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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported: April 20, 2001
PPL CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
PENNSYLVANIA 1-11459 23-2758192
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(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
TWO NORTH NINTH STREET, ALLENTOWN, PENNSYLVANIA 18101-1179
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(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (610) 774-5151
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(Former name or former address, if changed since last report)
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Item 5. Other Items
Power Supply Offer to Montana Power Company
On April 20, 2001, PPL Corporation (PPL) announced that its energy
marketing subsidiary, PPL EnergyPlus, has offered to provide Montana Power
Company with 500 MW of energy for five years beginning July 1, 2002. EnergyPlus
would sell this energy at 4 cents a kilowatt-hour to the extent that the energy
is produced by certain designated units of PPL Montana, LLC. After EnergyPlus
and Montana Power Company finalize the agreement, it will be submitted to the
Montana Public Service Commission for review.
Additional Generating Capacity
On April 23, 2001, PPL announced that it is developing a 540 MW power
plant near Chicago, Illinois and that the capacity at its Susquehanna nuclear
plant in Pennsylvania will be increased by 100 MW.
The Illinois facility will be a 540 MW, simple-cycle, natural gas-fired
electric generation facility. The facility is expected to be in service by the
summer of 2002 and is expected to cost about $305 million.
The planned 100 MW increase in the capacity of the Susquehanna nuclear
plant will be effected with the installation of more efficient steam turbines on
each of the two nuclear power units. The new turbines, which will replace units
that have been in operation since the early 1980s, will be installed in the
spring of 2003 and 2004 during refueling outages at the plant and are expected
to cost about $120 million.
Corporate Earnings
On April 24, 2001, PPL announced first-quarter 2001 earnings of $1.52
per diluted common share, a 54% increase over the same period a year ago. PPL
reported adjusted earnings of $3.81 per diluted share for the 12 months ended
March 31, 2001, compared to $2.54 reported in the same period last year.
PPL indicated that the major drivers of its earnings growth for the
first quarter 2001 were: increased margins on wholesale energy transactions;
positive results from the its regulated energy delivery business in Pennsylvania
and from its international operations; and its success in continuing to control
costs.
PPL reported that actual earnings per diluted share for the 12 months
ended March 31, 2001, were $3.97, including a nonrecurring benefit of 16 cents
per share from a settlement with various insurers for environmental and other
liabilities. Actual earnings per diluted share for the same period of 2000 were
$3.04, reflecting one-time gains from the sale of a generation plant in Sunbury,
Pa., a gain from the sale of the supply portion of PPL's electricity business in
the United Kingdom, and a net gain from the sale of transition bonds in the
securitization process. Partially offsetting these benefits during the period a
year ago was a one-time adjustment to write down the carrying value of certain
investments made by PPL Global, LLC, PPL's international energy development
subsidiary.
PPL also announced that it now forecasts earnings in excess of $4.00
per share for 2001 and $4.55 to $4.65 per share for 2002. Earnings per share of
$4.00 in 2001 would represent an increase of about 22% over 2000's adjusted
diluted earnings of $3.28 per common share. Earnings per common share of $4.55
to $4.65 in 2002 would represent an increase of about 15% over earnings now
forecast for 2001.
PPL reported that the significant increase in its earnings forecasts
for 2001 and 2002 was due to the following factors:
- The securitization of its U.S. electricity delivery business
described below.
- Its record earnings performance in the first quarter of 2001.
- Increased margins on energy transactions.
- Its planned increased supply of electricity to sell in the
competitive wholesale markets, including a new natural
gas-powered plant in Illinois.
- Strong growth in its electricity delivery business in Pennsylvania.
- Higher earnings from its international businesses.
- Its success in continuing to reduce costs.
PPL expects a compound annual earnings per share growth rate of 12 to
15 percent through 2005, based on its 2000 adjusted earnings.
Strategic Initiative
On April 24, 2001, PPL also announced a plan to effect the structural
separation of PPL Electric Utilities from PPL and PPL's other affiliated
companies, in a transaction that PPL calls the "securitization" of the electric
transmission and distribution business of PPL Electric
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Utilities. Upon completion of the securitization, PPL will effectively double
the amount of generating capacity PPL has to sell in wholesale electricity
markets while allowing PPL to retain valuable advantages related to operating
both energy supply and energy delivery businesses.
The securitization will be effected in a series of steps including:
- the structural separation of PPL Electric Utilities from PPL and
PPL's other affiliated companies;
- an increase in the leverage of PPL Electric Utilities through the
issuance of approximately $900 million of senior secured bonds
without any material impact on PPL Electric Utilities'
investment-grade credit rating; and
- the solicitation by PPL Electric Utilities, in early June 2001, of
bids to contract with energy suppliers to meet all of the
electricity needs associated with its obligation to serve
customers under capped rates from 2002 through the end of 2009.
