Document:

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                                                                     EXHIBIT 4.5
                                                                [Execution Copy]

                                  $500,000,000

                             PPL ENERGY SUPPLY, LLC

                           6.40% SENIOR NOTES DUE 2011

                          REGISTRATION RIGHTS AGREEMENT

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

                                                                October 19, 2001

Morgan Stanley & Co. Incorporated,
Barclays Capital Inc.,
Banc of America Securities LLC,
Banc One Capital Markets, Inc.,
J.P. Morgan Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Salomon Smith Barney Inc.,
Scotia Capital (USA) Inc.,
First Union Securities, Inc.,
Westdeutsche Landesbank Girozentrale (Dusseldorf),
     c/o Morgan Stanley & Co. Incorporated
          1585 Broadway,
              New York, New York  10036.

Dear Sirs:

     PPL Energy Supply, LLC, a limited liability company organized under the
laws of the State of Delaware (the "COMPANY"), proposes to issue and sell to
Morgan Stanley & Co. Incorporated, Barclays Capital Inc., Banc of America
Securities LLC, Banc One Capital Markets, Inc., J.P. Morgan Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
Scotia Capital (USA) Inc., First Union Securities, Inc. and Westdeutsche
Landesbank Girozentrale (Dusseldorf) (collectively, the "INITIAL PURCHASERS"),
upon the terms set forth in a purchase agreement of even date herewith (the
"PURCHASE AGREEMENT"), $500,000,000 aggregate principal amount of its 6.40%
Senior Notes Due 2011 (the "INITIAL SECURITIES"). The Initial Securities will be
issued pursuant to an indenture, dated as of October 1, 2001 as supplemented by
Supplemental Indenture No. 1, dated as of October 1, 2001 (as so supplemented,
the "INDENTURE"), among the Company and The Chase Manhattan Bank, as trustee
(the "TRUSTEE"). As an inducement to the Initial Purchasers to enter into the

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Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with the Initial Purchasers,
for the benefit of the Initial Purchasers and the holders of the Securities
(as defined below) (collectively the "HOLDERS"), as follows:

     1. Registered Exchange Offer. Unless not permitted by applicable law (after
the Company has complied with the ultimate paragraph of this Section 1), the
Company shall prepare and, not later than 120 days (such 120th day being a
"FILING DEADLINE") after the date on which the Initial Purchasers purchase the
Initial Securities pursuant to the Purchase Agreement (the "CLOSING DATE"), file
with the Securities and Exchange Commission (the "COMMISSION"), a registration
statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with
respect to a proposed offer (the "REGISTERED EXCHANGE OFFER") to the Holders of
Transfer Restricted Securities (as defined below), who are not prohibited by any
law or policy of the Commission from participating in the Registered Exchange
Offer, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount of debt securities of the Company
issued under the Indenture, identical in all material respects to the Initial
Securities, except for the transfer restrictions relating to the Initial
Securities, and registered under the Securities Act (the "EXCHANGE SECURITIES").
The Company shall use its reasonable best efforts to (i) cause such Exchange
Offer Registration Statement to become effective under the Securities Act within
240 days after the Closing Date (such 240th day being an "EFFECTIVENESS
DEADLINE") and (ii) keep the Exchange Offer Registration Statement effective for
not less than 30 days (or longer, if required by applicable law) after the date
notice of the Registered Exchange Offer is mailed to the Holders (such period
being called the "EXCHANGE OFFER REGISTRATION PERIOD").

     If the Company commences the Registered Exchange Offer, the Company (i)
will be entitled to consummate the Registered Exchange Offer 30 days after such
commencement (provided that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer) and (ii) will use its reasonable best efforts to consummate the
Registered Exchange Offer no later than 40 days after the date that the Exchange
Offer Registration Statement is declared effective (such 40th day being the
"CONSUMMATION DEADLINE").

     Upon the effectiveness of the Exchange Offer Registration Statement, the
Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder of Transfer
Restricted Securities electing to exchange the Initial Securities for Exchange
Securities (a) to make such exchange (assuming that such Holder (i) is not an
affiliate of the Company within the meaning of the Securities Act, (ii) acquires
the Exchange Securities in the ordinary course of such Holder's business, (iii)
has no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities and (iv) is not prohibited by any law or
policy of the Commission from participating in the Registered Exchange Offer)

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and (b) to trade such Exchange Securities from and after their receipt without
any limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States.

     The Company, the Initial Purchasers and each Exchanging Dealer (as defined
below) acknowledge that, pursuant to current interpretations by the Commission's
staff of Section 5 of the Securities Act, in the absence of an applicable
exemption therefrom, (i) each Holder which is a broker-dealer electing to
exchange Initial Securities, acquired for its own account as a result of market
making activities or other trading activities, for Exchange Securities (an
"EXCHANGING DEALER"), is required to deliver a prospectus containing the
information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and (c) Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an
Initial Purchaser that elects to sell Securities (as defined below) acquired in
exchange for Initial Securities constituting any portion of an unsold allotment,
is required to deliver a prospectus containing the information required by Items
507 or 508 of Regulation S-K under the Securities Act, as applicable, in
connection with such sale.

     If, prior to consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "PRIVATE EXCHANGE") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects to the Initial
Securities (the "PRIVATE EXCHANGE SECURITIES"). The Private Exchange Securities
will be issued under the Indenture and the Company shall use its reasonable best
efforts to cause the Private Exchange Securities to bear the same CUSIP number
as the Exchange Securities. The Initial Securities, the Exchange Securities and
the Private Exchange Securities are herein collectively called the "SECURITIES".

     "TRANSFER RESTRICTED SECURITIES" means each Security until (i) the date on
which such Security has been exchanged by a person for a freely transferable
Exchange Security in the Registered Exchange Offer, (ii) following the exchange
by a broker-dealer in the Registered Exchange Offer of an Initial Security for
an Exchange Security, the date on which such Exchange Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement as defined below or (iv) the date on which such Security
is distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.

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     In connection with the Registered Exchange Offer, the Company shall:

          (a) mail to each Holder a copy of the prospectus forming part of the
     Exchange Offer Registration Statement, together with an appropriate letter
     of transmittal and related documents;

          (b) keep the Registered Exchange Offer open for not less than 30 days
     (or longer, if required by applicable law) after the date notice thereof is
      mailed to the Holders;

          (c) utilize the services of a depositary for the Registered Exchange
     Offer with an address in the Borough of Manhattan, The City of New York,
     which may be the Trustee or an affiliate of the Trustee;

          (d) permit Holders to withdraw tendered Securities at any time prior
     to the close of business, New York time, on the last business day on which
     the Registered Exchange Offer shall remain open; and

          (e) otherwise comply with all applicable laws.

     As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Company shall:

          (x) accept for exchange all the Securities validly tendered and not
     withdrawn pursuant to the Registered Exchange Offer and the Private
     Exchange;

          (y) deliver to the Trustee for cancellation all the Initial Securities
     so accepted for exchange; and

          (z) cause the Trustee to authenticate and deliver promptly to each
     Holder of the Initial Securities, Exchange Securities or Private Exchange
     Securities, as the case may be, equal in principal amount to the Initial
     Securities of such Holder so accepted for exchange.

     The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
(i) in the case where such prospectus and any amendment or supplement thereto
must be delivered by an Exchanging Dealer or an Initial Purchaser, such period
shall be the lesser of 180 days and the date on which all Exchanging Dealers and
the Initial Purchasers have sold all Exchange Securities held by them (unless
such period is extended pursuant to Section 3(j) below) and (ii) the Company
shall make such prospectus and any amendment or supplement thereto available to

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any broker-dealer upon request for use in connection with any resale of any
Exchange Securities for a period of not less than 180 days after the
consummation of the Registered Exchange Offer.

     The Indenture will provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Indenture and that all the
Securities will vote and consent together on all matters as one class and that
none of the Securities will have the right to vote or consent as a class
separate from one another on any matter.

     Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.

     Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.

