   | **2006** |
|   |   |                                                              |   |   |   |   |   |   |
| GWh    |   |                                                              | 2,788 |   |   |   | 2,085 |   |
| Bcf    |   |                                                              | 5.3 |   |   |   | 4.3 |   |

**Utility      Revenues**

|                                                      | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------|-------------------------------------------------------------------------------------------|
| **Domestic:**                                             |                                                                                      |   |   |   |   |
| Retail                electric revenue (PPL Electric)     |                                                                                      |   |   |   |   |
| PLR                electric generation supply             |                                                                                      | $ | 37 |   |   |
| Electric                delivery                          |                                                                                      |   | 14 |   |   |
| Gas                revenue (PPL Gas Utilities)            |                                                                                      |   | (2 | ) |   |
| Other                                                     |                                                                                      |   | 1 |   |   |
| **International:**                                        |                                                                                      |   |   |   |   |
| U.K.                retail electric delivery (PPL Global) |                                                                                      |   | (10 | ) |   |
| Foreign                currency exchange rates            |                                                                                      |   | 23 |   |   |
|                                                      |                                                                                      | $ | 63 |   |   |

| · | higher                PLR revenues and electric delivery revenues primarily attributable                to a 4%                increase in sales volume, due in part to the impact of colder weather                in                2007 on residential and commercial sales and the return of customers                previously served by alternate suppliers; partially offset                by |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | lower                U.K. revenues primarily due to a 4% decrease in sales volumes as                a result                of milder weather in 2007.                                                                                                                                                                                                                                                |

**Energy-related      Businesses**

**Other      Operation and Maintenance**

|                                                                            | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                            |                                                                                      |
| Reduction                in Enron reserve in 2006 (Note 10)                     |                                                                                      | $ | 15 |   |   |
| Environmental                remediation                                        |                                                                                      |   | 6 |   |   |
| Pension                and other postretirement benefits                        |                                                                                      |   | 4 |   |   |
| Change                in foreign currency exchange rates                        |                                                                                      |   | 4 |   |   |
| Martins                Creek ash basin remediation adjustment in 2006 (Note 10) |                                                                                      |   | 3 |   |   |
| Susquehanna                nuclear station outage                               |                                                                                      |   | 2 |   |   |
| Tree-trimming                                                                   |                                                                                      |   | 2 |   |   |
| Storm                insurance premiums                                         |                                                                                      |   | 2 |   |   |
| Stock-based                compensation                                         |                                                                                      |   | 2 |   |   |
| Western                and Eastern U.S. fossil/hydro stations outages           |                                                                                      |   | (3 | ) |   |
| PUC                reportable storms                                            |                                                                                      |   | (3 | ) |   |
| Regulatory                asset in 2007 for PPL Gas Utilities rate case         |                                                                                      |   | (4 | ) |   |
| Higher                gains on sales of emission allowances                     |                                                                                      |   | (11 | ) |   |
| Other                                                                           |                                                                                      |   | 6 |   |   |
|                                                                            |                                                                                      | $ | 25 |   |   |

**Depreciation**

|                                                                                                                                    | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                                                                    |                                                                                      |
| Additions                to PP&E                                                                                                    |                                                                                      | $ | 9 |   |   |
| Purchase                of equipment previously leased                                                                                  |                                                                                      |   | 4 |   |   |
| Foreign                currency exchange rates                                                                                          |                                                                                      |   | 4 |   |   |
| Reduction                of useful lives of certain distribution assets                                                                 |                                                                                      |   | 1 |   |   |
| Favorable                impact of not depreciating transport assets classified as held for                sale                (Note 8) |                                                                                      |   | (2 | ) |   |
|                                                                                                                                    |                                                                                      | $ | 16 |   |   |

**Taxes,      Other Than Income**

**Other      Income**
**      - net**

**Financing      Costs**

|                                                                        | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                        |                                                                                      |
| Long-term                debt interest expense                              |                                                                                      | $ | 7 |   |   |
| Foreign                currency exchange rates                              |                                                                                      |   | 4 |   |   |
| Dividends                on 6.25% Series Preference Stock                   |                                                                                      |   | 4 |   |   |
| Loss                on redemption of 8.23% Subordinated Debentures due 2027 |                                                                                      |   | 2 |   |   |
| Hedging                activities                                           |                                                                                      |   | 1 |   |   |
| Increase                in capitalized interest                             |                                                                                      |   | (7 | ) |   |
|                                                                        |                                                                                      | $ | 11 |   |   |

