PP&L TRANSITION BOND CO INC, S-3/A, 1999-06-07

PP&L TRANSITION BOND CO INC
S-3/A, 1999-06-07
ASSET-BACKED SECURITIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1999
=======================================================================
REGISTRATION NO. 333-75369
- ------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NUMBER 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

PP&L TRANSITION BOND COMPANY LLC
(Issuer with respect to the Bonds)
(Exact name as specified in registrant's Certificate of Formation)

DELAWARE 23-3004428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

PP&L TRANSITION BOND COMPANY LLC,
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(610)774-5151

(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)

JAMES E. ABEL
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(610) 774-5151

(Name, address, including zip code, and telephone number
including area code, of agent for service)
-----------
Copies to:

CHRISTOPHER J. KELL DEAN E. CRIDDLE
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP ORRICK, HERRINGTON & SUTCLIFFE LLP
919 THIRD AVENUE 400 SANSOME STREET
NEW YORK, NEW YORK 10022 SAN FRANCISCO, CA 94111
(212) 735-2160 (415) 773-5783
Approximate date of proposed sale to the public: As soon as practicable
after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. |X|

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|

CALCULATION OF REGISTRATION FEE

==============================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Transition Bonds Issuable in $ 1,000,000 ____% $__________ $ 278
Series
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.
(2) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON ANY DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON A DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.

- -----------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED ________, 1999

Prospectus Supplement
(To Prospectus dated __________, 1999)

$_____ Transition Bonds, Series 1999-__
PP&L Transition Bond Company LLC

PP&L, Inc., Servicer

THE FOLLOWING SECURITIES ARE BEING OFFERED IN THIS PROSPECTUS SUPPLEMENT*:

Class__Bonds Class__Bonds Class__Bonds
Principal Amount $__________ $__________ $_________

Price __________% __________% _________%

Underwriting Discounts
and Commissions __________% __________% _________%

Net Proceeds
Bond Rate __________% __________% _________%

Expected Final
Payment Date __________% __________% _________%

Final Maturity Date __________% __________% _________%

(*) These securities will be referred to as the Series 1999- __ Bonds in this
Prospectus Supplement.

Interest and principal on the Series 1999- __ Bonds will be payable __________,
on the day of __________ or the first business day after these dates.

CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 13 OF THE PROSPECTUS.

THE SERIES 1999-_ BONDS REPRESENT OBLIGATIONS OF PP&L TRANSITION BOND
COMPANY LLC, WHICH IS THE ISSUER, AND ARE BACKED ONLY BY THE ASSETS OF THE
ISSUER. NEITHER PP&L, PP&L RESOURCES, NOR ANY OF THEIR AFFILIATES ARE
LIABLE FOR PAYMENTS ON THE BONDS.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

There currently is no secondary market for the Series 1999- __ Bonds,
and there is no assurance that one will develop.

Capitalized terms used in this Prospectus Supplement are defined
in a Glossary of Defined Terms which is Appendix A to the Prospectus. This
Glossary may be found after the Section entitled "Various Legal Matters
Relating to The Transition Bonds" in the Prospectus.

Morgan Stanley Dean Witter

The date of this Prospectus Supplement is __________, 1999.

This Prospectus Supplement does not contain complete information about
the offering of the Series 1999- __ Bonds. Additional Information is
contained in the Prospectus. Prospective Investors are urged to read both
this Prospectus Supplement and the Prospectus in full. Sales of the Series
1999-_ Bonds may not be consummated unless the purchaser has received both
this Prospectus Supplement and the Prospectus.

TABLE OF CONTENTS

Prospectus Supplement

WHERE TO FIND INFORMATION IN THESE DOCUMENTS..............................S-5
SUMMARY OF TERMS - PROSPECTUS SUPPLEMENT..................................S-6
THE SERIES 1999-_ BONDS...................................................S-9
General...........................................................S-9
Interest..........................................................S-9
Principal.........................................................S-10
Optional Redemption of the Series 1999- Bonds..................S-11
The Overcollateralization and Capital Amount......................S-11
Other Credit Enhancement..........................................S-12
DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY.............................S-13
Customer Class Descriptions.......................................S-13
PP&L Will Assess Intangible Transition Charges on
Particular Customers............................................S-14
PP&L's Intangible Transition Charges..............................S-14
PP&L May Obtain Adjustments to the Intangible Transition Charges..S-17
DESCRIPTION OF PP&L'S BUSINESS............................................S-17
PP&L's Operations.................................................S-17
Information Which Is Available to the Series 1999- __
Bondholders.....................................................S-18
UNDERWRITING THE SERIES 1999- __ BONDS....................................S-19
RATINGS FOR THE SERIES 1999- __ BONDS.....................................S-20

WHERE TO FIND INFORMATION IN THESE DOCUMENTS

This Prospectus Supplement and the attached Prospectus provide information
about the Issuer and PP&L, including terms and conditions that apply to the
Series 1999- __ Bonds. The specific terms of the 1999- __ Bonds are contained
in this Prospectus Supplement. You should rely only on information on the
Series 1999- __ Bonds provided in this Prospectus Supplement and the attached
Prospectus. We have not authorized anyone to provide you with different
information.

We have included cross-references to captions in these materials where you
can find further related discussions. We have started with several
introductory sections describing the Issuer and terms in abbreviated form,
followed by a more complete description of the terms. The introductory
sections are:

o Summary of Terms of the Series 1999- __ Bonds-- provides information
concerning the amounts and the payment terms of each class of
Series 1999- __ Bonds.

o Description of Intangible Transition Property -- provides
information concerning the asset that is the collateral to the
Series 1999- __ Bonds.

Cross references may be contained in the introductory sections which will
direct you elsewhere in this Prospectus Supplement or the attached
Prospectus to more detailed descriptions of a particular topic. You can
also find references to key topics in the Table of Contents on the
preceding page.

You can find the definition of capitalized terms in the "Glossary of
Defined Terms" which is Appendix A to the Prospectus. This Glossary may be
found after the Section entitled "Various Legal Matters Relating to The
Transition Bonds" in the Prospectus.

SUMMARY OF TERMS - PROSPECTUS SUPPLEMENT

This summary contains a brief description of the Series 1999- __
Bonds. You will find a detailed description of the terms of the offering of
the Series 1999- __ Bonds following this summary. The terms that apply to all
Series of Transition Bonds appear in the Prospectus which
follows this Prospectus Supplement.

CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 13 OF THE PROSPECTUS.

THE ISSUER: PP&L Transition Bond Company LLC, a
Delaware limited liability company
wholly owned by PP&L.

ISSUER'S ADDRESS: Two North Ninth Street; Allentown, PA 18101

ISSUER'S TELEPHONE NUMBER: (610) 774-5151

SELLER OF THE PROPERTY TO THE CEP Securities, an indirect wholly owned
ISSUER: subsidiary of PP&L, which is an
electric utility serving approximately
1.3 million customers in central and
eastern Pennsylvania.

SELLER'S ADDRESS: _______________________________

SELLER'S TELEPHONE NUMBER: _______________________________

SERVICER OF THE PROPERTY: PP&L

TRUSTEE: The Bank of New York

THE TERMS OF THE SERIES 1999 - BONDS

Class__Bonds Class__Bonds
Principal Amount: $__________ $__________

Interest Rate Per Annum: _____% _____%

Interest Accrual Method: _____ _____

Payment Dates: _____(___) _____(___)

First Payment Date: _______, 1999 _______, 1999

Expected Final Payment Date: ____________ ____________

Final Maturity Date: ____________ ____________

Anticipated Ratings
(Moody's/Standard & Poor's/Fitch ________ _______
IBCA/Duff & Phelps):

- ----------------

THE COLLATERAL

The issuer will own intangible transition property, a property right
created under the Competition Act. In general terms, the intangible
transition property represents the right to recover, through intangible
transition charges payable by retail consumers of electricity within PP&L's
service territory who access PP&L's transmission and distribution system,

o the principal amount of the transition bonds, and

o the interest, fees, costs, charges, credit enhancement and premiums, if
any, associated with the transition bonds.