     Notwithstanding any other provisions hereof, the Company will ensure that:

          (i) any Exchange Offer Registration Statement and any amendment
     thereto and any prospectus forming part thereof and any supplement thereto
     complies in all material respects with the Securities Act and the rules and
     regulations thereunder,

          (ii) any Exchange Offer Registration Statement and any amendment
     thereto does not, when it becomes effective, contain an untrue statement of
     a material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading and

          (iii) any prospectus forming part of any Exchange Offer Registration
     Statement, and any supplement to such prospectus, does not include an
     untrue statement of a material fact or omit to state a material fact

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     required to be stated therein or necessary in order to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading.

     If following the date hereof there has been announced a change in
Commission policy with respect to exchange offers that in the reasonable opinion
of counsel to the Company raises a substantial question as to whether the
Registered Exchange Offer is permitted by applicable federal law, the Company
will use reasonable best efforts to seek a no-action letter or other favorable
decision from the Commission allowing the Company to consummate the Registered
Exchange Offer. The Company will pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the Company will take
all such other actions as may be requested by the Commission or otherwise

required in connection with the issuance of such decision, including without
limitation (i) participating in telephonic conferences with the Commission, (ii)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that the Registered Exchange Offer should be permitted and (iii)
diligently pursuing a resolution (which need not be favorable) by the Commission
staff.

     2. Shelf Registration. If (i) the Company is not permitted to effect a
Registered Exchange Offer, as contemplated by Section 1 hereof, because of any
change in law or in applicable interpretations thereof by the staff of the
Commission, (ii) the Registered Exchange Offer is not consummated by the 270th
day after the Closing Date, (iii) any Initial Purchaser so requests with respect
to the Initial Securities (or the Private Exchange Securities) not eligible to
be exchanged for Exchange Securities in the Registered Exchange Offer and held
by it following consummation of the Registered Exchange Offer, or (iv) any
Holder (other than an Exchanging Dealer) is not permitted by applicable law or
interpretations thereof to participate in the Registered Exchange Offer or, in
the case of any Holder (other than an Exchanging Dealer) that participates in
the Registered Exchange Offer, such Holder does not receive freely tradeable
Exchange Securities on the date of the exchange and any such Holder so requests,
or (v) the Company so elects, the Company shall take the following actions (the
date on which any of the conditions described in the foregoing clauses (i)
through iv) occur, including in the case of clauses (iii) or (iv) the receipt of
the required notice, being a "TRIGGER DATE"):

          (a) The Company shall use its reasonable best efforts to file as
     promptly as practicable (but in no event more than 90 days after the
     Trigger Date (such 90th day being a "FILING DEADLINE")) with the Commission
     and thereafter use its reasonable best efforts to cause to be declared
     effective no later than 180 days after the Trigger Date (such 180th day
     being an "EFFECTIVENESS DEADLINE") a registration statement (the "SHELF
     REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
     Statement, a "REGISTRATION STATEMENT") on an appropriate form under the
     Securities Act relating to the offer and sale of the Transfer Restricted

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     Securities by the Holders thereof from time to time in accordance with the
     methods of distribution set forth in the Shelf Registration Statement and
     Rule 415 under the Securities Act (hereinafter, the "SHELF REGISTRATION");
     provided, however, that no Holder (other than an Initial Purchaser) shall
     be entitled to have the Securities held by it covered by such Shelf
     Registration Statement unless such Holder agrees in writing to be bound by
     all the provisions of this Agreement applicable to such Holder.

          (b) The Company shall use its reasonable best efforts to keep the
     Shelf Registration Statement continuously effective in order to permit the
     prospectus forming a part thereof to be lawfully delivered by the Holders
     of the relevant Securities, for a period ending on the earlier of (i) two
     years from the Closing Date or (ii) such shorter period that will terminate
     when all the Securities covered by the Shelf Registration Statement (A)
     have been sold pursuant thereto or (B) are no longer restricted securities
     (as defined in Rule 144 under the Securities Act, or any successor rule
     thereof).

          (c) Notwithstanding any other provisions of this Agreement to the
     contrary, the Company shall cause the Shelf Registration Statement and the
     related prospectus and any amendment or supplement thereto, as of the
     effective date of the Shelf Registration Statement, amendment or
     supplement, (i) to comply in all material respects with the applicable
     requirements of the Securities Act and the rules and regulations of the
     Commission and (ii) in each case, other than with respect to information
     included therein in reliance upon or in conformity with information
     furnished to the Company by or on behalf of any Holder specifically for use
     therein ("HOLDERS' INFORMATION"), not to contain any untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary in order to make the statements therein, in light of
     the circumstances under which they were made, not misleading.

     3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:

          (a) The Company shall (i) furnish to each Initial Purchaser, prior to
     the filing thereof with the Commission, a copy of the Registration
     Statement and each amendment thereof and each supplement, if any, to the
     prospectus included therein and, in the event that an Initial Purchaser
     (with respect to any portion of an unsold allotment from the original
     offering) is participating in the Registered Exchange Offer or the Shelf
     Registration Statement, the Company shall use its reasonable best efforts
     to reflect in each such document, when so filed with the Commission, such
     comments as such Initial Purchaser reasonably may propose; (ii) include the
     information set forth in Annex A hereto on the cover, in Annex B hereto in
     the "Exchange Offer Procedures" section and the "Purpose of the Exchange
     Offer" section and in Annex C hereto in the "Plan of Distribution" section

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     of the prospectus forming a part of the Exchange Offer Registration
     Statement (including any such changes, reasonably acceptable to the Initial
     Purchasers and the Company, necessary to reflect any changes in the
     positions taken or policies made by the staff of the Commission with
     respect to the potential "underwriter" status of any broker-dealer that is
     the beneficial owner (as defined in Rule 13d-3 under the Securities
     Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of Exchange
     Securities received by such broker-dealer in the Registered Exchange Offer
     (a "PARTICIPATING BROKER-DEALER"), whether such positions or policies have
     been publicly disseminated by the staff of the Commission or such positions
     or policies, in the reasonable judgment of the Initial Purchasers based
     upon advice of counsel (which may be in-house counsel), represent the
     prevailing views of the staff of the Commission) and include the
     information set forth in Annex D hereto in the Letter of Transmittal
     delivered pursuant to the Registered Exchange Offer; (iii) if requested by
     an Initial Purchaser, include the information required by Items 507 or 508
     of Regulation S-K under the Securities Act, as applicable, in the
     prospectus forming a part of the Exchange Offer Registration Statement; and

     (iv) in the case of a Shelf Registration Statement, include the names of
     the Holders who propose to sell Securities pursuant to the Shelf
     Registration Statement as selling securityholders.

          (b) The Company shall give written notice to the Initial Purchasers,
     the Holders of the Securities, if applicable, and any Participating
     Broker-Dealer from whom the Company has received prior written notice that
     it will be a Participating Broker-Dealer in the Registered Exchange Offer
     (which notice pursuant to clauses (ii) through (v) of this Section 3(b)
     shall be accompanied by an instruction to suspend the use of the prospectus
     until the requisite changes have been made):

               (i) when the Registration Statement or any amendment thereto has
          been filed with the Commission and when the Registration Statement or
          any post-effective amendment thereto has become effective;

               (ii) of any request by the Commission for amendments or
          supplements to the Registration Statement or the prospectus included
          therein or for additional information;

               (iii) of the issuance by the Commission of any stop order
          suspending the effectiveness of the Registration Statement or the
          initiation of any proceedings for that purpose;

               (iv) of the receipt by the Company or its legal counsel of any
          notification with respect to the suspension of the qualification of
          the Securities for sale in any jurisdiction or the initiation or
          threatening of any proceeding for such purpose; and

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               (v) of the happening of any event that requires the Company to
          make changes in the Registration Statement or the prospectus in order
          that the Registration Statement or the prospectus do not contain an
          untrue statement of a material fact nor omit to state a material fact
          required to be stated therein or necessary to make the statements
          therein (in the case of the prospectus, in light of the circumstances
          under which they were made) not misleading.