**Income      Taxes**

|                                                                                               | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                               |                                                                                      |
| Lower                pre-tax book income                                                           |                                                                                      | $ | (20 | ) |   |
| Change                in tax benefits related to nonconventional fuel tax                credits   |                                                                                      |   | (10 | ) |   |
| Change                in tax expense on foreign earnings                                           |                                                                                      |   | (10 | ) |   |
| Transfer                of WPD tax items in the first quarter of 2006                (Note 5) |                                                                                      |   | 20 |   |   |
| Other                                                                                              |                                                                                      |   | (1 | ) |   |
|                                                                                               |                                                                                      | $ | (21 | ) |   |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources**

|                                     |   | **March                31, 2007** |   | **December                31, 2006** |
|------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|
|                                     |   |                              |   |                                 |   |   |   |   |
| Cash                and cash equivalents |   | $                                 | 965    | (a)                                  |   | $ | 794 |   |
| Short-term                investments    |   |                              | 354    |                                 |   |   | 359 |   |
|                                     |   | $                                 | 1,319  | (a)                                  |   | $ | 1,153 |   |
| Short-term                debt           |   | $                                 | 71     |                                 |   | $ | 42 |   |

| (a) |   | Excludes                $36 million of cash related to the Latin American businesses that                is                included in "Assets held for sale" on the Balance                Sheet. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | proceeds                of $505 million from the issuance of long-term debt;                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | $286                million of cash provided by operating activities;                                                                                                           |
| · | a                net increase in short-term debt of $29 million; and                                                                                                            |
| · | net                proceeds of $26 million from the sale of emission allowances; offset                by                                                                       |
| · | $341                million of capital expenditures;                                                                                                                            |
| · | the                retirement of $201 million of long-term debt (which includes a payment                of                $29 million to settle related cross-currency swaps); |
| · | the                payment of $105 million of common stock dividends; and                                                                                                       |
| · | the                reclassification of $36 million of cash related to the Latin American                businesses to "Assets held for                sale."                    |

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

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

*Commodity      Price Risk (Non-trading)*

|                                                                                             |   | **Three                Months Ended****March                31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                          |   | **2006** |
|                                                                                             |   |                                                              |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                                                 | (111 | ) |   | $ | (284 | ) |
| Contracts                realized or otherwise settled during the period                         |   |                                                              | 23 |   |   |   | 11 |   |
| Fair                value of new contracts at inception                                          |   |                                                              | 23 |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                                              | 52 |   |   |   | 162 |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                                                 | (13 | ) |   | $ | (111 | ) |

|                                                                          |   | **Fair                  Value of Contracts at Period-End****Gains                  (Losses)** |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                                          |   | **Maturity****Less                  Than****1                  Year**                         |   | **Maturity****1-3                  Years** |   | **Maturity****4-5                  Years** |   | **Maturity****in                  Excess****of                  5 Years** |   | **Total                  Fair****Value** |
| **Source                  of Fair Value**                                     |   |                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                  actively quoted                                       |   | $                                                                                             | 15 |   |   | $ | 5 |   |   | $ | (6 | ) |   |   |   |   |   | $ | 14 |   |
| Prices                  provided by other external sources                    |   |                                                                                          | 14 |   |   |   | (143 | ) |   |   | (16 | ) |   | $ | (2 | ) |   |   | (147 | ) |
| Prices                  based on models and other valuation methods           |   |                                                                                          | 60 |   |   |   | 12 |   |   |   |   |   |   |   | 48 |   |   |   | 120 |   |
| Fair                  value of contracts outstanding at the end of the period |   | $                                                                                             | 89 |   |   | $ | (126 | ) |   | $ | (22 | ) |   | $ | 46 |   |   | $ | (13 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                                 |   | **Three                  Months Ended March 31,** |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
|                                                                                                 |   | **2007**                                          |   | **2006** |
|                                                                                                 |   |                                              |   |   |
| Fair                  value of contracts outstanding at the beginning of the                  period |   | $                                                 | 41 |   |   | $ | 5 |   |
| Contracts                  realized or otherwise settled during the period                           |   |                                              | (13 | ) |   |   | (11 | ) |
| Fair                  value of new contracts at inception                                            |   |                                              | 16 |   |   |   | 4 |   |
| Other                  changes in fair values                                                        |   |                                              | 1 |   |   |   | 14 |   |
| Fair                  value of contracts outstanding at the end of the period                        |   | $                                                 | 45 |   |   | $ | 12 |   |

|                                                                          |   | **Fair                  Value of Contracts at Period-End****Gains                  (Losses)** |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                                          |   | **Maturity****Less                  Than****1                  Year**                         |   | **Maturity****1-3                  Years** |   | **Maturity****4-5                  Years** |   | **Maturity****in                  Excess****of                  5 Years** |   | **Total                  Fair****Value** |
| **Source                  of Fair Value**                                     |   |                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                  actively quoted                                       |   | $                                                                                             | (3 | ) |   | $ | 2 |   |   | $ | 1 |   |   |   |   |   |   |   |   |   |
| Prices                  provided by other external sources                    |   |                                                                                          | 4 |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   | $ | 5 |   |
| Prices                  based on models and other valuation methods           |   |                                                                                          | 18 |   |   |   | 22 |   |   |   |   |   |   |   |   |   |   |   | 40 |   |
| Fair                  value of contracts outstanding at the end of the period |   | $                                                                                             | 19 |   |   | $ | 25 |   |   | $ | 1 |   |   |   |   |   |   | $ | 45 |   |