The principal amount of the transition bonds is equal to a portion of
PP&L's stranded costs. Stranded costs are an electric utility's net
electric generation related costs which traditionally would be recoverable
under a regulated environment but which may not be recoverable in a
competitive electric generation market. The intangible transition property
is described in more detail under "The Contribution Agreement--Assignment
of the Intangible Transition Property and Related Rights to the Seller" in
the Prospectus.

In connection with the issuance of the Series 1999- __ bonds, CEP
Securities will sell [$ ] billion of its intangible transition property to
the issuer. PP&L, as servicer of the intangible transition property, will
collect the intangible transition charges from customers on behalf of the
issuer. Other entities may be required to collect intangible transition
charges from customers and pay the amounts collected to PP&L, as servicer.
Since the amount of intangible transition charges collected will depend on
the amount of electricity delivered to customers within PP&L's service
territory, the amount of intangible transition charges collected may vary
substantially from year to year. See "The Servicer of the Intangible
Transition Property" in the prospectus.

PAYMENT SOURCES

On each payment date, the trustee will pay amounts owed on Series 1999- __
Bonds from

o amounts received from the servicer with respect to intangible
transition charges during the prior quarter; and

o amounts available for withdrawal from trust accounts held by the
trustee or paid pursuant to contracts pledged to secure one or more
series of transition bonds.

The series 1999- __ bonds will not be payable from collateral that is separate
from that securing other series of bonds. All series will be payable from
the same collateral. If another series of bonds is issued, the principal
source of repayment for that series will also be the intangible transition
charges collected by the servicer. The issuance of other series of
transition bonds is not expected to adversely affect collections of
intangible transition charges to make payments on the series 1999- __ bonds.
This is because intangible transition charges and adjustments thereof are
generally based on the total principal amount of all transition bonds
outstanding. See "The Indenture" in the prospectus.

PRINCIPAL PAYMENTS

On each payment date, the amount required to be paid as principal on the
transition bonds, including the series 1999- __ bonds, will equal:

o the unpaid principal amount of any series due on the final payment
date of that series; plus

o the unpaid principal amount of any transition bonds called for
redemption; plus

o the unpaid principal amount if there is a default on the transition
bonds and the trustee or the holders of a majority of the principal
amount of the transition bonds declare the transition bonds to be due
and payable; plus

o the principal scheduled to be paid on the transition bonds on that
payment date.

On each payment date, the issuer will distribute principal on the series
1999- __ bonds in the following order:

[To be provided at issuance]

INTEREST PAYMENTS

On each payment date, the issuer will pay interest on each class of the
series 1999- __ bonds as follows:

[To be provided at issuance]

OPTIONAL REDEMPTION

[Optional redemption provisions, if any, to be provided at issuance.]

PARTICULAR CREDIT ENHANCEMENT FEATURES

Credit enhancement for the series 1999- __ bonds includes the following:

o PP&L, as servicer of the intangible transition property on behalf of
the Issuer, will make adjustments to the intangible transition charges
it bills to customers, upon approval by the Pennsylvania PUC. PP&L will
make these adjustments if it determines that it is not collecting
sufficient intangible transition charges:

1) for the Issuer to make timely payments on the series 1999- __ bonds

2) and to pay fees, costs and charges

3) or if any of the subaccounts is not funded to its required level.

PP&L can make these changes, with the approval of the PUC, once a year.
However, during the final twelve months prior to the expected final payment
date for any series or class of transition bonds, it can make these
adjustments as frequently as monthly. See "The PUC Order and the Intangible
Transition Charges - The PUC Order" in the Prospectus.

[Additional credit enhancement, if any, to be provided at issuance.]

The credit enhancement for the series 1999- __ bonds is intended to protect
you against losses or delays in scheduled payments on your series 1999- __
bonds.

THE SERIES 1999- __ BONDS

The Series 1999- __ Bonds will be issued under and secured pursuant to the
Indenture as supplemented. The following summary does not purport to be
complete and is subject to, and qualified by reference to, the terms and
provisions of the Indenture. The Summary is also subject to, and qualified
by reference to the terms and provisions of the Series 1999- __ Bonds.

GENERAL

The Series 1999- __ Bonds will be issued on the Series Issuance Date and
will include the following Classes. For information on how the Bond Rate
was calculated, see "-Interest" below:

TABLE 1

Initial Class Expected Final Final
Class Principal Balance Payment Date Maturity Date Bond Rate*

How the Issuer Will Make Series 1999- __ Bond Payments. The Issuer
will pay interest and principal relating to the Series 1999- __ Bonds through
DTC or, if the Series 1999- __ Bonds are no longer in book-entry form, at the
offices of ___________ at __________, New York, New York ____. The Issuer
will make payments by wire transfer in immediately available funds to the
account designated by Cede & Co. as nominee of DTC if the Series 1999- __ are
in book-entry form. Otherwise, the Issuer will make payments by check
mailed first-class, postage prepaid to a Series 1999- __ Bondholder's address
as it appears on the Record Date. After prior notice to the Series 1999- __
Bondholders, the Issuer will pay the final installment of principal and
premium, if any, only upon presentation and surrender of the Series 1999- __
Bonds at a place specified in the notice. A beneficial owner of a Series
1999- __ Bond will receive payments from the securities intermediary through
whom it holds the Series 1999- __ Bonds.

INTEREST

Interest on each Class of the Series 1999- __ Bonds will accrue
beginning on the Series Issuance Date at the respective Bond Rates
indicated above. For each Class of the Series 1999- __ Bonds, interest is
payable on each Payment Date, commencing __________, 1999, to the persons
in whose names the Series 1999- __ Bonds of each Class are registered at the
close of business on the preceding record date.

Interest on the Series 1999- __ Bonds Class ___ will be calculated as
follows:

[To be provided at issuance for any Class with a floating rate Bond Rate]

On each Payment Date, each Class of Series 1999- __ Bonds will be
entitled to receive payments of interest as follows:

[To be provided at issuance]

The Record Date with respect to any Payment Date will be the close
of business on the Business Day preceding the Payment Date.

PRINCIPAL

On each Payment Date, holders of each Class of Series 1999- __ Bonds
will be entitled to receive payments of principal, to the extent funds are
available, as follows:

[To be provided at issuance.]

provided that the principal payment on any Class on a Payment Date will not
be greater than the amount necessary to reduce the Class Principal Balance
of the Class to the amount specified in Table 2 for the Class and Payment Date.

The entire unpaid principal amount of each Class of the Series
1999- __ Bonds will be due and payable on the Final Maturity Date for the
Class.

The Expected Amortization Schedule for the Series 1999- __ Bonds. The
following table sets forth the Principal Balance from the Series Issuance
Date to the Expected Final Payment Date that is scheduled to remain
outstanding for each Class of the Series 1999- __ Bonds. The table reflects
the Principal Balance at each Payment Date after giving effect to the
payments made on that date for each Class. In preparing the table, it has
been assumed, among other things, that:

1. the Series 1999- __ Bonds are issued on ________,

2. payments on the Series 1999- __ Bonds are made on each Payment Date,
commencing on ________,

3. the Quarterly Servicing Fee for the Series 1999- __ Bonds equals
_________,

4. there are no net earnings on amounts on deposit in the Collection
Account,

5. operating expenses, including all fees, costs and charges of the
Issuer and amounts owed by the Issuer to the Trustee, are paid in
the amount of $_____ in the aggregate for all Series on each
Payment Date, and

6. all ITC Collections are deposited in the Collection Account in
accordance with the PP&L's forecasts.