          (c) The Company shall make every reasonable effort to obtain the
     withdrawal at the earliest possible time of any order suspending the
     effectiveness of the Registration Statement.

          (d) The Company shall furnish to each Holder of Securities included
     within the coverage of the Shelf Registration, without charge, at least one
     conformed copy of the Shelf Registration Statement and any post-effective
     amendment thereto, including financial statements and schedules, and, if
     any such Holder so requests in writing, all exhibits thereto (including
     those, if any, incorporated by reference).

          (e) The Company shall deliver to each Exchanging Dealer and each
     Initial Purchaser, and to any other Holder who so requests, without charge,
     at least one conformed copy of the Exchange Offer Registration Statement
     and any post-effective amendment thereto, including financial statements
     and schedules, and, if any Initial Purchaser or any such Holder requests in
     writing, all exhibits thereto (including those incorporated by reference).

          (f) The Company shall, during the Shelf Registration Period, deliver
     to each Holder of Securities included within the coverage of the Shelf
     Registration, without charge, as many copies of the prospectus (including
     each preliminary prospectus) included in the Shelf Registration Statement
     and any amendment or supplement thereto as such person may reasonably
     request. The Company consents, subject to the provisions of this Agreement,
     to the use of the prospectus or any amendment or supplement thereto by each
     of the selling Holders of the Securities in connection with the offering
     and sale of the Securities covered by the prospectus, or any amendment or
     supplement thereto, forming a part of the Shelf Registration Statement.

          (g) The Company shall deliver to each Initial Purchaser, any
     Exchanging Dealer, any Participating Broker-Dealer and such other persons
     required to deliver a prospectus following the Registered Exchange Offer,
     without charge, as many copies of the final prospectus included in the
     Exchange Offer Registration Statement and any amendment or supplement
     thereto as such persons may reasonably request. The Company consents,
     subject to the provisions of this Agreement, to the use of the prospectus
     or any amendment or supplement thereto by any Initial Purchaser, if

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     necessary, any Participating Broker-Dealer and such other persons required
     to deliver a prospectus following the Registered Exchange Offer in
     connection with the offering and sale of the Exchange Securities covered by
     the prospectus, or any amendment or supplement thereto, included in such
     Exchange Offer Registration Statement.

          (h) Prior to the effective date of any Registration Statement, the
     Company will use its reasonable best efforts to register or qualify or
     cooperate with the Holders of the Securities included therein and their
     respective counsel in connection with the registration or qualification of
     the Securities for offer and sale under the securities or "blue sky" laws
     of such states of the United States as any Holder of the Securities
     reasonably requests in writing and do any and all other acts or things
     necessary or advisable to enable the offer and sale in such jurisdictions
     of the Securities covered by such Registration Statement; provided,
     however, that the Company shall not be required to (i) qualify to do
     business as a foreign corporation or as a securities dealer or to file a
     general consent to service of process or to file annual reports or to
     comply with any other requirements deemed by the Company to be unduly
     burdensome.

          (i) The Company shall cooperate with the Holders of the Securities to
     facilitate the timely preparation and delivery of certificates representing
     the Securities to be sold pursuant to any Registration Statement free of
     any restrictive legends and in such denominations and registered in such
     names as the Holders may request in writing a reasonable period of time
     prior to sales of the Securities pursuant to such Registration Statement.

          (j) Upon the occurrence of any event contemplated by paragraphs (ii)

     through (v) of Section 3(b) above during the period for which the Company
     is required to maintain an effective Registration Statement, the Company
     shall promptly prepare and file a post-effective amendment to the
     Registration Statement or a supplement to the related prospectus and any
     other required document so that, as thereafter delivered to Holders of the
     Securities or purchasers of Securities, the prospectus will not contain an
     untrue statement of a material fact or omit to state any material fact
     required to be stated therein or necessary to make the statements therein,
     in light of the circumstances under which they were made, not misleading.

          (k) In the case of a Shelf Registration Statement, each Holder of
     Securities to be registered pursuant thereto agrees by acquisition of such
     Securities that, upon receipt of any notice from the Company pursuant to
     paragraphs (ii) through (v) of Section 3(b) above, such Holder will
     discontinue disposition of such Securities until such Holder's receipt of
     copies of the supplemental or amended prospectus contemplated by Section
     3(j) or until advised in writing (the "ADVICE") by the Company that the use
     of the applicable prospectus may be resumed. If the Company shall give any

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     notice under paragraphs (ii) through (v) of Section 3(b) above, during the
     period that the Company is required to maintain an effective Registration
     Statement (the "EFFECTIVENESS PERIOD"), such Effectiveness Period shall be
     extended by the number of days during such period from and including the
     date of the giving of such notice to and including the date when each
     seller of Securities covered by such Registration Statement shall have
     received (x) the copies of the supplemental or amended prospectus
     contemplated by Section 3(j) (if an amended or supplemental prospectus is
     required) or (y) the Advice (if no amended or supplemental prospectus is
     required).

          (l) Not later than the effective date of the applicable Registration
     Statement, the Company will provide a CUSIP number for the Initial
     Securities, the Exchange Securities or the Private Exchange Securities, as
     the case may be, and provide the Trustee with printed certificates for the
     Initial Securities, the Exchange Securities or the Private Exchange
     Securities, as the case may be, in a form eligible for deposit with The
     Depository Trust Company.

          (m) The Company will comply with all rules and regulations of the
     Commission to the extent and so long as they are applicable to the
     Registered Exchange Offer or the Shelf Registration and will make generally
     available to its security holders (or otherwise provide in accordance with
     Section 11(a) of the Securities Act) an earnings statement satisfying the
     provisions of Section 11(a) of the Securities Act, no later than 45 days
     after the end of a 12-month period (or 90 days, if such period is a fiscal
     year) beginning with the first month of the Company's first fiscal quarter
     commencing after the effective date of the Registration Statement, which
     statement shall cover such 12-month period.

          (n) The Company shall cause the Indenture to be qualified under the
     Trust Indenture Act of 1939, as amended, as required by applicable law.

          (o) The Company may require each Holder of Securities to be sold
     pursuant to the Shelf Registration Statement to furnish to the Company such
     information regarding the Holder and the distribution of the Securities as
     the Company may from time to time reasonably require for inclusion in the
     Shelf Registration Statement, and the Company may exclude from such
     registration the Securities of any Holder that fails to furnish such
     information within a reasonable time after receiving such request.

          (p) In the case of a Shelf Registration Statement, the Company shall
     enter into such customary agreements (including, if requested, an
     underwriting agreement in customary form) and take all such other action,
     if any, as Holders of a majority in aggregate principal amount of the
     Securities being sold or the managing underwriters (if any) shall
     reasonably request in order to facilitate any disposition of Securities
     pursuant to such Shelf Registration Statement.

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          (q) In the case of any Shelf Registration, the Company shall (i) make
     reasonably available for inspection by a representative of the Holders of a
     majority in aggregate principal amount of the Securities registered
     pursuant thereto, one firm of legal counsel retained by the Holders of the
     Securities, an accountant or a single accounting firm retained by the
     Holders of the Securities, any managing underwriter participating in any
     disposition pursuant to the Shelf Registration Statement and one firm of
     legal counsel retained by such underwriter all relevant financial and other
     records, pertinent corporate documents and properties of the Company and
     (ii) use its reasonable best efforts to cause the Company's officers,
     directors, employees, accountants and auditors to supply all relevant
     information reasonably requested by such Holders of Securities or any such
     underwriter, attorney, accountant or agent in connection with the Shelf
     Registration Statement, in each case, as shall be reasonably necessary to
     enable such persons, to conduct a reasonable investigation within the
     meaning of Section 11 of the Securities Act; provided, however, that the
     foregoing inspection and information gathering shall be coordinated on
     behalf of the Initial Purchasers by you and on behalf of the other parties,
     by one counsel designated by and on behalf of such other parties as
     described in Section 4 hereof.