*Synthetic      Fuel Tax Credit Risk*

*Commodity      Price Risk Summary*
** **

*Interest      Rate Risk*
** **

*Foreign      Currency Risk*

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

**Related      Party Transactions**

**Acquisitions,      Development and Divestitures**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      ENERGY SUPPLY, LLC AND SUBSIDIARIES**

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

**Overview**

**Results      of Operations**

**Earnings**

**Segment      Results **

|                                  |   | **Three                Months****Ended                March 31,** |
|---------------------------------------|--------|-------------------------------------------------------------------|
|                                  |   | **2007**                                                          |   | **2006** |
|                                  |   |                                                              |   |   |   |   |
| Supply                                |   | $                                                                 | 119 |   |   | $ | 149 |   |
| International                Delivery |   |                                                              | 28 |   |   |   | 81 |   |
| Total                                 |   | $                                                                 | 147 |   |   | $ | 230 |   |

|                                             |   | **Three                Months****Ended                March 31,** |
|--------------------------------------------------|--------|-------------------------------------------------------------------|
|                                             |   | **2007**                                                          |   | **2006** |
|                                             |   |                                                              |   |   |   |   |
| Energy                revenues                   |   | $                                                                 | 759 |   |   | $ | 816 |   |
| Energy-related                businesses         |   |                                                              | 173 |   |   |   | 150 |   |
| Total                operating revenues          |   |                                                              | 932 |   |   |   | 966 |   |
| Fuel                and energy purchases         |   |                                                              | 339 |   |   |   | 376 |   |
| Other                operation and maintenance   |   |                                                              | 188 |   |   |   | 177 |   |
| Depreciation                                     |   |                                                              | 38 |   |   |   | 33 |   |
| Taxes,                other than income          |   |                                                              | 8 |   |   |   | 10 |   |
| Energy-related                businesses         |   |                                                              | 196 |   |   |   | 147 |   |
| Total                operating expenses          |   |                                                              | 769 |   |   |   | 743 |   |
| Other                Income - net                |   |                                                              | 13 |   |   |   | 9 |   |
| Interest                Expense                  |   |                                                              | 27 |   |   |   | 16 |   |
| Income                Taxes                      |   |                                                              | 29 |   |   |   | 66 |   |
| Minority                Interest                 |   |                                                              | 1 |   |   |   |   |   |
| Loss                from Discontinued Operations |   |                                                              |   |   |   |   | (1 | ) |
| Net                income                        |   | $                                                                 | 119 |   |   | $ | 149 |   |

| Eastern                U.S. non-trading margins |   | $      | (3  | )      |   |
|-------------------------------------------------|--------|--------|-----|--------|--------|
| Western                U.S. non-trading margins |   |   | (5  | )      |   |
| Interest                expense                 |   |   | (6  | )      |   |
| Earnings                from synfuel projects   |   |   | 11  |   |   |
| Other                                           |   |   | (2  | )      |   |
| Special                items                    |   |   | (25 | )      |   |
|                                            |   | $      | (30 | )      |   |

| · | See                "Domestic Gross Energy Margins" for an explanation of non-trading                margins                by geographic region and for an explanation of net energy trading                margins.                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                  |
| · | The                improved earnings contribution from synfuel projects was primarily                the                result of lower assumed phase-out of synthetic fuel tax credits for                the                three months ended March 31, 2007, compared with the same period                in                2006. |

|                                                                               |   | **Three                Months****Ended                March 31,** |
|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                               |   | **2007**                                                          |   | **2006** |
|                                                                               |   |                                                              |   |   |   |   |
| Mark-to-market                adjustments from certain economic non-trading hedges |   | $                                                                 | 10 |   |   | $ | 7 |   |
| Impairment                of telecommunications assets (Note 8)                    |   |                                                              | (18 | ) |   |   |   |   |
| Reduction                in Enron reserve (Note 10)                                |   |                                                              |   |   |   |   | 9 |   |
| Off-site                remediation of ash basin leak (Note                10)     |   |                                                              |   |   |   |   | 1 |   |
| Total                                                                              |   | $                                                                 | (8 | ) |   | $ | 17 |   |

*2007      Outlook*

|                                                      |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                      |   | **2007**                                                          |   | **2006** |
|                                                      |   |                                                              |   |   |   |   |
| Utility                revenues                           |   | $                                                                 | 216 |   |   | $ | 203 |   |
| Energy-related                businesses                  |   |                                                              | 10 |   |   |   | 10 |   |
| Total                operating revenues                   |   |                                                              | 226 |   |   |   | 213 |   |
| Other                operation and maintenance            |   |                                                              | 56 |   |   |   | 45 |   |
| Depreciation                                              |   |                                                              | 43 |   |   |   | 35 |   |
| Taxes,                other than income                   |   |                                                              | 16 |   |   |   | 11 |   |
| Energy-related                businesses                  |   |                                                              | 5 |   |   |   | 4 |   |
| Total                operating expenses                   |   |                                                              | 120 |   |   |   | 95 |   |
| Other                Income - net                         |   |                                                              | 11 |   |   |   | (1 | ) |
| Interest                Expense                           |   |                                                              | 49 |   |   |   | 43 |   |
| Income                Taxes                               |   |                                                              | 15 |   |   |   | 3 |   |
| (Loss)                Income from Discontinued Operations |   |                                                              | (25 | ) |   |   | 10 |   |
| Net                income                                 |   | $                                                                 | 28 |   |   | $ | 81 |   |