TABLE 2
EXPECTED AMORTIZATION SCHEDULE

Outstanding Class Principal Balance
Payment Date Series/Class [ ]
- ------------ --------------------------------------
, 1999
, 1999
, 1999
, 1999
, 2000
, 2000
, 2000
, 2000
, 2001
, 2001
, 2001
, 2001
[etc.]

Series 1999- __ Bond Principal Payments May Be Made Later than
Scheduled. There can be no assurance that the principal balance of any
Class of the Series 1999- __ Bonds will be reduced in the amounts indicated
in the foregoing table. The actual principal payments on the Class may be
made on a Payment Date later than indicated in the table. The Series 1999- __
Bonds will not be in default if not paid on the date specified in Table 2.

OPTIONAL REDEMPTION OF THE SERIES 1999- __ BONDS

[Optional redemption provisions, if any, to be provided at issuance.]

THE OVERCOLLATERALIZATION AND CAPITAL AMOUNT

The Overcollateralization Subaccount. The Overcollateralization
Amount for the Series 1999- __ Bonds is $_______ million. As shown in Table
3, the Intangible Transition Charges related to the Series 1999- __ Bonds
will be calculated at and periodically adjusted to a level that is designed
to collect the Overcollateralization Amount in equal amounts over the life
of the Series 1999- __ Bonds. The Scheduled Overcollateralization Levels, as
of the date of this Prospectus Supplement, for each Payment Date for all
Series of Transition Bonds are set forth below. See also "The Transition
Bonds--Credit Enhancement for the Transition Bonds" and "The Indenture-How
Funds in the General Subaccount Will be Allocated" in the Prospectus.

TABLE 3

Scheduled
Payment Date Overcollateralization Level

[To be provided at issuance.]

If amounts available in the General Subaccount and the Reserve Subaccount
are not sufficient on any Payment Date to make scheduled payments to the
Series 1999- __ Bondholders and to pay the fees, costs and charges specified
in the Indenture, the Trustee will draw on amounts in the
Overcollateralization Subaccount. See "The Transition Bonds--Credit
Enhancement for the Transition Bonds" and "The Indenture-How Funds in the
General Subaccount Will Be Allocated" in the Prospectus. The
Overcollateralization Amount has been set at a level sufficient to obtain
the ratings on the Series 1999- __ Bonds which are described above under
"Summary of Terms - Prospectus Supplement."

The Capital Subaccount. Upon the issuance of the Series 1999- __
Bonds, PP&L will deposit the Required Capital Amount for the Series 1999- __
Bonds of $ in the Capital Subaccount. If amounts available in the General
Subaccount, the Reserve Subaccount and the Overcollateralization Subaccount
are not sufficient on any Payment Date to make scheduled payments to the
Series 1999- __ Bondholders and to pay the fees, costs and charges specified
in the Indenture, the Trustee will draw on any amounts in the Capital
Subaccount in excess of $_____.
.
The Required Capital Amount has been set at a level sufficient to obtain
the ratings on the Series 1999- __ Bonds which are described above under
"Summary of Terms - Prospectus Supplement."

OTHER CREDIT ENHANCEMENT

The Reserve Subaccount for the Series 1999- __ Bonds. ITC Collections
available on any Payment Date in excess of the amount necessary to pay:

1. expenses of the Trustee and the Servicer and other fees, costs and
charges,

2. scheduled distributions of principal of and interest on each Series
of Transition Bonds payable on that Payment Date,

3. the amounts allocable to the Overcollateralization Subaccount, all
as described under "The Indenture--How Funds in the General
Subaccount Will Be Allocated" in the Prospectus and

4. any amount required to replenish the Capital Subaccount

will be allocated to the Reserve Subaccount. On a particular Payment Date,
amounts available in the General Subaccount may not be sufficient to make
scheduled distributions to the Series 1999- __ Bondholders and to pay expenses
of the Issuer, the Trustee, the Servicer and other fees, costs and charges
specified in the Indenture. If this occurs, the Trustee will draw on any
amounts in the Reserve Subaccount on that Payment Date.

[Any others to be provided at issuance.]

See "The Indenture--The Collection Account for the Transition Bonds" in the
Prospectus.

DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY

Intangible transition property is a property right created by the
Competition Act. Intangible transition property represents the irrevocable
right of an electric utility or assignee to receive through the imposition
of intangible transition charges amounts sufficient to recover all
of the following:

1. the transition or stranded costs of an electric utility approved by
the PUC for recovery through the issuance of transition bonds;

2. the costs of retiring existing debt or equity capital of the
electric utility or its holding company parent, including accrued
interest and acquisition or redemption premium, costs of
defeasance, and other related fees, costs and charges relating to,
through the issuance of transition bonds or the assignment, sale or
other transfer of intangible transition property; and

3. the costs incurred to issue, service or refinance the transition
bonds, including accrued interest and acquisition or redemption
premium, and other related fees, costs and charges, or to assign,
sell or otherwise transfer intangible transition property.

Each Customer Class is responsible for a fixed percentage of the Intangible
Transition Charges. The Intangible Transition Charges will be applied among
Rate Schedules within the three Customer Classes, and will be adjusted by
Customer Class. For more information, refer to "The Competition Act" and
"The PUC Order and the Intangible Transition Charges" in the Prospectus.

CUSTOMER CLASS DESCRIPTIONS:

PP&L's Customer Classes. Three Customer Classes make up PP&L's
customer base: Residential, Small Commercial and Industrial, and Large
Commercial and Industrial. Each Customer Class includes a number of Rate
Schedules. Customer Classes and Rate Schedules are created by PP&L and
approved by the PUC, and are subject to change. Any changes will be
reflected in any Adjustment Request filed with the PUC by PP&L. The current
Customer Classes and Rate Schedules were effective on or before November 1,
1997. For More information, refer to "The Servicer of the Intangible
Transition Property-PP&L's Customer Classes and Rate Schedules" in the
Prospectus.

PP&L WILL ASSESS INTANGIBLE TRANSITION CHARGES ON PARTICULAR CUSTOMERS

PP&L will assess Intangible Transition Charges on the bills of each
person that:

1. was a retail customer of electric service of PP&L located within
PP&L's service territory on January 1, 1997 or that became a
customer of electric service within PP&L's service territory after
January 1, 1997,

2. is still located within PP&L's service territory, and

3. is receiving distribution service from PP&L.

However, the Intangible Transition Charge is not payable by any person who
self-generates electricity with facilities that are not operated in
parallel with PP&L's transmission and distribution grid. The Intangible
Transition Charges have been allocated among the three Customer Classes as
well as the various Rate Schedules within each Customer Class. For a
description of the Customer Classes and the Rate Schedules within each
Customer Class, see "-PP&L's Intangible Transition Charges" below.

PP&L'S INTANGIBLE TRANSITION CHARGES

The Qualified Transition Expenses authorized in the PUC Order are
to be recovered from each Customer in each of PP&L's Customer Classes and
Rate Schedules. The Customer must pay Intangible Transition Charges on all
electricity delivered by PP&L, even if it elects to purchase electricity
from another supplier or if it elects to self-generate a portion of its
electricity needs. As long as the Customer is located within PP&L's retail
electric service area, it must pay Intangible Transition Charges, no matter
which entity is providing that Customer with electricity generation
service.

