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): July 11, 2008
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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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1-32944
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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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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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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
Section
8 - Other Events
Item
8.01 Other Events
D.C.
Circuit Court Decision Invalidating U.S. Environmental Protection Agency Clean
Air Program
As
previously disclosed, to facilitate attainment of its ozone and fine
particulates standards issued in 1997, the U.S. Environmental Protection Agency
(“EPA”) promulgated regulations in March 2005 called the Clean Air Interstate
Rule (“CAIR”) for 28 midwestern and eastern states, including
Pennsylvania. CAIR required by 2010 reductions in sulfur dioxide
emissions by about 50% beyond the reductions required under the Clean Air Act’s
acid rain cap-and-trade program and required further reductions by 2015 of 30%
beyond the 2010 reductions. These reductions were to be achieved by
surrendering allowances issued under the acid rain cap-and-trade program in a
ratio of two allowances per ton of sulfur dioxide emitted starting in 2010 and
2.86 allowances per ton of sulfur dioxide emitted starting in
2015. CAIR also established a regional cap-and-trade program for
year-round nitrogen oxide reductions beginning in 2009 and required further
nitrogen oxide reductions beginning in 2015 of 17% beyond 2009
levels.
Based
upon these requirements, PPL EnergyPlus, LLC ("PPL EnergyPlus") purchased
additional sulfur dioxide allowances beyond those required under the acid rain
program as well as annual nitrogen oxide allowances under the new CAIR annual
nitrogen oxide program.
On July
11, 2008, the United States Court of Appeals for the D.C. Circuit invalidated
CAIR, stating that a regional cap-and-trade program cannot be used to facilitate
attainment of the ozone and fine particulates standards. The Court
did not overturn the existing cap-and-trade program for sulfur dioxide
reductions under the acid rain program. In addition, despite the
Court’s ruling that a regional cap-and-trade program cannot be used for
attainment of the ozone standard, the existing ozone season cap-and-trade
program was not invalidated.
As a
result of this decision, PPL Corporation ("PPL") now anticipates that all
of the annual nitrogen oxide allowances PPL EnergyPlus had purchased may be
impaired because the CAIR rule has been vacated and therefore these allowances
are no longer required. In addition, the market price of sulfur
dioxide allowances has fallen dramatically since the Court’s decision was
issued. PPL currently is evaluating the Court’s decision to determine
its financial and other impacts. The combined book value for these
sulfur dioxide and nitrogen oxide emission allowances was approximately $100
million at June 30, 2008, excluding the seasonal nitrogen oxide allowances
unaffected by the Court’s ruling. While PPL is still evaluating the
impact of the Court’s decision, these allowances may be impaired in the third
quarter of 2008. The amount of the impairment charge will be based on
market prices at the end of the third quarter, an assessment of the emission
allowances PPL expects to consume in future periods, and other factors.
Any such impairment charge would be considered a special item, which would not
impact earnings from ongoing operations. In addition, as a result of
the Court’s decision PPL is reviewing aspects of its previously announced
program to install certain pollution control equipment to meet the CAIR
requirements, along with the relevant contracts for the purchase of these
allowances.
At this
time, PPL cannot predict the outcome of the legal proceedings related to the
Court’s decision, what action the EPA will take in response to this decision and
the timing of such action, or the ultimate impact on PPL of these proceedings
and resulting regulatory and other actions.
“Earnings
from ongoing operations” excludes the impact of special items. Special items
include charges, credits or gains that are unusual or nonrecurring and the
mark-to-market impact of energy-related, non-trading economic hedges. The
mark-to-market impact of these hedges is economically neutral to the company
because the mark-to-market gains or losses on the energy hedges will reverse as
the hedging contracts settle in the future. Earnings from ongoing operations
should not be considered as an alternative to reported earnings, or net income,
which is an indicator of operating performance determined in accordance with
generally accepted accounting principles (GAAP). PPL believes that earnings from
ongoing operations, although a non-GAAP measure, is also useful and meaningful
to investors because it provides them with PPL’s underlying earnings performance
as another criterion in making their investment decisions. PPL’s management also
uses earnings from ongoing operations in measuring certain corporate performance
goals. Other companies may use different measures to present financial
performance.
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/
J. Matt Simmons, Jr.
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J.
Matt Simmons, Jr.
Vice
President and Controller
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PPL
ENERGY SUPPLY, LLC
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By:
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/s/
J. Matt Simmons, Jr.
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J.
Matt Simmons, Jr.
Vice
President and Controller
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Dated: July
16, 2008