| U.K.:                                                                                               |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Delivery                margins                                                                     |   | $      | (7     | )      |   |
| Depreciation                                                                                        |   |   | (3     | )      |   |
| Operating                expenses                                                                   |   |   | (3     | )      |   |
| Interest                expense                                                                     |   |   | (3     | )      |   |
| Income                taxes                                                                         |   |   | (20    | )      |   |
| Impact                of changes in foreign currency exchange rates                                 |   |   | 7      |   |   |
| Hyder                liquidation distributions (Note 8)                                        |   |   | 4      |   |   |
| Gain                on transfer of equity investment (Note 8)                                       |   |   | 5      |   |   |
| Impairment                of investment in U.K. real estate (Note 8)                                |   |   | 6      |   |   |
| Other                                                                                               |   |   | (2     | )      |   |
| Latin                American results of operations excluding special items (Note                8) |   |   | 6      |   |   |
| Other                                                                                               |   |   | (2     | )      |   |
| Special                items                                                                        |   |   | (41    | )      |   |
|                                                                                                |   | $      | (53    | )      |   |

| · | The                U.K.'s earnings were negatively impacted by lower delivery margins,                primarily due to a 4% decrease in sales volumes as a result of milder                weather in 2007.                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                       |
| · | Higher                U.K. income taxes were due to the transfer of WPD tax items in the                first                quarter of 2006. See Note 5 to the Financial Statements for additional                information.                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                       |
| · | Changes                in foreign exchange rates increased WPD's portion of revenue and                expense                line items by 12% in the three months ended March 31, 2007, compared                with                the same period in 2006, which resulted in $7 million of additional                earnings in 2007. |

|                                                                  |   | **Three                Months****Ended                March 31,** |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                  |   | **2007**                                                          |   | **2006** |
| Divestiture                of Latin American businesses (Note 8) |   | $                                                                 | (40 | ) |   |   |   |   |
| Reduction                in Enron reserve                             |   |                                                              |   |   |   | $ | 1 |   |
| Total                                                                 |   | $                                                                 | (40 | ) |   | $ | 1 |   |

*2007      Outlook*

**Statement      of Income Analysis -- **

**Domestic      Gross Energy Margins**

|                                                   | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|--------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                   |                                                                                      |
| Wholesale                energy marketing              |                                                                                      | $ | (86 | ) |   |
| Wholesale                energy marketing to affiliate |                                                                                      |   | 35 |   |   |
| Unregulated                retail electric and gas     |                                                                                      |   | (3 | ) |   |
| Net                energy trading margins              |                                                                                      |   | (3 | ) |   |
| Other                revenue adjustments (a)           |                                                                                      |   | 14 |   |   |
| Total                revenues                          |                                                                                      |   | (43 | ) |   |
| Fuel                                                   |                                                                                      |   | 65 |   |   |
| Energy                purchases                        |                                                                                      |   | (100 | ) |   |
| Energy                purchases from affiliate         |                                                                                      |   | (2 | ) |   |
| Other                cost adjustments (a)              |                                                                                      |   | 3 |   |   |
| Total                cost of sales                     |                                                                                      |   | (34 | ) |   |
| Domestic                gross energy margins           |                                                                                      | $ | (9 | ) |   |

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

|                                         | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|----------------------------------------------|-------------------------------------------------------------------------------------------|
| Non-trading                                  |                                                                                      |   |   |   |   |
| Eastern                U.S.                  |                                                                                      | $ | 1 |   |   |
| Western                U.S.                  |                                                                                      |   | (7 | ) |   |
| Net                energy trading            |                                                                                      |   | (3 | ) |   |
| Domestic                gross energy margins |                                                                                      | $ | (9 | ) |   |

*Eastern      U.S.*

*Western      U.S.*

*Net      Energy Trading*

|   |   | **Three                Months****Ended                March 31,** |
|--------|--------|-------------------------------------------------------------------|
|   |   | **2007**                                                          |   | **2006** |
|   |   |                                                              |   |   |   |   |   |   |
| GWh    |   |                                                              | 2,788 |   |   |   | 2,085 |   |
| Bcf    |   |                                                              | 5.3 |   |   |   | 4.3 |   |

**Utility      Revenues**

|                                                      | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------|-------------------------------------------------------------------------------------------|
| **International:**                                        |                                                                                      |   |   |   |   |
| U.K.                retail electric delivery (PPL Global) |                                                                                      | $ | (10 | ) |   |
| Foreign                currency exchange rates            |                                                                                      |   | 23 |   |   |
|                                                      |                                                                                      | $ | 13 |   |   |