Recovery of Qualified Transition Expenses will be allocated among
PP&L's Customer Classes. This recovery will be based on the relative
generation-related charges borne by PP&L's Customer Classes through the
electric rates specified in PP&L's current electricity rate tariff. PP&L
will determine the amount to be allocated to each Rate Schedule within that
Customer Class. That amount will be expressed as a charge or charges for
each Rate Schedule. From this determination, PP&L will calculate the total
amount of Intangible Transition Charges required to be billed to each
Customer Class in order to generate ITC Collections sufficient to ensure
timely recovery of Qualified Transition Expenses. Those charges will be
reflected in each Customer's bill within each Rate Schedule. The charges
will vary among Customer Classes and among Rate Schedules within a Customer
Class.

The dollar amount of the charge on a Customer's bill is the
Intangible Transition Charge payable by the Customer. ITC Collections will
vary from projections because total electricity generation revenues are
affected by changes in usage, number of Customers, rate of delinquencies
and write-offs or other factors. PP&L will recalculate the charge applied
to Customers' bills to adjust for such variations on each Calculation Date.
See Tables 3, 4, 5, 6, 7, 8 and 9 under "The Servicer of the Intangible
Transition Property" in the Prospectus.

On each Remittance Date, the Servicer will remit all ITC
Collections and all proceeds of other Collateral received by the Servicer
to the Trustee under the Indenture for deposit in the Collection Account.
ITC Collections remitted by the Servicer to the Trustee will be deposited
into the General Subaccount. On each Payment Date, the Trustee will
allocate amounts in the General Subaccount to make the allocation described
under "The Indenture--How Funds in the General Subaccount Will Be
Allocated" in the Prospectus.

The Average Intangible Transition Charge for Customers. Initially,
the Intangible Transition Charges billed will be approximately $_________
per month for an average Customer in the Residential Customer Class. The
Intangible Transition Charges billed will be approximately $_________ per
month for an average Customer in the Small Commercial and Industrial
Customer Class. The Intangible Transition Charges billed will be
approximately $________ per month for an average Customer in the Large
Commercial and Industrial Customer Class. Intangible Transition Charges
will be collected from Customers in accordance with the design of existing
Rate Schedules which consist of "block structure" demand per kilowatt
and, in the case of most of the Rate Schedules, use per kilowatt hour
components. The Average ITC Rate tabulated below reflects the Rate Schedule
ITC Collections divided by the Rate Schedule use in kwh. The average
monthly bill for each PP&L Customer Class during 1998 was $______, $____
and $______, respectively. The Intangible Transition Charges are expressed
as a rate applied to each Customer's total bill or non-generation portion
of the bill, as applicable. The following projected average Intangible
Transition Charges will be imposed on Customers in each Customer Class, and
the Rate Schedules within each Customer Class, beginning on the Series
Issuance Date for the Series 1999- __ Bonds:

TABLE 4

PROJECTED AVERAGE INTANGIBLE TRANSITION CHARGES FOR THE PERIOD FROM __ TO
DECEMBER 31, 1999

RESIDENTIAL

Rate Schedule Average ITC Rate per kwh
------------- ------------------------

Rate Schedule RS
Rate Schedule RTS
Rate Schedule RTD

SMALL COMMERCIAL AND INDUSTRIAL

Rate Schedule Average ITC Rate per kwh
------------- ------------------------

Rate Schedule GS-1
Rate Schedule GS-3
Rate Schedule GH-1(R)
Rate Schedule GH-2(R)
Rate Schedule IS-1
Rate Schedule SA
Rate Schedule SM
Rate Schedule SHS
Rate Schedule SE
Rate Schedule SI-1(R)
Rate Schedule TS
Rate Schedule BL

LARGE COMMERCIAL AND INDUSTRIAL

Rate Schedule Average ITC Rate per kwh
------------- ------------------------

Rate Schedule LP-4
Rate Schedule IS-P
Rate Schedule LP-5
Rate Schedule LP-6
Rate Schedule IS-T
Rate Schedule LPEP
Rate Schedule ISM
Rate Schedule Standby

PP&L MAY OBTAIN ADJUSTMENTS TO THE INTANGIBLE TRANSITION CHARGES

The Servicer on behalf of the Issuer is required to seek
adjustments to the Intangible Transition Charges on each Calculation Date
as described under "The PUC Order and the Intangible Transition Charges" in
the Prospectus.

The PUC's Intangible Transition Charge Adjustment Process. Actual
ITC Collections are intended to be neither more nor less than the amount
necessary to pay the principal of the Transition Bonds of each Series in
accordance with the Expected Amortization Schedule, to pay interest on each
Series and to fund the related expenses and reserves. In order to enhance
the likelihood that the appropriate amount of Intangible Transition Charges
will be collected, the Servicing Agreement requires the Servicer to seek,
and the Competition Act and the PUC Order require the PUC to approve,
annual adjustments to the Intangible Transition Charges on January 1 of
each year. These adjustments will be based on actual ITC Collections and
updated assumptions by the Servicer as to projected future usage of
electricity by Customers, expected delinquencies and write-offs and future
expenses relating to the Series 1999- __ Bonds. In addition, the PUC Order
provides that, commencing twelve months prior to the Expected Final Payment
Date for each Series or Class of Transition Bonds, adjustments may be made
quarterly or monthly. The final Adjustment Date for the Series 1999- __ Bonds
will be ___. For more information, refer to "The Servicing Agreement-The PUC's
Intangible Transition Cost Adjustment Process" in the Prospectus.

The following table reflects information regarding the adjustments
to the Intangible Transition Charges assessed on each Customer Class and
each Rate Schedule that have been implemented since the first Adjustment
Date:

[To be provided at issuance of subsequent Series, if applicable.]

DESCRIPTION OF PP&L'S BUSINESS

The following is information which supplements that provided under
the heading "PP&L" in the Prospectus. For a more complete discussion of the
Servicer, see "PP&L" and "The Servicer of the Intangible Transition
Property" in the Prospectus.

PP&L'S OPERATIONS

PP&L is an operating electric utility, incorporated under the laws
of the Commonwealth of Pennsylvania in 1920. PP&L is the primary subsidiary
of PP&L Resources, a holding company formed in 1995. The assets of PP&L
equal approximately 92% of PP&L Resources's consolidated assets. The
financial condition and results of operation of PP&L are currently the
principal factors affecting the financial condition and results of
operations of PP&L Resources.

PP&L reported net income of $________ on revenue of $_________ for
the [quarter][year] ended __________, 1999 as compared with net income of
$________ on revenue of $________ for the [quarter][year] ended _________,
1998.

Actual usage is dependent on factors such as weather conditions,
demographic changes, and economic conditions. See "Risk Factors-Unusual
Nature of Intangible Transition Property" in the Prospectus. The total
annual usage adjusted for weather effects has increased for the past two
years. The compounded annual growth rate in the usage, adjusted for weather
effects, by all Customer Classes from 1988 through 1998 was __%. There can
be no assurance that future usage growth rates for PP&L will be similar to
historical experience.

The Percentage Concentration Within PP&L's Large Commercial and
Industrial Customers. For the period ended December 31, 1998, the largest
Customer represented approximately 3.6%, and the ten largest Customers
represented approximately 20.5%, of PP&L's Large Commercial and Industrial
Customer Class revenues. There are no material concentrations in either of
the other two Customer Classes.

There can be no assurance that current Customers will remain
Customers or that the levels of Customer concentration in the future will
be similar to those set forth above.