          (r) In the case of any Shelf Registration, the Company, if requested
     by the Holders of a majority in aggregate principal amount of the
     Securities registered pursuant thereto, their counsel or any managing
     underwriting in connection with such Shelf Registration, shall use its
     reasonable best efforts to cause (i) its counsel to deliver an opinion and
     updates thereof relating to the Securities in customary form addressed to
     such Holders and the managing underwriters, if any, thereof and dated, in
     the case of the initial opinion, the effective date of such Shelf
     Registration Statement with such changes as are customary in connection
     with the preparation of a Shelf Registration Statement; (ii) its officers
     to execute and deliver all customary documents and certificates and updates
     thereof requested by any underwriters of the applicable Securities and
     (iii) its independent public accountants and the independent public
     accountants with respect to any other entity for which financial
     information is provided in the Shelf Registration Statement to provide to
     the selling Holders of the applicable Securities and any underwriter
     therefor a comfort letter in customary form and covering matters of the
     type customarily covered in comfort letters in connection with primary
     underwritten offerings, subject to receipt of appropriate documentation as
     contemplated, and only if permitted, by Statement of Auditing Standards No.
     72.

          (s) In the case of the Registered Exchange Offer, if requested by any
     Initial Purchaser or any known Participating Broker-Dealer, the Company
     shall cause (i) its counsel to deliver to such Initial Purchaser or such
     Participating Broker-Dealer a signed opinion in the form set forth in
     Section 6(d) and (e) of the Purchase Agreement with such changes as are
     customary in connection with the preparation of a Registration Statement
     and (ii) its independent public accountants and the independent public

                                       12

<PAGE>

     accountants with respect to any other entity for which financial
     information is provided in the Registration Statement to deliver to such
     Initial Purchaser or such Participating Broker-Dealer a comfort letter, in
     customary form, meeting the requirements as to the substance thereof as set
     forth in Section 6(g) and (h) of the Purchase Agreement, with appropriate
     date changes.

          (t) In the event that any broker-dealer registered under the Exchange
     Act shall underwrite any Securities or participate as a member of an
     underwriting syndicate or selling group or "assist in the distribution"
     (within the meaning of the Conduct Rules (the "RULES") of the National
     Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
     Holder of such Securities or as an underwriter, a placement or sales agent
     or a broker or dealer in respect thereof, or otherwise, the Company will
     assist such broker-dealer in complying with the requirements of such Rules,
     including, without limitation, by (i) if such Rules, including Rule 2720,
     shall so require, engaging a "qualified independent underwriter" (as
     defined in Rule 2720) to participate in the preparation of the Registration
     Statement relating to such Securities, to exercise usual standards of due
     diligence in respect thereto and, if any portion of the offering
     contemplated by such Registration Statement is an underwritten offering or
     is made through a placement or sales agent, to recommend the yield of such
     Securities, (ii) indemnifying any such qualified independent underwriter to
     the extent of the indemnification of underwriters provided in Section 5
     hereof and (iii) providing such information to such broker-dealer as may be
     required in order for such broker-dealer to comply with the requirements of
     the Rules.

     4. Registration Expenses. (a) All expenses incident to the Company's
performance of and compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement is ever filed or becomes
effective, including without limitation;

          (i) all registration and filing fees and expenses;

          (ii) all fees and expenses of compliance with federal securities and
     state "blue sky" or securities laws;

          (iii) all expenses of printing (including printing certificates for
     the Securities to be issued in the Registered Exchange Offer and the
     Private Exchange and printing of Prospectuses), messenger and delivery
     services and telephone;

          (iv) all fees and disbursements of counsel for the Company;

          (v) all application and filing fees in connection with listing the
     Exchange Securities on a national securities exchange or automated
     quotation system pursuant to the requirements hereof; and

                                       13

<PAGE>

          (vi) all fees and disbursements of independent certified public
     accountants of the Company (including the expenses of any special audit and
     comfort letters required by or incident to such performance).

The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.

          (b) In connection with any Registration Statement required by this
     Agreement, the Company will reimburse the Initial Purchasers and the
     Holders of Transfer Restricted Securities who are tendering Initial
     Securities in the Registered Exchange Offer and/or selling or reselling
     Securities pursuant to the "Plan of Distribution" contained in the Exchange
     Offer Registration Statement or the Shelf Registration Statement, as
     applicable, for the reasonable fees and disbursements of not more than one
     counsel, who shall be Sullivan & Cromwell unless another firm reasonably
     acceptable to the Company shall be chosen by the Holders of a majority in
     principal amount of the Transfer Restricted Securities for whose benefit
     such Registration Statement is being prepared.

     5. Indemnification. (a) In the event of a Shelf Registration Statement or
in connection with any prospectus delivery pursuant to an Exchange Offer
Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company shall indemnify and hold harmless each Holder
(including, without limitation, any such Initial Purchaser or Exchanging
Dealer), its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such Holder
within the meaning of Section 15 of the Securities Act (collectively referred to
for purposes of this Section 5 as a Holder) against any and all loss, expense,
claim, damage or liability to which, jointly or severally, such Holder or such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, expense, claim, damage or liability (or actions in respect
thereof) arises out of or is based upon any untrue statement or alleged untrue
statement of any material fact contained in such Registration Statement or any
prospectus forming a part thereof or any amendment or supplement to any thereof,
or arises out of or is based upon the omission or alleged omission to state
therein any material fact required to be stated therein or necessary to make the
statements therein not misleading; and, except as hereinafter in this Section
provided, the Company agrees to reimburse each Holder and each person who
controls any Holder as aforesaid for any reasonable legal or other expenses as
incurred by such Holder or such controlling person in connection with
investigating or defending any such loss, expense, claim, damage or liability;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, expense, claim, damage or liability arises out of or
is based on an untrue statement or alleged untrue statement or omission or
alleged omission made in any such document in reliance upon, and in conformity
with, any Holders' Information furnished to the Company by or through any such

                                       14

<PAGE>

Holder expressly for use in any such document; and provided further, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Holder from whom the person asserting any such
losses, expenses, claims, damages or liabilities purchased Securities, or any
person controlling such Holder, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder to such person, at
or prior to the written conformation of the sale of the Securities to such
person, and if the prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 5(a)
hereof.

     (b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, members, managers, employees, representatives and agents,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act (collectively referred to for purposes of this Section
5(b) as the Company), from and against any loss, expense, claim, damage or
liability to which it or they may become subject, under the Securities Act or
otherwise, insofar as such loss, expense, claim, damage or liability (or actions
in respect thereof) arises out of or is based on any untrue statement or alleged
untrue statement of any material fact contained in Shelf Registration Statement
or in any prospectus forming a part thereof or any amendment or supplement to
any thereof, or arises out of or is based upon the omission or alleged omission
to state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, and only
to the extent, that such untrue statement or alleged untrue statement or
omission was made in any such documents in reliance upon, and in conformity
with, any Holders' Information furnished to the Company by or through any Holder
expressly for use in any such document; and, except as hereinafter in this
Section provided, each Holder agrees to reimburse the Company, their officers
and directors, and each of them, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, for any
reasonable legal or other expenses incurred by it or them in connection with
investigating or defending any such loss, expense, claim, damage or liability;
provided, however, that no such Holder shall be liable for any indemnity claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Securities pursuant to such Shelf Registration Statement.

     (c) Upon receipt of notice of the commencement of any action against an
indemnified party, the indemnified party shall, with reasonable promptness, if a
claim in respect thereof is to be made against an indemnifying party under its
agreement contained in this Section 5, notify such indemnifying party in writing
of the commencement thereof; but the omission so to notify an indemnifying party
shall not relieve it from any liability which it may have to the indemnifying
party otherwise than under its agreement contained in this Section 5. In the
case of any such notice to an indemnifying party, it shall be entitled to
participate at its own expense in the defense, or if it so elects, to assume the
defense, of any such action, but if it elects to assume the defense, such

                                       15

<PAGE>

defense shall be conducted by counsel chosen by it and satisfactory to the
indemnified party and to any other indemnifying party, defendant in the suit. In
the event that any indemnifying party elects to assume the defense of any such
action and retain such counsel, the indemnified party shall bear the fees and
expenses of any additional counsel retained by it. No indemnifying party shall
be liable in the event of any settlement of any such action effected without its
consent except as provided in Section 5(e) hereof. Each indemnified party agrees
promptly to notify each indemnifying party of the commencement of any litigation
or proceedings against it in connection with the issue and sale of the
Securities.