**Energy-related      Businesses**

**Other      Operation and Maintenance**

|                                                                            | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                            |                                                                                      |   |   |   |   |
| Reduction                in Enron reserve in 2006 (Note 10)                     |                                                                                      | $ | 15 |   |   |
| Pension                and other postretirement benefits                        |                                                                                      |   | 4 |   |   |
| Change                in foreign currency exchange rates                        |                                                                                      |   | 4 |   |   |
| Allocation                of corporate service costs                            |                                                                                      |   | 4 |   |   |
| Martins                Creek ash basin remediation adjustment in 2006 (Note 10) |                                                                                      |   | 3 |   |   |
| Susquehanna                nuclear station outage                               |                                                                                      |   | 2 |   |   |
| Western                and Eastern U.S. fossil/hydro stations outages           |                                                                                      |   | (3 | ) |   |
| Higher                gains on sales of emission allowances                     |                                                                                      |   | (11 | ) |   |
| Other                                                                           |                                                                                      |   | 4 |   |   |
|                                                                            |                                                                                      | $ | 22 |   |   |

**Depreciation**

|                                                                    | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                    |                                                                                      |   |   |   |   |
| Additions                to PP&E                                    |                                                                                      | $ | 4 |   |   |
| Foreign                currency exchange rates                          |                                                                                      |   | 4 |   |   |
| Contribution                of assets from parent                       |                                                                                      |   | 3 |   |   |
| Purchase                of equipment previously leased                  |                                                                                      |   | 1 |   |   |
| Reduction                of useful lives of certain distribution assets |                                                                                      |   | 1 |   |   |
|                                                                    |                                                                                      | $ | 13 |   |   |

**Taxes,      Other Than Income**

**Other      Income - net**

**Interest      Expense**

|                                                                        | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                        |                                                                                      |
| Long-term                debt interest expense                              |                                                                                      | $ | 17 |   |   |
| Foreign                currency exchange rates                              |                                                                                      |   | 4 |   |   |
| Loss                on redemption of 8.23% Subordinated Debentures due 2027 |                                                                                      |   | 2 |   |   |
| Increase                in capitalized interest                             |                                                                                      |   | (7 | ) |   |
| Other                                                                       |                                                                                      |   | 1 |   |   |
|                                                                        |                                                                                      | $ | 17 |   |   |

**Income      Taxes**

|                                                                                               | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|----------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                               |                                                                                      |
| Lower                pre-tax book income                                                           |                                                                                      | $ | (25 | ) |   |
| Change                in tax benefits related to nonconventional fuel tax                credits   |                                                                                      |   | (10 | ) |   |
| Change                in tax expense on foreign earnings                                           |                                                                                      |   | (10 | ) |   |
| Transfer                of WPD tax items in the first quarter of 2006                (Note 5) |                                                                                      |   | 20 |   |   |
|                                                                                               |                                                                                      | $ | (25 | ) |   |

**Discontinued      Operations**

**Financial      Condition**

**Liquidity      and Capital Resources **

|                                     |   | **March                31, 2007** |   | **December                31, 2006** |
|------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|
|                                     |   |                              |   |                                 |   |   |   |   |
| Cash                and cash equivalents |   | $                                 | 757    |  (a)                            |   | $ | 524 |   |
| Short-term                investments    |   |                              | 348    |                                 |   |   | 328 |   |
|                                     |   | $                                 | 1,105  |  (a)                            |   | $ | 852 |   |

| (a) |   | Excludes                $36 million of cash related to the Latin American businesses that                is                included in "Assets held for sale" on the Balance                Sheet. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | $500                million of contributions from Member;                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | $223                million of cash provided by operating activities; and                                                                                                       |
| · | net                proceeds of $26 million from the sale of emission allowances; offset                by                                                                       |
| · | $270                million of capital expenditures;                                                                                                                            |
| · | the                retirement of $121 million of long-term debt (which includes a payment                of                $29 million to settle related cross-currency swaps); |
| · | distributions                to Member of $72 million; and                                                                                                                      |
| · | the                reclassification of $36 million of cash related to the Latin American                businesses to "Assets held for                sale."                    |

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

*Commodity      Price Risk (Non-trading)*

|                                                                                             |   | **Three                Months Ended****March                31,** |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                                             |   | **2007**                                                          |   | **2006** |
|                                                                                             |   |                                                              |   |   |   |   |   |   |
| Fair                value of contracts outstanding at the beginning of the                period |   | $                                                                 | (111 | ) |   | $ | (278 | ) |
| Contracts                realized or otherwise settled during the period                         |   |                                                              | 18 |   |   |   | 9 |   |
| Fair                value of new contracts at inception                                          |   |                                                              | 23 |   |   |   |   |   |
| Other                changes in fair values                                                      |   |                                                              | 57 |   |   |   | 173 |   |
| Fair                value of contracts outstanding at the end of the period                      |   | $                                                                 | (13 | ) |   | $ | (96 | ) |

