PPL’s reported earnings in the most recent quarter were $0.64 per share, compared with $0.69 per share a year ago. Excluding special items, PPL’s earnings from ongoing operations for the quarter were $0.60 per share, compared with $0.61 per share a year ago.

The primary drivers of PPL’s quarterly earnings from ongoing operations were less favorable UK currency exchange rates and lower wholesale energy margins in the U.S., offset by financing activity benefits and lower operating expenses both in the U.S. and the UK.

PPL reaffirmed its 2009 forecast of $1.60 to $1.90 per share in earnings from ongoing operations. PPL’s 2009 forecast of reported earnings is $1.64 to $1.94 per share, reflecting special items recorded through March 31, 2009. The company also reaffirmed its 2010 earnings forecast of $3.60 to $4.20 per share, saying that – due to lower wholesale electricity prices – it currently expects 2010 earnings to be at the low end of this range. Following its normal practice, the company will provide an updated review of the 2010 forecast this fall.

“The actions we’ve taken since late 2008 and our solid first-quarter performance reinforce our belief that we can achieve our 2009 earnings forecast,” said James H. Miller, PPL’s chairman, president and chief executive officer.

“We’re seeing the benefits from reducing our capital and operation and maintenance spending and from steps we’ve taken to reduce our risks in the wholesale energy markets,” Miller said. “We also took advantage of our strong liquidity position to repurchase some long-term debt, which will result in future reductions in interest expense.”

Miller said the company remains focused on maintaining a strong balance sheet and stable investment-grade credit ratings. “These are traditional PPL strengths, providing us stable access to lower-cost funding in this credit-challenged economic environment,” he said.

“We’re still pursuing select growth opportunities, such as the expansion of our hydroelectric generation capacity in Pennsylvania and Montana,” Miller said, “largely driven by the availability of necessary federal economic stimulus incentives. These initiatives will further enhance PPL’s already-diverse generation portfolio as the nation moves toward limits on carbon emissions.”

First-Quarter 2009 Earnings Details

Reported earnings in the first quarter of 2009 included a net special item credit of $0.04 per share, including a $0.13 per share credit related to the mark-to-market impacts of energy-related, non-trading economic hedges.

Special item charges in the quarter, totaling $0.09 per share, were: $0.04 per share related to the impairment of emission allowances; $0.03 per share related to the recent workforce reduction; $0.01 per share related to impairments of securities in PPL’s nuclear decommissioning trust funds; and $0.01 per share related to other smaller asset impairments. For the first-quarter of 2008, PPL recorded a net special item credit of $0.08 per share.

Key Factors Impacting Business Segment Earnings from Ongoing Operations

Supply Segment

PPL’s supply business segment primarily consists of the domestic energy generation and marketing operations of PPL Energy Supply.

Earnings from ongoing operations for PPL’s supply business segment in the first quarter of 2009 increased by $0.03 per share, or 16%, compared with 2008. This increase was primarily due to a $0.05 per share gain recorded on the repurchase of a portion of PPL Energy Supply’s debt; lower operation and maintenance expenses at PPL’s Susquehanna nuclear plant as a result of the timing of this year’s refueling outage; and higher wholesale energy margins in the western US due to higher wholesale sales and higher hydroelectric generation output.

Partially offsetting these positive factors were lower wholesale energy margins in the eastern US primarily driven by higher average fuel prices and lower realized margins from marketing and trading activities.

Pennsylvania Delivery Segment

PPL’s Pennsylvania delivery business segment includes the regulated electric delivery operations of PPL Electric Utilities and included the delivery operations of its natural gas and propane businesses prior to their divestiture in October 2008.

Earnings from ongoing operations for PPL’s Pennsylvania delivery business segment in the first quarter of 2009 declined by $0.02 per share, or 13%, compared with 2008. This decrease was primarily due to the loss of earnings from the natural gas and propane businesses and higher financing costs. Partially offsetting these negative factors were lower operation and maintenance expenses.

International Delivery Segment

PPL’s international delivery business segment primarily includes investments in the regulated electric distribution companies in the United Kingdom.

Earnings from ongoing operations for PPL’s international delivery business segment in the first quarter of 2009 declined by $0.02 per share, or 8%, compared with a year ago. This decline was primarily due to less favorable currency exchange rates, partially offset by lower financing costs and lower UK income taxes.

2009 Ongoing Earnings Forecast by Business Segment

PPL is reaffirming its 2009 forecast of $1.60 to $1.90 per share in earnings from ongoing operations. This forecast reflects the following expectations by business segment.

Supply Segment

PPL projects higher earnings in its supply business segment in 2009 compared with 2008, driven by higher energy margins as a result of higher expected baseload generation and margins from marketing and trading activities, despite higher expected coal expense – partially offset by higher expected operation and maintenance expenses and depreciation.

Pennsylvania Delivery Segment

PPL projects lower earnings from its Pennsylvania delivery business segment in 2009 compared with 2008, due to the divestiture of the natural gas distribution and propane businesses and slightly lower results from the electricity delivery business. Slightly higher revenues in the electricity delivery business are expected to be offset by higher operation and maintenance expenses.

International Delivery Segment

PPL projects lower earnings from its international delivery business segment in 2009 compared with 2008 as a result of less favorable currency exchange rates.

2010 Earnings Forecast

PPL’s earnings for 2010 are currently expected to be at the low end of the previously announced range of $3.60 to $4.20 per share.

The full-requirements supply contract between PPL EnergyPlus and PPL Electric Utilities expires at the end of 2009. As a result of hedging more than 90% of its baseload generation through March 31, 2009, PPL continues to forecast strong growth in energy margins in 2010.