     (d) If any Holder or person entitled to indemnification by the terms of
subsection (a) of this Section 5 shall have given notice to the Company of a
claim in respect thereof pursuant to Section 5(c) hereunder, and if such claim
for indemnification is thereafter held by a court to be unavailable or
insufficient for any reason other than by reason of the terms of this Section 5
or if such claim is unavailable under controlling precedent, such Holder or
person shall be entitled to contribution from the Company to liabilities and
expenses, except to the extent that contribution is not permitted under Section
11(f) of the Securities Act. In determining the amount of contribution to which
such Holder or person is entitled, there shall be considered the relative
benefits received by such Holder or person and the Company from the offering of
the Securities that were the subject of the claim for indemnification (taking
into account the portion of the proceeds of the offering realized by the Holder
under such Shelf Registration and by the Company in the initial offering), the
Holder's or person's relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission, and any other equitable considerations
appropriate under the circumstances. The parties hereto agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Holders were treated as one entity for such
purpose). Notwithstanding the provisions of this Section 5(d), an indemnifying
party that is a Holder of Securities shall not be required to contribute any
amount in excess of the amount by which the total price at which the Securities
sold by such indemnifying party to any purchaser exceeds the amount of any
damages which such indemnifying party has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission.

     (e) No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 5 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party and all liability
arising out of such litigation, investigation, proceeding or claim, and (ii)
does not include a statement as to or an admission of fault, culpability or the
failure to act by or on behalf of any indemnified party.

                                       16

<PAGE>

     (f) The indemnity and contribution provided for in this Section 5 shall
remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of any Holder or any person controlling any
Holder, the Company or directors or officers and (ii) any termination of this
Agreement.

     6. Additional Interest Under Certain Circumstances. (a) Additional interest
(the "ADDITIONAL INTEREST") with respect to the Securities shall be assessed as
follows if any of the following events occur (each such event in clauses (i)
through (iv) below being herein called a "REGISTRATION DEFAULT"):

          (i) any Registration Statement required by this Agreement is not filed
     with the Commission on or prior to the applicable Filing Deadline;

          (ii) any Registration Statement required by this Agreement is not
     declared effective by the Commission on or prior to the applicable
     Effectiveness Deadline;

          (iii) the Registered Exchange Offer has not been consummated on or
     prior to the Consummation Deadline; or

          (iv) any Registration Statement required by this Agreement has been
     declared effective by the Commission but (A) such Registration Statement
     thereafter ceases to be effective, without being succeeded within 45 days
     by an additional Registration Statement filed and declared effective or (B)
     such Registration Statement or the related prospectus ceases to be usable
     for a period of more than 45 days in connection with resales of Transfer
     Restricted Securities during the periods specified herein because either
     (1) any event occurs as a result of which the related prospectus forming
     part of such Registration Statement would include any untrue statement of a
     material fact or omit to state any material fact necessary to make the
     statements therein in the light of the circumstances under which they were
     made not misleading, or (2) it shall be necessary to amend such
     Registration Statement or supplement the related prospectus, to comply with
     the Securities Act or the Exchange Act or the respective rules thereunder.

     Additional Interest shall accrue on the Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.25% per
annum (the "ADDITIONAL INTEREST RATE") during the 90-day period immediately
following the occurrence of such Registration Default and shall increase by
0.25% per annum at the end of each subsequent 90-day period, but in no event
shall the Additional Interest Rate exceed 0.50% per annum.

     Notwithstanding anything to the contrary in this Section, the Company shall
not be required to pay additional interest to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or failed

                                       17

<PAGE>

to provide the information required to be provided by it, if any, pursuant to
Section 3(o).

     Following the cure of all Registration Defaults, the accrual of Additional
Interest shall cease.

     (b) A Registration Default referred to in Section 6(a)(iv) hereof shall be
deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus (which could include description in a report
filed under the Exchange Act and incorporated by reference in such Shelf
Registration Statement) and (ii) in the case of clause (y), the Company is
proceeding promptly and in good faith to amend or supplement such Shelf
Registration Statement and/or related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 45 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.

     (c) Any amounts of Additional Interest due pursuant to Section 6(a) will be
payable in cash on the regular interest payment dates with respect to the
Securities. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest Rate by the principal amount of the
Securities and further multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360.

     7. Rules 144 and 144A. The Company shall use its reasonable best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the written request of any Holder of
Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's Securities pursuant to Rules
144 and 144A. The Company covenants that it will take such further action as any
Holder of Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)). Upon the written request of any Holder of Initial Securities, the
Company shall deliver to such Holder a written statement as to whether it has
complied with such requirements. The Company will provide a copy of this
Agreement to prospective purchasers of Initial Securities identified to the

                                       18

<PAGE>

Company by the Initial Purchasers upon request. Notwithstanding the foregoing,
nothing in this Section 7 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.

     8. Underwritten Registrations. If any of the Transfer Restricted Securities
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering ("MANAGING UNDERWRITERS") will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities to be included in such offering, subject to the consent of the
Company (which consent shall not be unreasonably withheld) and such Holders
shall be responsible for all underwriting commissions and discounts in
connection therewith.

     No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

     9. Miscellaneous.

     (a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Section 1 and 2 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 1 and
2 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

     (b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's securities under any
agreement in effect on the date hereof.

     (c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose Securities are being sold pursuant to a Registration Statement and

                                       19

<PAGE>

that does not directly or indirectly affect the rights of other Holders may be
given by Holders of a majority in aggregate principal amount of the Securities
being sold by such Holders pursuant to such Registration Statement.

     (d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:

          (1) if to a Holder of the Securities, at the most current address
     given by such Holder to the Company.

          (2) if to the Initial Purchasers:

                        Morgan Stanley & Co. Incorporated

                        1585 Broadway
                        New York, NY  10036
                        Fax No.:  (212) 761-0783
                        Attention: Financing Services Group

          with a copy to:

                        Sullivan & Cromwell

                        125 Broad Street

                        New York, NY  10004
                        Fax No: (212) 558-3588
                        Attention: Robert W. Downes

          (3) if to the Company, at its address as follows:

                        PPL Energy Supply, LLC
                        Two North Ninth Street
                        Allentown, PA  18101
                        Fax No.:  (610) 774-5106
                        Attention:  Treasurer

          with a copy to:

                        PPL Services Corporation

                        Two North Ninth Street

                        Allentown, PA  18101
                        Fax No.:  (610) 774-6726
                        Attention: Michael A. McGrail

                                       20

<PAGE>

          and a copy to:

                         Thelen Reid & Priest LLP

                         40 West 57th Street

                         New York, NY  10019
                         Fax No.: (212) 603-2001
                         Attention: Catherine C. Hood

     All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

     (e) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.

     (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

     (i) Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

                                       21

<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the several Initial Purchasers and the Company in accordance with its terms.

                                        Very truly yours,

                                        PPL ENERGY SUPPLY, LLC

                                        By:  /s/ James E. Abel
                                             ----------------------------------
                                             Name:  James E. Abel
                                             Title: Treasurer

The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first above written.

MORGAN STANLEY & CO. INCORPORATED
BARCLAYS CAPITAL INC.
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS INC.
FIRST UNION SECURITIES, INC.
J.P. MORGAN SECURITIES, INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON SMITH BARNEY INC.
SCOTIA CAPITAL (USA) INC.
WESTDEUTSCHE LANDESBANK GIROZENTRALE (DUSSELDORF)

By:  MORGAN STANLEY & Co. INCORPORATED

By:  /s/ Harold J. Hendershot, III
     -----------------------------
     Name:  Harold J. Hendershot, III
     Title: Executive Director

                                       22

<PAGE>

                                                                         ANNEX A

     Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the consummation of Registered Exchange
Offer, it will make this Prospectus available to any broker-dealer after for use
in connection with any such resale. See "Plan of Distribution."