|                                                                        |   | **Fair                Value of Contracts at Period-End****Gains                (Losses)** |
|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|
|                                                                        |   | **Maturity****Less                Than****1                Year**                         |   | **Maturity****1-3                Years** |   | **Maturity****4-5                Years** |   | **Maturity****in                Excess****of                5 Years** |   | **Total                Fair****Value** |
| **Source                of Fair Value**                                     |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                actively quoted                                       |   | $                                                                                         | 15 |   |   | $ | 5 |   |   | $ | (6 | ) |   |   |   |   |   | $ | 14 |   |
| Prices                provided by other external sources                    |   |                                                                                      | 15 |   |   |   | (144 | ) |   |   | (16 | ) |   | $ | (2 | ) |   |   | (147 | ) |
| Prices                based on models and other valuation methods           |   |                                                                                      | 60 |   |   |   | 12 |   |   |   |   |   |   |   | 48 |   |   |   | 120 |   |
| Fair                value of contracts outstanding at the end of the period |   | $                                                                                         | 90 |   |   | $ | (127 | ) |   | $ | (22 | ) |   | $ | 46 |   |   | $ | (13 | ) |

*Commodity      Price Risk (Trading)*

|                                                                                                 |   | **Three                  Months Ended March 31,** |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|
|                                                                                                 |   | **2007**                                          |   | **2006** |
|                                                                                                 |   |                                              |   |   |   |   |
| Fair                  value of contracts outstanding at the beginning of the                  period |   | $                                                 | 41 |   |   | $ | 5 |   |
| Contracts                  realized or otherwise settled during the period                           |   |                                              | (13 | ) |   |   | (11 | ) |
| Fair                  value of new contracts at inception                                            |   |                                              | 16 |   |   |   | 4 |   |
| Other                  changes in fair values                                                        |   |                                              | 1 |   |   |   | 14 |   |
| Fair                  value of contracts outstanding at the end of the period                        |   | $                                                 | 45 |   |   | $ | 12 |   |

|                                                                          |   | **Fair                  Value of Contracts at Period-End****Gains                  (Losses)** |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|
|                                                                          |   | **Maturity****Less                  Than****1                  Year**                         |   | **Maturity****1-3                  Years** |   | **Maturity****4-5                  Years** |   | **Maturity****in                  Excess****of                  5 Years** |   | **Total                  Fair****Value** |
| **Source                  of Fair Value**                                     |   |                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prices                  actively quoted                                       |   | $                                                                                             | (3 | ) |   | $ | 2 |   |   | $ | 1 |   |   |   |   |   |   |   |   |   |
| Prices                  provided by other external sources                    |   |                                                                                          | 4 |   |   |   | 1 |   |   |   |   |   |   |   |   |   |   | $ | 5 |   |
| Prices                  based on models and other valuation methods           |   |                                                                                          | 18 |   |   |   | 22 |   |   |   |   |   |   |   |   |   |   |   | 40 |   |
| Fair                  value of contracts outstanding at the end of the period |   | $                                                                                             | 19 |   |   | $ | 25 |   |   | $ | 1 |   |   |   |   |   |   | $ | 45 |   |

*Synthetic      Fuel Tax Credit Risk *

*Commodity      Price Risk Summary*

*Interest      Rate Risk *

*Foreign      Currency Risk *

*Nuclear      Decommissioning Trust Funds - Securities Price Risk*

**Related      Party Transactions**

**Acquisitions,      Development and Divestitures**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      ELECTRIC UTILITIES CORPORATION AND SUBSIDIARIES**

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

**Overview**

**Results      of Operations**

**Earnings**

| Delivery                revenues (net of CTC/ITC amortization, interest expense on transition                bonds and ancillary charges) |   | $      | 5  |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----|--------|--------|
| Operation                and maintenance expenses                                                                                         |   |   | (2 | )      |   |
| Depreciation                                                                                                                              |   |   | (2 | )      |   |
|                                                                                                                                      |   | $      | 1  |   |   |

*2007      Outlook*

**Statement      of Income Analysis -- **

**Operating      Revenues**

|                                 | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|--------------------------------------|-------------------------------------------------------------------------------------------|
|                                 |                                                                                      |
| PLR                electric delivery |                                                                                      | $ | 37 |   |   |
| Electric                delivery     |                                                                                      |   | 14 |   |   |
| Other                                |                                                                                      |   | 1 |   |   |
|                                 |                                                                                      | $ | 52 |   |   |

**Energy      Purchases from Affiliate**

**Other      Operation and Maintenance**

|                                     | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|------------------------------------------|-------------------------------------------------------------------------------------------|
|                                     |                                                                                      |
| Storm                insurance premiums  |                                                                                      | $ | 2 |   |   |
| Tree-trimming                            |                                                                                      |   | 2 |   |   |
| Environmental                remediation |                                                                                      |   | 1 |   |   |
| PUC                reportable storms     |                                                                                      |   | (3 | ) |   |
| Other                                    |                                                                                      |   | 1 |   |   |
|                                     |                                                                                      | $ | 3 |   |   |