During the three years ending December 31, 1998, the delinquency
experience for all Customers has improved substantially due to more
aggressive collection efforts. However, these efforts have also increased
the amount of write-offs, because these efforts led PP&L to write off
delinquent accounts at a faster rate. The amount of write-offs is expected,
but is not assured, to decline in coming years due to the implementation of
a residential security deposit policy which is expected to be completed by
the end of 1999. PP&L does not expect, but cannot assure, that the
delinquency or write-off experience with respect to ITC Collections will
differ substantially from its delinquency and write-off history in
collecting electricity usage charges from its Customers.

INFORMATION THAT IS AVAILABLE TO THE SERIES 1999- __ BONDHOLDERS

The Issuer Will File Information With the SEC. The Issuer will file
with the SEC all periodic reports as are required by the Exchange Act, and
the rules, regulations or orders of the SEC thereunder. Copies of the
Registration Statement and exhibits thereto may be obtained at the
locations specified in the Prospectus under "PP&L" at prescribed rates.
Information filed with the SEC can also be inspected at the SEC's site on
the World Wide Web at http://www.sec.gov. The Issuer may discontinue filing
periodic reports under the Exchange Act at the beginning of the fiscal year
following the issuance of Transition Bonds of any Series if there are fewer
than 300 holders of Transition Bonds of that Series.

Disclaimers About the Prospectus. No dealer, salesperson or other
person has been authorized to give any information or to make any
representations other than those contained in this Prospectus Supplement
and the Prospectus and, if given or made, the information or
representations must not be relied upon as having been authorized by the
Issuer, PP&L, the Underwriters or any dealer, salesperson or other person.
Neither the delivery of this Prospectus Supplement and the Prospectus nor
any sale made hereunder shall, under any circumstances, create an
implication that information herein or therein is correct as of any time
since the date of this Prospectus Supplement or the Prospectus. This
Prospectus Supplement and the Prospectus do not constitute an offer to
sell, or a solicitation of an offer to buy any security in any jurisdiction
in which it is unlawful to make any similar offer or solicitation.

UNDERWRITING THE SERIES 1999- __ BONDS

Subject to the terms and conditions set forth in the Underwriting
Agreement among the Issuer, PP&L and the Underwriters, for whom Morgan
Stanley Dean Witter is acting as the representative, the Issuer has agreed
to sell to the Underwriters, and the Underwriters have severally agreed to
purchase, the principal amount of Series 1999- __ Bonds set forth opposite
each Underwriter's name below:

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and to pay for all of the Series 1999- __
Bonds offered hereby, if any are taken.

The Underwriters' Sales Price for the Series 1999- __ Bonds. The
Underwriters propose to offer the Series 1999- __ Bonds in part directly to
retail purchasers at the initial public offering prices set forth on the
cover page of this Prospectus Supplement, and in part to some securities
dealers at a price less a concession not in excess of percent of the
principal amount of the Series 1999- __ Class ___ Bonds, percent of the
principal amount of the Series 1999- __ Class ___ Bonds and percent of the
principal amount of the Series 1999- __ Class ___ Bonds. The Underwriters
may allow and the dealers may reallow a concession to some brokers and
dealers not in excess of percent of the principal amount of the Series
1999- __ Class ___ Bonds, percent of the principal amount of the Series
1999- __ Class ___ Bonds and percent of the principal amount of the Series
1999- __ Class ___ Bonds. After the Series 1999- __ Bonds are released for
sale to the public, the offering price and other selling terms may from
time to time be varied by the Underwriters.

No Assurance as to Resale Price or Resale Liquidity for the Series
1999- __ Bonds. The Series 1999- __ Bonds are a new issue of securities with no
established trading market. The Series 1999- __ Bonds will not be listed on
any securities exchange. The Issuer has been advised by the Underwriters
that they intend to make a market in the Series 1999- __ Bonds but are not
obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market
for the Series 1999- __ Bonds.

Various Types of Underwriter Transactions Which May Affect the
Price of the Series 1999- __ Bonds. The Underwriters may engage in
overallotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids with respect to the Series 1999- __ Bonds in
accordance with Regulation M under the Securities Exchange Act of 1934.
Overallotment transactions involve syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the Series 1999- __ Bonds so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Series 1999- __ Bonds in the open
market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the Underwriters to reclaim
a selling concession from a syndicate member when the Series 1999- __ Bonds
originally sold by the syndicate member are purchased in a syndicate
covering transaction. These overallotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids may cause
the prices of the Series 1999- __ Bonds to be higher than they would
otherwise be in the absence of these transactions. None of the Seller,
PP&L, the Issuer or the Trustee or any of the Underwriters represent that
the Underwriters will engage in any of these transactions or that these
transactions, once commenced, will not be discontinued without notice at
any time.

In the ordinary course of business, each Underwriter and its
affiliates have engaged and may engage in investment banking and/or
commercial banking transactions with the Issuer and its affiliates,
including PP&L. In addition, each Underwriter may from time to time take
positions in the Series 1999- __ Bonds.

Under the terms of the Underwriting Agreement, the Issuer and PP&L
have agreed to reimburse the Underwriters for some expenses.

The Issuer and PP&L have agreed to indemnify the several
Underwriters against some liabilities, including liabilities under the
Securities Act.

RATINGS FOR THE SERIES 1999- __ BONDS

It is a condition of any Underwriter's obligation to purchase the
Series 1999- __ Bonds that the Series 1999- __ Class ___ Bonds be rated "__" by
S&P, "__" by Moody's and "__" by Fitch, the Series 1999- __ Class ___ Bonds be
rated "__" by S&P, "__" by Moody's and "__" by Fitch and the Series 1999-
__ Class ___ Bonds be rated "__" S&P, "__" by Moody's and "__" by Fitch, which,
in each case, is in one of the four highest rating categories of the Rating
Agency.

Limitations of Security Ratings. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning Rating Agency. No
person is obligated to maintain the rating on any Series 1999- __ Bond, and,
accordingly, there can be no assurance that the ratings assigned to any
Class of Series 1999- __ Bonds upon initial issuance will not be revised or
withdrawn by a Rating Agency at any time thereafter. If a rating of any
Class of Series 1999- __ Bonds is revised or withdrawn, the liquidity of the
Class of Series 1999- __ Bonds may be adversely affected. In general, ratings
address credit risk and do not represent any assessment of any particular
rate of principal payments on the Series 1999- __ Bonds other than payment in
full of each Class of Series 1999- __ Bonds by the applicable Final Maturity
Date.

Prospectus

PP&L Transition Bond Company, LLC, Issuer

PP&L, Inc., Servicer

Transition Bonds

CONSIDER CAREFULLY THE ISSUER
THE RISK FACTORS
BEGINNING ON PAGE o may periodically issue transition bonds in one
13 OF THIS or more series with one or more classes;
PROSPECTUS.
o will own:
These securities are
backed by an o intangible transition property, which is the
intangible asset and right, created by Pennsylvania's Competition
issued by an issuer Act, to collect intangible transition
that has no assets charges in amounts designed to be sufficient
other than the to repay the transition bonds, to pay other
property described expenses specified in the Indenture and to
in this Prospectus. fund the trust accounts
These securities are
not obligations of o other property described in this Prospectus.
PP&L or any
affiliate other than THE TRANSITION BONDS
the issuer.
o will be payable only from assets of the Issuer;
This Prospectus
may be used to o will be supported by trust accounts held by
offer and sell a the trustee for the transition bonds, and,
series of transition if so stated in the applicable prospectus
bonds only if supplement, other credit enhancement; and
accompanied by the
Prospectus o will be issued in series, each of which the
Supplement for that issuer may issue without the consent of
series. existing transition bondholders.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES,
NOR HAVE THEY DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is ___________.

