UNITED
STATES
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): October 11,
2005
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Commission
File
Number
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Registrant;
State of Incorporation;
Address
and Telephone Number
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IRS
Employer
Identification
No.
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1-11459
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PPL
Corporation
(Exact
name of Registrant as specified in its charter)
(Pennsylvania)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
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23-2758192
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333-74794
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PPL
Energy Supply, LLC
(Exact
name of Registrant as specified in its charter)
(Delaware)
Two
North Ninth Street
Allentown,
PA 18101-1179
(610)
774-5151
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23-3074920
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Section
7 - Regulation FD
Item
7.01 Regulation FD Disclosure
Martins
Creek Disposal Basin Leak
PPL
Martins Creek, LLC (“PPL Martins Creek”), an indirect, wholly owned subsidiary
of PPL Corporation (“PPL”) and PPL Energy Supply, LLC (“PPL Energy Supply”),
owns and operates the Martins Creek generating facility along the Delaware
River
in eastern Pennsylvania. The Martins Creek facility includes two 150-megawatt
coal-fired generating units and two 835-megawatt oil/gas-fired generating
units.
In August 2005, a leak from one of two disposal basins containing fly ash
and
water used in connection with the operation of the coal-fired generating
units
caused the discharge of approximately 100 million gallons of water containing
ash from the basin onto adjacent roadways and fields and into the Delaware
River. The leak has been stopped, and the company has determined that the
problem was caused by a failure in the disposal basin’s discharge structure.
PPL
currently is working with the Pennsylvania Department of Environmental
Protection (“DEP”) and other appropriate agencies and consultants to assess the
extent of the environmental damage caused by the ash in the discharged water
and
to remediate the damage. Repairs and upgrades to the disposal basin
that
leaked are nearly complete. PPL has shut down the coal-fired generating units
and intends to place the units back in service and begin using the basin
again
after completing the repairs and upgrades and obtaining the Pennsylvania
DEP’s
approval.
PPL
has
completed the clean-up of the adjacent roadways and fields and is continuing
to
work on the removal of ash from the Delaware River. At this time, the company
has no reason to believe that there is any danger to human health as a result
of
the disposal basin leak or its clean-up activities. The company continues
to
carefully monitor river water quality and drinking water from residential
wells
and the local city water supply. Analyses conducted by an independent laboratory
have shown that the area drinking water meets current and prospective federal
drinking water standards for the coal ash constituents of concern - arsenic,
selenium and mercury. PPL has been informed by outside experts retained by
it
that, based on the experts’ biological assessment to be reflected in their
pending assessment report, there was no short-term adverse biological impact
on
the river aquatic life. The company currently is developing an assessment
plan
for any potential long-term impacts.
In
September 2005, PPL Martins Creek received a Notice of Violation (“NOV”) from
the Pennsylvania DEP concerning the leak and the company has provided a response
to the NOV. The Pennsylvania DEP held a formal enforcement conference with
PPL
on September 28 at which the company’s actions to date in response to the leak
were discussed, and the Pennsylvania DEP requested various additional
information for purposes of determining the appropriate penalty.
The
Delaware Riverkeeper Network, an environmental activist group, has stated
that
it will seek legal redress. Also, representatives of the Commonwealth of
Pennsylvania, the State of New Jersey, the U.S. Fish and Wildlife Service
and
the National Oceanic and Atmospheric Administration have indicated that they
are
considering natural resource damage claims under applicable state and federal
environmental laws.
On
or
about September 21, the company received notice from the Delaware Riverside
Conservancy, Inc. and approximately 63 local residents of their intention
to
file suit against the company for alleged violations of numerous state and
federal environmental laws resulting from the leak. The notice was given
pursuant to provisions in those laws that give citizens the right to act
as
“private attorneys general” in bringing enforcement actions but require such
notice to be given 60 days in advance of their bringing such lawsuits so
that
the state and federal environmental agencies can have the opportunity to
bring
enforcement action themselves. If the state or federal agencies do so, then
the
citizens’ suits may be preempted.
PPL
and PPL Energy Supply have
recorded a charge in the third quarter of 2005 of $33 million in connection
with
the current expected costs relating to the Martins Creek leak. Of this amount,
$29 million, or $19 million after-taxes ($0.05 per share for PPL), relates
to
expected costs for assessment and remediation of the leak beyond the Martins
Creek property. Given the nature and scope of the off-site assessment and
remediation, PPL is treating these off-site costs as an unusual charge. While
this unusual charge will impact net income, or reported earnings, for PPL
and
PPL Energy Supply for the third quarter of 2005, as reported in accordance
with
generally accepted accounting principles, it will not impact PPL's earnings
from
ongoing operations, which excludes unusual items. The balance of the total
charge, $4 million, or $3 million after-taxes ($0.01 per share for PPL),
relates
to on-site costs, which will impact both reported earnings and earnings from
ongoing operations.