**Depreciation**

**Taxes,      Other Than Income**

**Other      Income - net**

**Financing      Costs**

|                                                      | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|-----------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                      |                                                                                      |
| Dividends                on 6.25% Series Preference Stock |                                                                                      | $ | 4 |   |   |
| Long-term                debt interest expense            |                                                                                      |   | (7 | ) |   |
| Other                                                     |                                                                                      |   | 1 |   |   |
|                                                      |                                                                                      | $ | (2 | ) |   |

**Income      Taxes**

|                                                         | **Three                Months Ended****March                31, 2007 vs. March 31, 2006** |
|--------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                         |                                                                                      |
| Higher                pre-tax book income                    |                                                                                      | $ | 2 |   |   |
| Change                in tax expense related to tax reserves |                                                                                      |   | (1 | ) |   |
|                                                         |                                                                                      | $ | 1 |   |   |

**Financial      Condition**

**Liquidity      and Capital Resources **

|                                     |   | **March                31, 2007** |   | **December                31, 2006** |
|------------------------------------------|--------|-----------------------------------|--------|--------------------------------------|
|                                     |   |                              |   |                                 |   |   |   |   |
| Cash                and cash equivalents |   | $                                 | 54     |                                 |   | $ | 150 |   |
| Short-term                investments    |   |                              |   |                                 |   |   | 26 |   |
|                                     |   | $                                 | 54     |                                 |   | $ | 176 |   |
| Short-term                debt           |   | $                                 | 71     |                                 |   | $ | 42 |   |

| · | the                retirement of $80 million of long-term debt;                       |
|--------|---------------------------------------------------------------------------------------|
| · | $63                million of capital expenditures; and                               |
| · | the                payment of $40 million of common stock dividends to PPL; offset by |
| · | a                net increase in short-term debt of $29 million; and                  |
| · | $30                million of cash provided by operating                activities.   |

**Risk      Management**

*Commodity      Price Risk - PLR Contracts*

*Interest      Rate Risk*

**Related      Party Transactions**

**Environmental      Matters**

**New      Accounting Standards**

**Application      of Critical Accounting Policies**

----

**PPL      CORPORATION**

**PPL      ENERGY SUPPLY, LLC **

**PPL      ELECTRIC UTILITIES CORPORATION**

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

**Item      4. Controls and Procedures**

| (a)    |   | Evaluation                of disclosure controls and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | The                registrants' principal executive officers and principal financial                officers, based on their evaluation of the registrants' disclosure                controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)                of                the Securities Exchange Act of 1934) have concluded that, as of March                31,                2007, the registrants' disclosure controls and procedures are effective                to                ensure that material information relating to the registrants and                their                consolidated subsidiaries is recorded, processed, summarized and                reported                within the time periods specified by the SEC's rules and forms,                particularly during the period for which this quarterly report has                been                prepared. The aforementioned principal officers have concluded that                the                disclosure controls and procedures are also effective to ensure that                information required to be disclosed in reports filed under the Exchange                Act is accumulated and communicated to management, including the                principal                executive and principal financial officers, to allow for timely decisions                regarding required disclosure. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (b)    |   | Change                in internal controls over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | The                registrants' principal executive officers and principal financial                officers                have concluded that there were no changes in the registrants' internal                control over financial reporting during the registrants' first fiscal                quarter that have materially affected, or are reasonably likely to                materially affect, the registrants' internal control over financial                reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