TABLE OF CONTENTS

Page

IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS............6

SUMMARY OF TERMS - PROSPECTUS..............................................7

RISK FACTORS..............................................................13
Legal, Legislative or Regulatory Action That May Adversely Affect
Your Investment.......................................................13
Unusual Nature of Intangible Transition Property........................14
Servicing Risks.........................................................17
The Risks Associated With Potential Bankruptcy Proceedings..............20
Other Risks Associated With An Investment In The Transition Bonds.......22

FORWARD-LOOKING INFORMATION...............................................26

PP&L......................................................................29

THE COMPETITION ACT.......................................................30
The Competition Act's General Effect on the Electric Utility Industry
in Pennsylvania.......................................................30
Recovery of Stranded Costs for PP&L and Other Pennsylvania Utilities....30
PP&L and Other Utilities May Securitize Stranded Costs..................31
Only a Pennsylvania Utility May Sue for Nonpayment of Intangible
Transition Charges....................................................34

PP&L'S RESTRUCTURING PLAN.................................................34
The History of PP&L's Restructuring Plan................................34
The PUC Order...........................................................35
How the Electricity Generation Service Provider of Last Resort Will
Be Determined.........................................................38
Other Provisions of PP&L's Restructuring Plan...........................39

THE PUC ORDER AND THE INTANGIBLE TRANSITION CHARGES.......................39
The PUC Order...........................................................39
PP&L's Intangible Transition Charges....................................42
Customers Within PP&L's Service Territory May Choose How Their
Electricity Consumption is Billed.....................................45
PP&L's Universal Service Program for Low-Income Customers...............46

PRIOR LEGAL CHALLENGES TO THE COMPETITION ACT OR THE PUC ORDER............47
Litigation Relevant to the Competition Act..............................47
Legislative Activity....................................................49
Potential Unexpected Regulatory Action by the PUC.......................50

THE SERVICER OF THE INTANGIBLE TRANSITION PROPERTY........................51
PP&L ................................................................51
PP&L Resources..........................................................52
PP&L's Customer Classes and Rate Schedules..............................52
How PP&L Forecasts the Number of Customers and the Amount of
Electricity Usage.....................................................65
PP&L's Billing Process..................................................68
PP&L Maintains Limited Information on its Customers'
Creditworthiness......................................................69
PP&L's Procedures for Collecting Intangible Transition Charges from
Electric Generation Suppliers and Other Third Party Billers...........72
PP&L's Efforts to Deal With the Year 2000 Computer Issue................73

PP&L TRANSITION BOND COMPANY LLC, THE ISSUER..............................76

HOW THE ISSUER WILL USE THE PROCEEDS OF THE TRANSITION BONDS..............79

INCORPORATION OF DOCUMENTS BY REFERENCE...................................79

THE TRANSITION BONDS......................................................80
General Terms of the Transition Bonds...................................82
Payments of Interest and Principal on the Transition Bonds..............82
Redemption of the Transition Bonds......................................83
Credit Enhancement for the Transition Bonds.............................83
Transition Bonds Will Be Issued in Book-Entry Form......................85
Definitive Transition Bonds.............................................89

WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE TRANSITION BONDS...............................................90

THE CONTRIBUTION AGREEMENT................................................91
Assignment of the Intangible Transition Property and Related Rights
to the Seller.........................................................91
PP&L's Representations and Warranties...................................91
PP&L's Covenants........................................................97
PP&L's Obligation to Indemnify the Issuer and the Trustee and
to Take Legal Action.................................................100
Successors to PP&L.....................................................101
The Treatment of the Assignment of Intangible Transition Property......102

THE SALE AGREEMENT.......................................................102
CEP Securities' Sale and Assignment of Intangible Transition Property
and Rights Under the Contribution Agreement..........................102

THE SERVICING AGREEMENT..................................................104
PP&L's Servicing Procedures............................................104
Potential Limitations to Collecting Intangible Transition Charges......106
The PUC's Intangible Transition Charge Adjustment Process..............107
PP&L May Provide a Letter of Credit to Ensure Remittances on
Each Remittance Date.................................................109
PP&L's Compensation for Its Role as Servicer and Its Release
of Other Parties.....................................................109
PP&L's Duties as Servicer..............................................109
PP&L's Representations and Warranties as Servicer......................110
PP&L, as Servicer, Will Indemnify the Issuer and Other Related
Entities.............................................................111
PP&L, as Servicer, Will Provide Statements to the Issuer
and to the Trustee...................................................112
PP&L to Provide Compliance Reports Concerning the
Servicing Agreement..................................................113
Matters Regarding PP&L as Servicer.....................................113
Events Constituting a Default by PP&L in Its Role as Servicer..........114
The Trustee's Rights If PP&L Defaults in Its Role as Servicer..........115
The Obligations of a Servicer That Succeeds PP&L.......................115

THE INDENTURE............................................................116
The Security for the Transition Bonds..................................116
Transition Bonds May Be Issued in Various Series or Classes............117
The Collection Account for the Transition Bonds........................118
How Funds in the General Subaccount Will Be Allocated..................122
Reports to Holders of the Transition Bonds.............................125
The Issuer and the Trustee May Modify the Indenture....................125
What Constitutes an Event of Default on the Transition Bonds...........129
Covenants of the Issuer................................................132
Access to the List of Holders of the Transition Bonds..................134
The Issuer Must File an Annual Compliance Statement....................134
The Trustee Must Provide an Annual Report to All Transition
Bondholders..........................................................134
What Will Trigger Satisfaction and Discharge of the Indenture..........135
The Issuer's Legal Defeasance and Covenant Defeasance Options..........135
The Trustee............................................................137

HOW A BANKRUPTCY OF PP&L OR THE
SERVICER MAY AFFECT YOUR INVESTMENT...................................138

MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BONDS.....................141
Income Tax Status of the Transition Bonds..............................141
Definition of Non U.S. Holder..........................................141
Taxation of Foreign Transition Bondholders.............................142
Material Commonwealth of Pennsylvania Tax Matters......................144

ERISA CONSIDERATIONS.....................................................145
Plan Asset Issues For an Investment in the Transition Bonds............145
Prohibited Transaction Exemptions......................................146
Special Considerations Applicable to Insurance Company General
Accounts.............................................................147
General Investment Considerations For Prospective Plan Investors
in the Transition Bonds..............................................148

PLAN OF DISTRIBUTION FOR THE TRANSITION BONDS............................149

RATINGS FOR THE TRANSITION BONDS.........................................150

VARIOUS LEGAL MATTERS RELATING TO THE TRANSITION BONDS...................150

IMPORTANT NOTICE
ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS

You should rely only on information on the Transition Bonds
provided in this Prospectus and in the related Prospectus Supplement. We
have not authorized anyone to provide you with different or additional
information.

We include cross-references to sections where you can find
additional information. Check the table of contents to locate these
sections.

The information in this Prospectus and a Prospectus Supplement may
not be current as of any date after the date of the Prospectus or
Prospectus Supplement.

This Prospectus and any related Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any
security in any jurisdiction in which it is unlawful to make
this offer or solicitation.

You can find a Glossary of the capitalized terms used in this
Prospectus and in the Prospectus Supplement in Appendix A to this
Prospectus.

SUMMARY OF TERMS - PROSPECTUS

This summary contains a brief description of the transition bonds
that applies to all series of transition bonds issued under this
prospectus. Information that relates to a specific series of transition
bonds can be found in the prospectus supplement related to that series. You
will find a detailed description of the terms of the offering of transition
bonds following this summary.

CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 13 OF THIS
PROSPECTUS.

The Issuer: PP&L Transition Bond Company LLC, a
Delaware limited liability company
wholly owned by PP&L. PP&L is an
operating electric utility serving
approximately 1.3 million customers in
central and eastern Pennsylvania. The
issuer was formed solely to purchase
intangible transition property and to
issue one or more series of transition
bonds secured by the intangible
transition property.

Issuer's Address: Two North Ninth Street; Allentown, PA 18101

Issuer's Telephone Number: (610) 774-
Seller of the Intangible CEP Securities, an indirect wholly owned
Transition Property to the subsidiary of PP&L. On May 13, 1999, PP&L
Issuer: assigned its intangible transition
property to CEP Securities pursuant to
a contribution agreement. On the issue
date for each series, except in the
event of a refunding of outstanding
transition bonds, CEP Securities will
sell intangible transition property and
assign the contribution agreement to
the issuer pursuant to a sale agreement
between CEP Securities and the issuer.
CEP Securities is a special purpose
vehicle which is not authorized to
conduct any business other than
accepting the assignment of intangible
transition property from PP&L, and
selling this asset to the issuer.

Seller's Address: _______________________________

Seller's Telephone Number: _______________________________

Servicer of the Intangible PP&L, acting as servicer, will service the
Transition Property: transferred intangible transition property
pursuant to a servicing agreement
between the Issuer and the servicer.

Trustee: The Bank of New York

The Assets of the Issuer: The issuer will own:

o the intangible transition property
transferred to the Issuer (See "The
Contribution Agreement--Assignment
of the Intangible Transition
Property and Related Rights to the
Seller" in this Prospectus);

o trust accounts held by the trustee; and

o other credit enhancement acquired
or held to ensure payment of the
transition bonds.

THE COLLATERAL

The issuer will own intangible transition property, a property right
created under the competition act. In general terms, the intangible
transition property represents the right to recover, through intangible
transition charges payable by retail consumers of electricity within PP&L's
service territory who access PP&L's transmission and distribution system,

o the principal amount of the transition bonds, and

o the interest, fees, costs, charges, credit enhancement and premiums, if
any, associated with the transition bonds.

On May 13, 1999, PP&L assigned its intangible transition property to the
seller pursuant to a contribution agreement. The seller will sell up to
$2.85 billion of intangible transition property to the issuer. PP&L, as
servicer of the intangible transition property, will collect the intangible
transition charges from customers within its service territory on behalf of
the issuer. Other entities may be required to collect intangible transition
charges from customers within PP&L's service territory and pay the amounts
collected to the servicer. See "The Servicer of the Intangible Transition
Property" in this prospectus.

PAYMENT SOURCES

On each payment date, the trustee will pay amounts owed on all outstanding
series of transition bonds from:

o amounts collected by the servicer for the issuer with respect to
intangible transition charges during the prior quarter; and

o amounts available from trust accounts held by the trustee. These
accounts are described in greater detail under "The Indenture-The
Collection Account for the Transition Bonds" in this prospectus.

PRIORITY OF DISTRIBUTIONS

On each payment date specified in the related prospectus supplement, the
trustee will pay or allocate remittances by the servicer and all investment
earnings on the trust accounts, to the extent funds are available in the
collection account, in the following order of priority:

(1) payment of the trustee's fee, which will be a fixed fee in an amount
specified in the indenture;

(2) payment of fees to the independent managers of the issuer, which will
be fixed in an amount to be agreed upon by the issuer and the independent
managers;

(3) payment of the servicing fee, which will be a fixed fee in an amount
specified in the servicing agreement, to the servicer;

(4) payment of the administration fee, which will be a fixed fee in an
amount specified in the administration agreement between the
issuer and PP&L;

(5) payment of current operating expenses of the issuer, up to an
aggregate of [$ ] for each payment date for all series;

(6) payment of the interest then due on the transition bonds, including
payment of any amount payable to the swap counterparty on any interest
rate swap;

(7) payment of the principal then legally required to be paid on the
transition bonds;

(8) payment of the principal then scheduled to be paid on the transition
bonds;

(9) payment of any remaining unpaid operating expenses then owed by the
issuer;

(10) replenishment of any shortfalls in the capital subaccount;

(11) allocation of any required amount to the overcollateralization
subaccount;

(12) release of an amount equal to investment earnings on amounts in the
capital subaccount to the issuer;

(13) allocation of the remainder, if any, to the reserve subaccount.

The priority of distributions for ITC collections, as well as available
amounts in the subaccounts, are described in more detail in "The
Indenture-How Funds in the General Subaccount Will Be Distributed" in this
prospectus, as well as in the summary for the prospectus supplement for
each series of transition bonds. A diagram depicting how the intangible
transition charges will be allocated, may be found on page 27 of this
prospectus.

CREDIT ENHANCEMENT AND ACCOUNTS

Unless otherwise specified in any prospectus supplement, credit enhancement
for the transition bonds will be as follows:

o The servicer will make adjustments to the intangible transition charges
to make up for any shortfall or excess in intangible transition charge
collections, upon approval of these adjustments by the Pennsylvania
PUC. The servicer can make these changes, once a year, except during
the twelve months prior to the expected final payment date for each
series or class of transition bonds, when it can make these adjustments
as frequently as monthly. See "The PUC Order and the Intangible
Transition Charges - The PUC Order" in this Prospectus.

o Collection Account - Under the indenture, the trustee will hold a
single collection account, divided into various subaccounts, for all
series of transition bonds. The primary subaccounts for credit
enhancement purposes are:

1) Overcollateralization Subaccount -The prospectus supplement for each
series of transition bonds will specify a funding level for the
overcollateralization subaccount. This funding level will equal the
percentage of the principal amount of that series stated in the
related prospectus supplement. That amount will be funded over the
term of the transition bonds.

2) Capital Subaccount - An amount specified in the prospectus
supplement for each series of transition bonds will be deposited
into the capital subaccount on the date of issuance of that series.
Any shortfall in the aggregate capital subaccount for an existing
series will be replenished before a new series may be issued.

3) Reserve Subaccount - Any excess amount of intangible transition
charge collections and investment earnings will be held in the
reserve subaccount.

Each of the overcollateralization subaccount, the capital subaccount and
the reserve subaccount will be available to make payments on all series of
transition bonds on each payment date.

Additional credit enhancement for any series may include surety bonds or
letters of credit or other forms of credit enhancement. Any additional
forms of credit enhancement for each series will be specified in the
related prospectus supplement. Credit enhancement for the transition bonds
is intended to protect you against losses or delays in scheduled payments
on your transition bonds.

STATE PLEDGE

The Commonwealth of Pennsylvania has pledged that it will not limit, alter,
impair or reduce the value of the intangible transition property or the
intangible transition charges until the transition bonds are fully repaid
or discharged. However, the Commonwealth does not have to adhere to its
pledge if adequate compensation is provided to the transition bondholders.
The competition act does not define adequate compensation. Thus, the amount
of this compensation may not be sufficient to protect your transition bond
investment.

OPTIONAL REDEMPTION

A prospectus supplement may provide for redemption of a series of
transition bonds at the option of the issuer at a redemption price not less
than the outstanding principal of and accrued interest on the transition
bonds.

PAYMENT AND RECORD DATES

The payment and record dates for each series of transition bonds will be
listed in the corresponding prospectus supplement.

EXPECTED FINAL PAYMENT DATES AND FINAL MATURITY DATES

Failure to pay the entire outstanding amount of the transition bonds of any
class or series by the expected final payment date will not result in a
default with respect to that class or series until the final maturity date
for the class or series. The expected final payment date and the final
maturity date of each series and class of transition bonds will be
specified in the corresponding prospectus supplement.

