© 2007 PPL Electric Utilities Energy Outlook: 2008 and Beyond Small Business Development Center Lehigh University November 7, 2007 Tom Stathos PPL Electric Utilities

© 2007 PPL Electric Utilities Who we are  Subsidiary of PPL Corporation  Award-winning utility with proud tradition 2,300 people serving 1.4 million customers Hazleton Philadelphia Pittsburgh Erie

© 2007 PPL Electric Utilities What we do Strictly delivery company  48,000 miles of power lines  Nearly 1 million poles  2 million calls answered  10,000 square miles

© 2007 PPL Electric Utilities What’s important to us  Reliability  Safety  Affordability  Customer service Customer satisfaction is our key to success

© 2007 PPL Electric Utilities Rate changes  2007 adjustment due to court ruling  Distribution rate increase for 2008  Cost of energy supply for 2010 Recent and upcoming changes

© 2007 PPL Electric Utilities 2007 rate change  Change effective Aug. 1  Business customers saw bills decrease (2-5%, depending on use)  Residential and street light customers saw bills increase (3.8% for average residential customer) Court ruling required cost shift

© 2007 PPL Electric Utilities Change proposed for 2008  Settlement awaiting PUC decision  Residential and street light customers would see increase (4.7% for average residential customer)  Businesses would see little change 1.7% overall increase sought for Jan. 1

© 2007 PPL Electric Utilities Why the increase for 2008?  Helps offset rising costs –Transformers up 80% –Cable up 25% –Health care, bucket trucks, fuel all up by double-digit percentages  Enables continued investment in our electric delivery system  First distribution rate increase since 2005 So we can maintain a high level of service

© 2007 PPL Electric Utilities Distribution vs. supply Supply  Many suppliers  Unregulated Distribution  PPL Electric Utilities  Regulated

© 2007 PPL Electric Utilities What’s next?  Increase expected as generation price caps expire  PPL Electric Utilities buying supply now for 2010  One-third purchased to date  If remaining supply purchased at same price, average residential customer would see 34.5% increase 2010 and beyond

© 2007 PPL Electric Utilities Why the generation price increase in 2010?  Cost of fossil fuels up sharply since 2000  Compliance with new environmental regulations raises costs for suppliers  Alternative energy quotas kick in Costs have risen since rate caps were set Natural gas, ▲250% Oil, ▲100% Coal, ▲55% Uranium, ▲800%

© 2007 PPL Electric Utilities What we’re doing to help  Keeping customers informed  Promoting conservation, delivering tools to help customers save –  Spreading out supply purchases  Investing in technology to support new rate options  Increasing support for low-income assistance programs Preparing customers in advance

© 2007 PPL Electric Utilities e-power, Energy Analyzer

© 2007 PPL Electric Utilities BUSINESS IMPACT  Eliminates costs of manual reading, special reads, installation checks  Eliminates estimated bills  Call Center cost reduction  Improves billing efficiency  Enables customer data presentment via internet  Improved complaint handing performance  Improved outage management processes  Improved outage analysis (w/ OMS implementation)  Aids customer power quality complaint resolution  Enhances field engineering voltage profiling effort Advanced Metering Infrastructure SYSTEM CAPABILITY: PRESENT  Capture Monthly, Daily, Hourly billing reads  Two-Way Communications  Captures Voltage and Momentaries New Technology

© 2007 PPL Electric Utilities Our focus  Continuing purchases for 2010  Investing $1.4 billion in our delivery system  Stepping up tree-trimming, equipment inspections  Improving our ability to respond to outages  Spending wisely, improving efficiency  Developing new tools, programs for our customers Helping customers, improving service