                                       A-1

<PAGE>

                                                                         ANNEX B

     Each broker-dealer that receives Exchange Securities for its own account in
exchange for Initial Securities, where such Initial Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection

with any resale of such Exchange Securities. See "Plan of Distribution."

                                       B-1

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

     Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the consummation of a Registered
Exchange Offer, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 200__, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.(1)

     The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

     For a period of 180 days after the consummation of a Registered Exchange
Offer, the Company will promptly send additional copies of this Prospectus and
any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal. The Company has agreed to

------------------------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.

                                       C-1

<PAGE>

pay all expenses incident to the Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or concessions
of any brokers or dealers and will indemnify the Holders of the Securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.

                                       C-2

<PAGE>

                                                                         ANNEX D

[    ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
     COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
     THERETO.

          Name:
                    ---------------------------------------------------------
          Address:
                    ---------------------------------------------------------

     If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Securities. If the undersigned is a broker-dealer that will receive
Exchange Securities for its own account in exchange for Initial Securities that
were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Securities; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.

                                       D-1<PAGE>

                                                                    EXHIBIT 10.3

     364-DAY REVOLVING CREDIT AGREEMENT, dated as of June 26, 2001, among PPL
CAPITAL FUNDING, INC., a Delaware corporation ("Borrower"); PPL CORPORATION, a
Pennsylvania corporation ("Parent"), as guarantor of the obligations of Borrower
hereunder and PPL ENERGY SUPPLY, LLC, a Delaware limited liability company
("Lender") (all capitalized terms used herein shall have the meanings specified
therefor in Section 5 unless otherwise defined herein).

     Subject to and upon the terms and conditions set forth herein, the Lender
is willing to make available to the Borrower the credit facility herein provided
for working capital and other general corporate purposes of the Borrower,
including investments in, or loans to, affiliates of the Borrower.

     Subject to and upon the terms and conditions set forth herein, the
parties agree as follows:

         SECTION 1.     Amounts and Terms of Loans.
                        --------------------------

     1.1 Commitment. Subject to and upon the terms and conditions herein set
forth, the Lender agrees, at any time and from time to time prior to the Expiry
Date, to make a loan or loans (each a "Loan" and collectively the "Loans") to
the Borrower, which Loans (i) shall at the option of the Borrower, be initially
maintained as Base Rate Loans or Eurodollar Loans, and (ii) may be repaid and
borrowed in accordance with the provisions hereof.

     1.2 Notices of Borrowing. Whenever the Borrower desires to make a Borrowing
hereunder, it shall give the Lender at the Payment Office (i) no later than
12:00 Noon (New York time) at least three Business Days' prior written notice or
telephonic notice (confirmed in writing) of each Eurodollar Loan to be made
hereunder and (ii) no later than 11:30 A.M. (New York time) on the date of such
Borrowing written notice or telephonic notice (confirmed in writing) of each
Base Rate Loan to be made hereunder. Each such notice (each a "Notice of
Borrowing") shall state that the Borrowing is being made hereunder and shall
specify the aggregate principal amount the Borrower desires to borrow hereunder,
the date of Borrowing (which shall be a Business Day), the Type of Loans to be
made pursuant to such Borrowing and the Interest Period to be applicable
thereto.

     1.3 Disbursement of Funds. On the date specified in each Notice of
Borrowing the Lender will make available the amount of the Borrowing requested
to be made on such date in U.S. dollars and in immediately available funds, to
the Borrower not later than 1:00 P.M. (New York time) (or, in the case of Base
Rate Loans, 3:00 P.M. (New York time)).

     1.4 Repayment of Loans; Evidence of Debt. The outstanding principal balance
of each Loan shall be due and payable by the Borrower on the Expiry Date. Each
Loan shall bear interest from the date thereof on the outstanding principal
balance thereof as set forth in Section 2.1. The Lender shall maintain

<PAGE>

in accordance with its usual practice an account or accounts evidencing the
indebtedness to the Lender resulting from each Loan made by the Lender from time
to time to the Borrower, including the amounts of principal and interest payable
and paid to the Lender from time to time under this Agreement.

     1.5 Fees. The Borrower agrees to pay to the Lender a commitment fee, in an
amount or amounts to be agreed upon between the Borrower and the Lender from
time to time, for the period from the Closing Date until the Expiry Date (or
such earlier date as the Commitment shall be terminated), on the average daily
unused amount of the Commitment.

     1.6 Reductions in Commitment. The Borrower shall have the right, upon at
least 3 Business Days' prior written notice to the Lender at the Payment Office,
to reduce permanently the Commitment, in an aggregate amount equal to an
integral multiple of $1,000,000 and not less than $10,000,000, or to terminate
the unutilized portion of the Commitment.

     1.7 Compensation. The Borrower shall compensate the Lender, upon the
Lender's written request given promptly after learning of the same, for all
losses, expenses and liabilities (including, without limitation, any interest
paid by the Lender to lenders of funds borrowed by it to make or carry its
Eurodollar Loans and any loss sustained by the Lender in connection with the
re-employment of such funds), which the Lender sustains: (i) if for any reason
(other than a failure of the Lender to perform its obligations) a Borrowing of
any Eurodollar Loan does not occur on a date specified therefor in a Notice of
Borrowing or notice of conversion (whether or not withdrawn or canceled pursuant
to ss. 2.5 or otherwise), (ii) if any repayment or conversion (pursuant to ss.
2.5 or otherwise) of any of its Eurodollar Loans occurs on a date which is not
the last day of the Interest Period applicable thereto, or (iii) without
duplication of any amounts paid pursuant to ss. 2 hereof, as a consequence of
any other default by the Borrower to repay its Eurodollar Loans when required by
the terms of this Agreement. A statement as to any amounts payable to the Lender
under this ss. 1.7 submitted to the Borrower by the Lender shall show the amount
payable and the calculations used to determine such amount and shall, absent
manifest error, be final, conclusive and binding upon all parties hereto.

     1.8 Notes. The Lender may request that its Loans be evidenced by a
revolving note or notes from time to time (the "Notes").

         SECTION 2. Interest.
                    --------

     2.1 Rates of Interest. (a) The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan made to it from the date
the proceeds thereof are made available to it until prepayment pursuant to ss. 3
or maturity (whether by acceleration or otherwise) at a rate per annum which
shall be the Base Rate in effect from time to time.

     (b) The Borrower agrees to pay interest in respect of the unpaid principal
amount of each Eurodollar Loan made to it from the date the proceeds thereof are
made available to it until prepayment pursuant to ss. 3 or maturity (whether by
acceleration or otherwise) at a rate per annum which shall be the relevant
Quoted Rate.

                                       2

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     (c) The Borrower agrees to pay interest in respect of overdue principal of,
and (to the extent permitted by law) overdue interest in respect of, each Loan
made to it, on demand, at a rate per annum which shall be 2% in excess of the
Base Rate in effect from time to time.

     (d) Interest shall be computed on the actual number of days elapsed on the
basis of a 360-day year; provided, however, that for any rate of interest
determined by reference to a prime rate under Lender's revolving credit
facilities in effect on the date of determination, interest shall be computed on
the actual number of days elapsed on the basis of a year of 365 or 366 days.

     (e) In computing interest on the Loans, the date of the making of a Loan
shall be included and the date of payment shall be excluded, provided, however,
that if a Loan is repaid on the same day on which it is made, such day shall
nevertheless be included in computing interest thereon.