**PART      II. OTHER INFORMATION**

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

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

| **Item                  6. Exhibits**                                                                                                                                                                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                             |   |   |
| *4(a)                                                                                                                                                                                                                                                                  | -  | Subordinated                  Indenture, dated as of March 1, 2007, among PPL Capital Funding,                  Inc., PPL                  Corporation and The Bank of New York, as trustee thereunder (Exhibit                  4(a)                  to PPL Corporation Form 8-K Report (File No. 1-11459) dated March 20,                  2007)  |
| *4(b)                                                                                                                                                                                                                                                                       | -  | Supplemental                  Indenture No. 1, dated as of March 1, 2007, among PPL Capital Funding,                  Inc., PPL Corporation and The Bank of New York, as trustee thereunder                  (Exhibit 4(b) to PPL Corporation Form 8-K Report (File No. 1-11459)                  dated                  March 20, 2007)  |
| *[_]10(a)                                                                                                                                                                                                                                                                   | -  | Establishment                  of 2007 annual performance goals and business criteria for incentive                  awards to PPL Corporation Named Executive Officers (PPL Corporation                  Form                  8-K Report (File No. 1-11459) dated March 28, 2007)  |
| *[_]10(b)                                                                                                                                                                                                                                                                   | -  | Establishment                  of 2007 annual performance goals and business criteria for incentive                  awards to PPL Electric Utilities Corporation Named Executive Officers                  (PPL                  Electric Utilities Corporation Form 8-K Report (File No. 1-905)                  dated                  March 28, 2007)  |
| [_]10(c)                                                                                                                                                                                                                                                                    | -  | Trust                  Agreement, dated as of March 20, 2007, between PPL Corporation                  and                  Wachovia Bank, N.A., as Trustee  |
| [_]10(d)                                                                                                                                                                                                                                                                    | -  | Trust                  Agreement, dated as of March 20, 2007, between PPL Corporation                  and                  Wachovia Bank, N.A., as Trustee  |
| [_]10(e)                                                                                                                                                                                                                                                                    | -  | Trust                  Agreement, dated as of March 20, 2007, between PPL Corporation                  and                  Wachovia Bank, N.A., as Trustee  |
| [_]10(f)                                                                                                                                                                                                                                                                    | -  | Amendment                  No. 3 to Amended and Restated Incentive Compensation Plan, dated                  as of                  March 21, 2007  |
| [_]10(g)                                                                                                                                                                                                                                                                    | -  | Amendment                  No. 3 to Amended and Restated Incentive Compensation Plan for Key                  Employees, dated as of March 21, 2007  |
| [_]10(h)                                                                                                                                                                                                                                                                    | -  | Form                  of Retention Agreement entered into between PPL Corporation and                  Messrs.                  Champagne, Farr, Miller and Shriver   |
| [_]10(i)                                                                                                                                                                                                                                                                    | -  | Form                  of Severance Agreement entered into between PPL Corporation and                  the Named                  Executive Officers  |
| 12(a)                                                                                                                                                                                                                                                                       | -  | PPL                  Corporation and Subsidiaries Computation of Ratio of Earnings to                  Combined                  Fixed Charges and Preferred Stock Dividends  |
| 12(b)                                                                                                                                                                                                                                                                       | -  | PPL                  Energy Supply, LLC and Subsidiaries Computation of Ratio of Earnings                  to                  Fixed Charges  |
| 12(c)                                                                                                                                                                                                                                                                       | -  | PPL                  Electric Utilities Corporation and Subsidiaries Computation of                  Ratio of                  Earnings to Combined Fixed Charges and Preferred Stock                  Dividends  |
| *                  -                  Previously filed                                                                                                                                                                                                                           |
| [_]                  - Filed or listed pursuant to Item 601(b)(10)(iii) of Regulation                  S-K                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                             |   |   |
| Certifications                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, for                  the                  quarterly period ended March 31, 2007, filed by the following officers                  for                  the following companies:  |
|                                                                                                                                                                                                                                                                             |   |   |
| 31(a)                                                                                                                                                                                                                                                                       | -  | James                  H. Miller for PPL Corporation  |
| 31(b)                                                                                                                                                                                                                                                                       | -  | Paul                  A. Farr for PPL Corporation  |
| 31(c)                                                                                                                                                                                                                                                                       | -  | James                  H. Miller for PPL Energy Supply, LLC  |
| 31(d)                                                                                                                                                                                                                                                                       | -  | Paul                  A. Farr for PPL Energy Supply, LLC  |
| 31(e)                                                                                                                                                                                                                                                                       | -  | David                  G. DeCampli for PPL Electric Utilities Corporation  |
| 31(f)                                                                                                                                                                                                                                                                       | -  | J.                  Matt Simmons, Jr. for PPL Electric Utilities Corporation  |
|                                                                                                                                                                                                                                                                             |   |   |

| Certifications                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for the                quarterly period ended March 31, 2007, furnished by the following                officers                for the following companies:  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                        |   |   |
| 32(a)                                                                                                                                                                                                                                                  | -  | James                H. Miller for PPL Corporation  |
| 32(b)                                                                                                                                                                                                                                                  | -  | Paul                A. Farr for PPL Corporation  |
| 32(c)                                                                                                                                                                                                                                                  | -  | James                H. Miller for PPL Energy Supply, LLC  |
| 32(d)                                                                                                                                                                                                                                                  | -  | Paul                A. Farr for PPL Energy Supply, LLC  |
| 32(e)                                                                                                                                                                                                                                                  | -  | David                G. DeCampli for PPL Electric Utilities Corporation  |
| 32(f)                                                                                                                                                                                                                                                       | - | J.                Matt Simmons, Jr. for PPL Electric Utilities                Corporation |

----

SIGNATURES

|                                        | **PPL                Corporation**                                                                                                                                                                                                                                                                                      |
|---------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        | (Registrant)                                                                                                                                                                                                                                                                                                            |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
|                                        | **PPL                Energy Supply, LLC**                                                                                                                                                                                                                                                                               |
|                                        | (Registrant)                                                                                                                                                                                                                                                                                                            |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
|                                        | **PPL                Electric Utilities Corporation**                                                                                                                                                                                                                                                                   |
|                                        | (Registrant)                                                                                                                                                                                                                                                                                                            |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
|                                        |                                                                                                                                                                                                                                                                                                                    |   |
| Date:  May                3, 2007 | /s/  J.                Matt Simmons,                Jr.                                          |
|                                        | J.                Matt Simmons, Jr.                                                                                                                                                                                                                                                                                     |   |
|                                        | Vice                President and Controller                                                                                                                                                                                                                                                                            |   |
|                                        | (Principal                Accounting Officer)                                                                                                                                                                                                                                                                           |   |