© 2007PPL Electric Utilities

Energy Outlook:2008 and Beyond

Small Business Development Center

Lehigh University

November 7, 2007Tom Stathos

PPL Electric Utilities

© 2007PPL 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

© 2007PPL 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

© 2007PPL Electric Utilities

What’s important to us

Reliability

Safety

Affordability

Customer service

Customer satisfaction is our key to success

© 2007PPL 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

© 2007PPL 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

© 2007PPL 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

© 2007PPL 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

© 2007PPL Electric Utilities

Distribution vs. supply

Supply Many suppliers Unregulated

Distribution PPL Electric Utilities Regulated

© 2007PPL 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

© 2007PPL 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%

© 2007PPL Electric Utilities

What we’re doing to help

Keeping customers informed

Promoting conservation, delivering tools to help customers save

– www.pplelectric.com

Spreading out supply purchases

Investing in technology to support new rate options

Increasing support for low-income assistance programs

Preparing customers in advance

© 2007PPL Electric Utilities

e-power, Energy Analyzer

© 2007PPL 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

© 2007PPL 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