At
this
time, PPL and PPL Energy Supply cannot predict the final cost of assessment
and
remediation, the exact nature of any regulatory or other legal actions that
may
be initiated against PPL, PPL Energy Supply or their subsidiaries as a result
of
the disposal basin leak, the extent of the fines or damages that may be sought
in connection with any such actions, when the coal-fired generating units
may be
placed back in service or the ultimate financial impact on PPL or PPL Energy
Supply.
Earnings
Forecast
PPL
is
maintaining its previously announced 2005 forecast of $2.00 to $2.10 per
share
in earnings from ongoing operations and its previously announced 2006 earnings
forecast of $2.15 to $2.25 per share.
The
forecast of earnings from ongoing operations for 2005 excludes the charge
described above for the current estimate of the off-site costs associated
with
the Martins Creek matter and any other unusual items, such as the following
previously announced after-tax charges: (1) $27 million, or $0.07 per share,
in
the first quarter related to a PJM Interconnection, L.L.C. billing dispute;
(2)
$5 million, or $0.01 per share, in the first quarter related to accelerated
amortization of certain stock-based compensation awarded in prior years;
(3) $6
million, or $0.02 per share, in the first quarter related to settlement of
the
NorthWestern Corporation litigation; and (4) $47 million, or $0.12 per share,
in
the second quarter related to the sale of the Sundance power plant in Arizona.
Based
on
the charge for the current estimate of the off-site costs associated with
the
Martins Creek matter, PPL has revised its 2005 forecast of reported earnings
(which includes all of the unusual items identified above totaling $0.27
per
share) to $1.73 to $1.83 per share.
PPL
plans
to release its consolidated third quarter 2005 earnings results on Tuesday,
November 1. PPL’s senior management will discuss these results, and provide an
update concerning the company’s strategy, long-term forecast and general
business outlook, including the status of the Martins Creek matter, during
a
conference call with financial analysts on November 1.
"Earnings
from ongoing operations" excludes the impact of unusual items. Earnings from
ongoing operations should not be considered as an alternative to net income,
or
reported earnings, which is an indicator of operating performance determined
in
accordance with generally accepted accounting principles (GAAP). PPL Corporation
believes that earnings from ongoing operations, although a non-GAAP measure,
is
also useful and meaningful to investors because it provides them with the
company's underlying earnings performance as another criterion in making
their
investment decisions. PPL Corporation's management also uses earnings from
ongoing operations in measuring certain corporate performance goals. Other
companies may use different measures to present financial
performance.
Statements
contained in this news release, including statements with respect to future
earnings and environmental costs, impacts and regulatory or legal actions,
are
“forward-looking statements” within the meaning of the federal securities laws.
Although PPL Corporation believes that the expectations and assumptions
reflected in these forward-looking statements are reasonable, these statements
involve a number of risks and uncertainties, and actual results may differ
materially from the results discussed in the 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; market prices for crude oil and the potential impact on synthetic
fuel
tax credits and our synthetic fuel operations; weather conditions affecting
customer energy usage and operating costs; competition in power markets;
the
effect of any business or industry restructuring; the profitability and
liquidity of PPL Corporation and its subsidiaries; new accounting requirements
or new interpretations or applications of existing requirements; operating
performance of plants and other facilities; environmental conditions and
requirements and the related costs of compliance, including environmental
capital expenditures and emission allowance and other expenses; system
conditions and operating costs; development of new projects, markets and
technologies; performance of new ventures; asset acquisitions and dispositions;
political, regulatory or economic conditions in states, regions and countries
where PPL Corporation or its subsidiaries conduct business; any
impact of 2005’s hurricanes on our business, including any impact on fuel
prices; receipt
of necessary government permits, approvals and rate relief; capital market
conditions and decisions regarding capital structure; the impact of state,
federal or foreign investigations applicable to PPL Corporation and its
subsidiaries; the outcome of litigation against PPL Corporation and its
subsidiaries; stock price performance; the market prices of equity securities
and the impact on pension income and resultant cash funding requirements
for
defined benefit pension plans; the securities and credit ratings of PPL
Corporation and its subsidiaries; political, regulatory or economic conditions
in states, regions or countries where PPL Corporation or its subsidiaries
conduct business, including any potential effects of threatened or actual
terrorism or war or other hostilities; foreign exchange rates; new state,
federal or foreign legislation, including new tax legislation; and the
commitments and liabilities of PPL Corporation and its subsidiaries. Any
such
forward-looking statements should be considered in light of such important
factors and in conjunction with PPL Corporation's Form 10-K and other reports
on
file with the Securities and Exchange Commission.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrants
have
duly caused this report to be signed on their behalf by the undersigned hereunto
duly authorized.
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PPL
CORPORATION
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By:
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/s/
Paul A. Farr
Paul
A. Farr
Senior
Vice President-Financial and Controller
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PPL
ENERGY SUPPLY, LLC
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By:
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/s/
Paul A. Farr
Paul
A. Farr
Vice
President and Controller
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Dated: October
14, 2005