PPL Electric Utilities currently has a full requirements supply
agreement with PPL EnergyPlus that expires at the end of 2001. Under the
Pennsylvania Electricity Generation Customer Choice and Competition Act, PPL
Electric Utilities is required as a provider of last resort, through 2009, to
provide electricity at pre-set prices to its delivery customers who do not
select an alternate supplier. As part of the securitization, PPL Electric
Utilities will solicit bids to contract with energy suppliers to meet its
obligation to deliver energy to its customers. PPL EnergyPlus intends to be one
of the parties to bid on the supply contract at market competitive prices. To
the extent that PPL EnergyPlus is a successful bidder, it will have an
eight-year contract to sell a portion of its available energy at
market-competitive wholesale prices. To the extent that PPL EnergyPlus is not a
successful bidder, it will have additional energy that can be sold in the
wholesale market at market rates.
Several aspects of the securitization must be reviewed and approved by
the Pennsylvania Public Utility Commission. These approvals are expected in the
third quarter of 2001.
Dividend Policy
Concurrent with the announcement of PPL's securitization plan on April
24, 2001, PPL also announced that it will maintain its dividend at the current
level of $1.06 per common share for the foreseeable future. PPL believes this
dividend policy is consistent with, and an important element of, its continued
transformation to a growth-oriented energy company. Dividends on PPL's common
stock are declared at the discretion of its Board of Directors. PPL will
continue to consider the appropriateness of its dividend level, taking into
account its financial position, its results of operations, conditions in the
industry and other factors which the Board of Directors deems relevant.
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CERTAIN STATEMENTS CONTAINED IN THIS REPORT, INCLUDING STATEMENTS WITH
RESPECT TO FUTURE EARNINGS, DIVIDENDS, ENERGY SUPPLY AND DEMAND, COSTS,
SUBSIDIARY PERFORMANCE, GROWTH, NEW TECHNOLOGY, PROJECT DEVELOPMENT, ENERGY
PRICES, STRATEGIC INITIATIVES AND GENERATING CAPACITY AND PERFORMANCE, ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE FEDERAL SECURITIES LAWS.
ALTHOUGH PPL CORPORATION BELIEVES THAT THE EXPECTATIONS AND ASSUMPTIONS
REFLECTED IN THESE STATEMENTS ARE REASONABLE, THERE CAN BE NO ASSURANCE THAT
THESE EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. THESE FORWARD-LOOKING
STATEMENTS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
THE FOLLOWING ARE AMONG THE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS: MARKET DEMAND AND PRICES
FOR ENERGY, CAPACITY AND FUEL; WEATHER VARIATIONS AFFECTING CUSTOMER ENERGY
USAGE; COMPETITION IN RETAIL AND WHOLESALE POWER MARKETS; THE EFFECT OF ANY
BUSINESS OR INDUSTRY RESTRUCTURING; PROFITABILITY AND LIQUIDITY; NEW ACCOUNTING
REQUIREMENTS OR NEW INTERPRETATIONS OR APPLICATIONS OF EXISTING REQUIREMENTS;
SYSTEM CONDITIONS AND OPERATING COSTS; DEVELOPMENT OF NEW PROJECTS; MARKETS AND
TECHNOLOGIES; ENVIRONMENTAL CONDITIONS AND REQUIREMENTS; PERFORMANCE OF NEW
VENTURES; POLITICAL, REGULATORY OR ECONOMIC CONDITIONS IN COUNTRIES WHERE PPL
CORPORATION OR ITS SUBSIDIARIES CONDUCT BUSINESS; RECEIPT OF NECESSARY
GOVERNMENTAL APPROVALS; CAPITAL MARKET CONDITIONS; STOCK PRICE PERFORMANCE; PPL
CORPORATION'S OR ANY OF ITS SUBSIDIARIES' SECURITIES RATINGS; FOREIGN EXCHANGE
RATES; AND COMMITMENTS AND LIABILITIES. ANY SUCH FORWARD-LOOKING STATEMENTS
SHOULD BE CONSIDERED IN LIGHT OF SUCH FACTORS AND IN CONJUNCTION WITH PPL
CORPORATION'S FORM 10-K AND OTHER REPORTS ON FILE WITH OR FURNISHED TO THE
SECURITIES AND EXCHANGE COMMISSION.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PPL CORPORATION
By: /s/ James E. Abel
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James E. Abel
Vice President - Finance &
Treasurer
Dated: April 27, 2001