     2.2 Determination of Rate of Borrowing. As soon as practicable after 10:00
A.M. (New York time) on the Business Day prior to the commencement of any
Interest Period with respect to a Eurodollar Loan, the Lender shall determine
(which determination, absent manifest error, shall be final, conclusive and
binding upon all parties) the rate of interest which shall be applicable to such
Eurodollar Loan for the Interest Period applicable thereto and shall promptly
give notice thereof (in writing or by telephone, confirmed in writing) to the
Borrower. In the event that there is no applicable rate for such Eurodollar
Loan: (i) the Lender shall promptly give notice thereof (in writing or by
telephone, confirmed in writing) to the Borrower and (ii) such Loan shall be
deemed to have been requested to be made as a Base Rate Loan and (iii) the rate
applicable to such Loan shall be the Base Rate in effect from time to time.

     2.3 Interest Payment Dates. Accrued interest shall be payable (i) in
respect of each Eurodollar Loan, at the end of the Interest Period relating
thereto and in respect of each Loan with an Interest Period of longer than 3
months, on each 3-month anniversary of the first day of such Interest Period,
(ii) in respect of each Base Rate Loan, at the end of each Interest Period
relating thereto and (iii) in respect of each Loan, on any prepayment (on the
amount prepaid), at maturity (whether by acceleration or otherwise) and, after
maturity, on demand.

     2.4 Conversions; Interest Periods. (a) The Borrower shall have the option
to convert on any Business Day, all or a portion at least equal to
$10,000,000 of the outstanding principal amount of the Loans made to it pursuant
to one or more Borrowings of one Type of Loans into a Borrowing or Borrowings of
another Type of Loan, provided that except as provided in ss.2.5(b), Eurodollar
Loans may be converted into Base Rate Loans only on the last day of an Interest
Period applicable thereto and no partial conversion of a Borrowing of Eurodollar
Loans shall reduce the outstanding principal amount of the Loans pursuant to
such Borrowing to less than $10,000,000. Each such conversion shall be effected
by the Borrower by giving the Lender at its Payment Office, prior to 12:00 Noon
(New York time), at least three Business Days (or by 12:00 Noon on the same
Business Day in the case of a conversion into Base Rate Loans) prior written
notice (or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. (a) At the time the Borrower

                                       3

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gives a Notice of Borrowing or Notice of Conversion in respect of the making of,
or conversion into, a Borrowing of Eurodollar Loans (in the case of the initial
Interest Period applicable thereto) or prior to 12:00 Noon (New York time) on
the third Business Day prior to the expiration of an Interest Period applicable
to a Borrowing of Eurodollar Loans (in the case of any subsequent Interest
Period), such Borrower shall have the right to elect, by giving the Lender
written notice (or telephonic notice promptly confirmed in writing), the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of the Borrower, be a one, two, three or six month period or, subject
to availability on the part of the Lender, such shorter period as ends on the
Expiry Date. Notwithstanding anything to the contrary contained above:

          (i) the initial Interest Period for any Borrowing of Eurodollar Loans
     shall commence on the date of such Borrowing (including the date of any
     conversion from a Borrowing of Base Rate Loans) and each Interest Period
     occurring thereafter in respect of such Borrowing shall commence on the day
     on which the next preceding Interest Period expires;

          (ii) if any Interest Period applicable to a Borrowing of Eurodollar
     Loans begins on a day for which there is no numerically corresponding day
     in the calendar month at the end of such Interest Period, such Interest
     Period shall end on the last Business Day of such calendar month;

          (iii)  no Interest Period in respect of any Borrowing of Loans shall
     extend beyond the Expiry Date; and

          (iv) all Eurodollar Loans comprising a Borrowing shall at all times
     have the same Interest Period.

If upon the expiration of any Interest Period, the Borrower has failed to elect
a new Interest Period to be applicable to the respective Borrowing of Eurodollar
Loans as provided above or is unable to elect a new Interest Period as a result
of ss. 2.4(a)(ii) above, the Borrower shall be deemed to have elected to convert
such Borrowing into a Borrowing of Base Rate Loans effective as of the
expiration date of such current Interest Period.

         2.5 Increased Costs, Illegality, Etc. (a) In the event that the Lender
shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties but, shall be made only after
consultation with the Borrower) that:

          (i) on any date for determining the Quoted Rate for any Interest
     Period, by reason of any change after the date hereof affecting the
     interbank Eurodollar market, adequate and fair means do not exist for
     ascertaining the applicable interest rate by reference to the Quoted Rate;
     or

          (ii) at any time, by reason of any change in any applicable law or any
     other circumstance, the Quoted Rate shall not represent the effective
     pricing to the Lender for funding or maintaining the affected Eurodollar
     Loan; or

                                       4

<PAGE>

         (iii) at any time, that the making or continuance of any Eurodollar
     Loan has become unlawful by compliance by the Lender in good faith with any
     law, governmental rule, regulation, guideline or order, or would cause
     severe hardship to the Lender as a result of a contingency occurring after
     the date hereof which materially and adversely affects the interbank
     Eurodollar market;

then, and in any such event, the Lender shall on such date of determination give
notice (by telephone confirmed in writing) to the Borrower of such
determination. Thereafter, (x) in the case of clause (i) or (ii) above, the
Borrower shall pay to the Lender, upon written demand therefor, such additional
amounts deemed in good faith by the Lender to be material (in the form of an
increased rate of, or a different method of calculating, interest or otherwise
as the Lender in its discretion shall determine) as shall be required to cause
the Lender to receive interest with respect to its affected Eurodollar Loan at a
rate per annum equal to the then Applicable Eurodollar Margin in excess of the
effective pricing to the Lender to make or maintain such Eurodollar Loan and (y)
in the case of clause (iii), the Borrower shall take one of the actions
specified in ss. 2.5(b) as promptly as possible and, in any event, within the
time period required by law. A certificate as to additional amounts owed the
Lender, showing in reasonable detail the basis for the calculation thereof,
submitted to the Borrower by the Lender shall, absent manifest error, be final,
conclusive and binding upon all of the parties hereto.

         (b) At any time that any of its Loans are affected by the circumstances
described in ss. 2.5(a) the Borrower may (i) if the affected Eurodollar Loan is
then being made pursuant to a Borrowing, cancel said Borrowing by giving the
Lender notice thereof by telephone (confirmed in writing) on the same date that
the Borrower was notified by the Lender pursuant to ss. 2.5(a) or (ii) if the
affected Eurodollar Loan is then outstanding, upon at least 3 Business Days'
written notice to the Lender, require the Lender to convert such Eurodollar Loan
into a Base Rate Loan.

         SECTION 3. Payments.
                    --------

         3.1 Payments on Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day and, if a
payment of principal has been so extended, interest shall be payable on such
principal at the applicable rate during such extension.

         3.2 Voluntary Prepayments. The Borrower shall have the right to prepay
its Loans in whole or in part, without premium or penalty, from time to time
pursuant to this ss. 3.2 on the following terms and conditions: (i) the Borrower
shall give the Lender at the Payment Office at least 3 Business Days' prior
written notice or telephonic notice (confirmed in writing) of its intent to
prepay such Loans, which notice shall specify the amount of such prepayment and
the specific Borrowing to be prepaid; (ii) each prepayment shall be in an
integral multiple of $1,000,000 and not less than $10,000,000 (or, if less, the
amount then remaining outstanding in respect of the Borrowing being prepaid);
(iii) at the time of any prepayment, the Borrower shall pay all interest accrued
on the principal amount of said prepayment and, if the Borrower prepays any
Eurodollar Loan on any day other than the last day of an Interest Period
applicable thereto, the Borrower shall compensate the Lender for losses
sustained as a result of such prepayment to the extent and as provided in
Section 1.7.

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<PAGE>

     3.3 Method and Place of Payment, Etc. Except as expressly provided herein,
all payments under this Agreement shall be made to the Lender not later than
Noon (New York time) on the date when due and shall be made in freely
transferable U.S. dollars and in immediately available funds at the Payment
Office.

         SECTION 4.  Parent Guarantee.
                     ----------------

     In order to induce the Lender to extend credit hereunder to Borrower,
Parent hereby irrevocably and unconditionally guarantees, as primary obligor and
not merely as a surety, the Borrower Obligations. Parent further agrees that the
due and punctual payment of the Borrower Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee hereunder notwithstanding any such
extension or renewal of any Borrower Obligation.

     Parent waives presentment to, demand of payment from and protest to
Borrower of any of the Borrower Obligations, and also waives notice of
acceptance of its obligations and notice of protest for nonpayment. The
obligations of Parent hereunder shall not be affected by (a) the failure of the
Lender to assert any claim or demand or to enforce any right or remedy against
Borrower under the provisions of this Agreement or otherwise, (b) change or
increase in the amount of any of the Borrower Obligations, whether or not
consented to by Parent, or (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement or any other agreement.

     Parent further agrees that its agreement hereunder constitutes a promise of
payment when due (whether or not any bankruptcy or similar proceeding shall have
stayed the accrual or collection of any of the Borrower Obligations or operated
as a discharge thereof) and not merely of collection, and waives any right to
require that any resort be had by the Lender to any balance of any deposit
account or credit on the books of any bank in favor of any other person.

     The obligations of Parent hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, and shall not be subject
to any defense or setoff, counterclaim, recoupment or termination whatsoever, by
reason of the invalidity, illegality or unenforceability of the Borrower
Obligations, any impossibility in the performance of the Borrower Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
Parent hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Lender to assert any claim or demand or to enforce any remedy
under this Agreement or any other agreement, by any waiver or modification in
respect of any thereof, by any default, failure or delay, willful or otherwise,
in the performance of the Borrower Obligations, or by any other act or omission
which may or might in any manner or to any extent vary the risk of Parent or
otherwise operate as a discharge of Parent or Borrower as a matter of law or
equity.

     Parent further agrees that its obligations hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Borrower Obligation is rescinded or must otherwise be
restored by the Lender upon the bankruptcy or reorganization of Borrower or
otherwise.

                                       6

<PAGE>

     In furtherance of the foregoing and not in limitation of any other right
which the Lender may have at law or in equity against Parent by virtue hereof,
upon the failure of Borrower to pay any Borrower Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, Parent hereby promises to and will, upon receipt of
written demand by the Lender, forthwith pay, or cause to be paid, in cash the
amount of such unpaid Borrower Obligation.

     Upon payment by Parent of any Borrower Obligation, the Lender shall, in a
reasonable manner, assign the amount of such Borrower Obligation owed to it and
so paid to Parent, to the extent to which the Borrower Obligation in question
was discharged by Parent, or make such disposition thereof as Parent shall
direct (all without recourse to the Lender and without any representation or
warranty by the Lender).

     Upon payment by Parent of any sums as provided above, all rights of
Parent against Borrower arising as a result thereof by way of right of
subrogation or otherwise shall in all respects be subordinate and junior in
right of payment to the prior indefeasible payment in full of all the Borrower
Obligations owed by Borrower to the Lender.

         SECTION 5.  Miscellaneous.
                     -------------

     5.1 Definitions. As used herein the following terms shall have the meanings
herein specified and shall include in the singular number the plural and in the
plural number the singular:

     "Agreement" shall mean this 364-Day Revolving Credit Agreement, as it may
from time to time be amended, supplemented or otherwise modified.

     "Base Rate" shall mean, for any day, a rate per annum based on the "Base
Rate" available to the Lender under its revolving credit facilities then in
effect.

     "Base Rate Loan" shall mean any Loan during any period during which such
Loan is bearing interest at the rates provided for in ss. 2.1(a).

     "Borrower" shall mean PPL Capital Funding, Inc."Borrower Obligations" shall
mean all obligations of Borrower under this Agreement to pay (i) the principal
of and interest on the Loans when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and (ii)
all other payment obligations of Borrower hereunder or under any other Loan
Documents.

     "Borrowing" shall mean the incurrence of one Type of Loan to a Borrower
from the Lender on a given date, all of which Eurodollar Loans shall have the
same Interest Period, pursuant to ss. 1.2; provided, however, that Loans to the
Borrower of a different Type extended by the Lender pursuant to ss. 2.5(b) shall
be considered a part of the related Borrowing.

     "Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day on which banks
in New York City are authorized by law or other governmental actions to close
and (ii) with respect to all notices and determinations in connection with, and

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payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the London interbank Eurodollar market.

     "Closing Date" shall mean the date of this Agreement.

     "Commitment" for the Lender, shall mean $800,000,000, to be reduced by the
amount of any reduction thereto effected pursuant to ss. 1.6.

     "Eurodollar Loan" shall mean any loan during any period during which such
Loan is bearing interest at the rates provided for in ss. 2.1(b).

     "Expiry Date" shall mean June __, 2002.

     "GAAP" shall mean United States generally accepted accounting principles
applied on a consistent basis.

     "Interest Period" shall mean (a) as to any Eurodollar Loan, the period
commencing on the date of such Loan or on the last day of the most recent
Interest Period applicable thereto and ending on the numerically corresponding
day (or, if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect
in a Notice of Borrowing or Notice of Conversion and (b) as to any Base Rate
Loan, the period commencing on the date of such Loan and ending on the date 90
days thereafter or, if earlier, on the Expiry Date or the date of prepayment of
such Loan. If any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day, provided that if any Interest Period applicable to a Borrowing of
Eurodollar Loans would otherwise expire on a day which is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day.

     "Loan" shall have the meaning assigned that term in ss. 1.1.

     "Loan Documents" shall mean this agreement and any Notes issued by the
Borrower hereunder.

     "Notice of Borrowing" shall have the meaning assigned that term in ss. 1.2.

     "Notice of Conversion" shall have the meaning assigned that term in ss.
2.4(a).

     "Parent" shall have the meaning assigned that term in the first paragraph
of this Agreement.

     "Payment Office" shall mean the office of the Lender located at Two North
Ninth Street, Allentown, PA, 18101, or such other office as the Lender may
hereafter designate in writing as such to the other parties hereto.

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     "Quoted Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, the rate agreed upon by the Borrower and the Lender, based on
rates available to Lender for Eurodollar Loans under its revolving credit
facilities then in effect.

     "Type" shall mean any type of Loan, i.e., whether a Loan is a Base Rate
Loan or a Eurodollar Loan.

     5.2 Exercise of Rights. Neither the failure nor delay on the part of the
Lender to exercise any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Lender would otherwise have. No notice to or
demand on Borrower or Parent in any case shall entitle Borrower or Parent, as
applicable, to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of the Lender to any other or
further action in any circumstances without notice or demand.

     5.3 Amendment and Waiver. Neither this Agreement [nor any other Loan]
Document] nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Borrower, Parent and the Lender.

     5.4 Successors and Assigns. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.

     5.5 Notices, Requests, Demands. All notices, requests, demands or other
communications to or upon the respective parties hereto shall be deemed to have
been given or made (i) in the case of notice by mail, when actually received,
and (ii) in the case of telecopier notice sent over a telecopier machine owned
or operated by a party hereto, when sent, in each case addressed to the party or
parties to which such notice is given at their respective addresses shown below
their signatures hereto or at such other address as such party may hereafter
specify in writing to the others. No other method of giving notice is hereby
precluded.

     5.6 Governing Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania.

         5.7 Counterparts. This Agreement may be executed in any number of
     copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.

     5.8 Effectiveness. This Agreement shall become effective on the Closing
Date.

     5.9 Headings Descriptive. The headings of the various provisions of this
Agreement are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.

                                       9

<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.

                           PPL CAPITAL FUNDING, INC.,

                              By /s/ James E. Abel
                               -------------------
                               Name: James E. Abel
                               Title:

                                PPL CORPORATION,

                              By /s/ James E. Abel
                               -------------------
                               Name: James E. Abel
                               Title:

                             PPL ENERGY SUPPLY, LLC,

                              By /s/ James E. Abel
                               -------------------
                               Name: James E. Abel
                               Title:

                                       10

<PAGE>

                               Notice of Borrowing
                               -------------------

                                       11

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