REPORTS TO TRANSITION BONDHOLDERS

Pursuant to the indenture, the trustee will provide to the holders of
record of the transition bonds regular reports prepared by the servicer
containing information concerning, among other things, the issuer and the
collateral. Unless and until transition bonds are issued in definitive
form, the reports will be provided to Cede. The reports will be available
to transition bondholders upon request to the trustee or the servicer. The
financial information provided to transition bondholders will not be
examined and reported upon by an independent public accountant. In
addition, an independent public accountant will not provide an opinion
thereon. See "The Indenture --The Trustee Must Provide an Annual Report to
All Transition Bondholders" in this prospectus.

TAX STATUS

The issuer and PP&L have received a private letter ruling from the Internal
Revenue Service that the transition bonds will be characterized as debt of
PP&L. In addition, Morgan, Lewis & Bockius LLP has, in reliance on that
ruling, rendered its opinion to the issuer and PP&L that the transition
bonds will be characterized as debt of PP&L for Pennsylvania income tax
purposes.

If you purchase a transition bond, you agree to treat it as debt of PP&L
for U.S. federal, state and local tax purposes.

ERISA CONSIDERATIONS

Pension plans and other investors subject to ERISA may acquire the
transition bonds subject to specified conditions. The acquisition and
holding of the transition bonds could be treated as an indirect prohibited
transaction under ERISA. Accordingly, by purchasing the transition bonds,
each investor purchasing on behalf of a pension plan will be deemed to
certify that the purchase and subsequent holding of the transition bonds
would be exempt from the prohibited transaction rules of ERISA. For further
information regarding the application of ERISA, see "ERISA Considerations"
in this prospectus.

RISK FACTORS

You should consider the following risk factors in deciding whether
to purchase transition bonds.

LEGAL, LEGISLATIVE OR REGULATORY ACTION THAT MAY ADVERSELY
AFFECT YOUR INVESTMENT

LEGAL ACTION MAY The intangible transition property is the
REDUCE THE VALUE OF creation of the Competition Act and an order
YOUR INVESTMENT issued by the PUC. A court decision or a
federal or state law might seek to overturn
either the Competition Act or the PUC's
order. If this occurs, you may lose some or
all of your investment or you may experience
delays in recovering your investment.

Three lawsuits have challenged the validity
of the Competition Act. Two of these alleged
that the Competition Act was not validly
enacted by the Pennsylvania legislature. A
Pennsylvania court has rejected these claims.
The court's decisions in those cases have not
been appealed and the period for filing
appeals has lapsed.

The third lawsuit asserted that the
Competition Act provisions that allowed for
the recovery of intangible transition charges
violated the Commerce Clause of the U.S.
Constitution. The Pennsylvania courts
rejected that claim, and a petition that the
U.S. Supreme Court hear the case was denied.
For a more complete description of relevant
litigation, see "Prior Legal Activity
Challenging the Competition Act or the PUC
Order-Litigation Relevant to the Competition
Act" in this prospectus.

In addition to any future direct challenges,
a court might overturn a similar statute in
another state. Such a decision would not
automatically invalidate the Competition Act
or the related PUC Order, but it might give
rise to a challenge to the Competition Act.
Therefore, legal activity in other states may
indirectly affect the value of your
investment. See "Prior Legal Activity
Challenging The Competition Act or The PUC
Order" in this prospectus.

FUTURE LEGISLATIVE ACTION The value of your investment may decline due to
MAY REDUCE THE VALUE OF legislative action. For example:
YOUR INVESTMENT
o The Pennsylvania legislature may repeal
the Competition Act in order to serve a
significant public purpose such as
protecting the public health and
safety.

o The Pennsylvania legislature may limit
or alter the intangible transition
property so as to reduce its value if
the legislature provides you with an
amount deemed to be adequate
compensation. However, that
compensation ultimately may not be
sufficient for you to recover fully
your investment.

o Congress or a federal agency may decide
that it can preempt the Pennsylvania
legislature and pass a law or adopt a
rule or regulation prohibiting or
limiting the collection of intangible
transition charges.

PP&L will not indemnify you for any changes
in the law that may affect the value of your
transition bonds. See "Prior Legal Activity
Challenging the Competition Act or the PUC
Order-Legislative Activity" in this
prospectus.

THE PUC MAY TAKE Apart from key items set forth in the PUC
ACTIONS WHICH MAY Order, which are stated to be irrevocable,
REDUCE THE VALUE OF the PUC retains the power to adopt, revise or
YOUR INVESTMENT rescind rules or regulations affecting PP&L
or a successor utility. PP&L has agreed to
resist any PUC rule, regulation or decision
that would reduce the value of the intangible
transition property. However, PP&L may not be
successful in its efforts. Thus, future PUC
rules, regulations or decisions may
materially reduce the value of your
investment. See "Prior Legal Activity
Challenging the Competition Act or the PUC
Order-Potential Unexpected Regulatory Action
by the PUC" in this prospectus.

UNUSUAL NATURE OF INTANGIBLE TRANSITION PROPERTY

A PLANT SHUTDOWN BY Under the Competition Act, the Issuer's
PP&L MAY REDUCE THE authority to collect intangible transition
VALUE OF YOUR charges may depend on the continued operation
INVESTMENT of generation facilities for which the PUC
has awarded stranded cost recovery to PP&L.
Failure to operate those facilities at
reasonable availability levels might
adversely affect the Issuer's right to
collect intangible transition charges. This
may materially reduce the value of your
investment. See "The Competition
Act--Recovery of Stranded Costs for PP&L and
Other Pennsylvania Utilities" in this
prospectus.

REVENUES TO PAY The primary source of funds to pay principal
PRINCIPAL AND INTEREST and interest on transition bonds and other
MAY BE REDUCED IF qualified transition expenses is revenue
CUSTOMERS REDUCE received through intangible transition
ENERGY CONSUMPTION OR charges. Those funds may be reduced for
INSTALL ALTERNATIVE various reasons, including reduction in
SOURCES OF ENERGY energy consumption or the installation of
alternative sources of energy by customers.
The Competition Act addresses these
possibilities by providing for the
reconciliation of intangible transition
charges on a periodic basis. However, these
reconciliations may not be adequate if:

o PP&L's projections are inaccurate;

o PP&L requests insufficient adjustments;

o the requested adjustments would cause
PP&L's rates for electricity generation
to exceed the electricity generation
rate cap; or

o the PUC does not approve PP&L's
requested adjustments in a full or
timely fashion.

ADJUSTMENTS TO PP&L, as servicer, is required to request
INTANGIBLE TRANSITION from the PUC, on behalf of the Issuer,
CHARGES MAY NOT BE periodic adjustments of the intangible
SUFFICIENT TO PROTECT transition charges. These adjustments are
YOUR INVESTMENT intended to provide, among other things, for
timely payment of the transition bonds.
However, the frequency of these adjustments
is limited. PP&L will base its adjustment
requests on any shortfalls during the prior
adjustment period and on projections of
future electricity use and the customers'
ability to pay their electric bills. However,
unforeseen events, such as weather, changes
in economic conditions or market changes due
to increased competition, may make
projections inaccurate. Moreover, PP&L might
request adjustments that are insufficient to
provide for timely payment of the transition
bonds. In addition, the PUC may not approve
PP&L's requests in a timely fashion. One or
more of these factors may prevent PP&L from
collecting a sufficient amount of intangible
transition charges to repay the transition
bonds on a timely basis. This may materially
reduce the value of your investment. See "The
Servicing Agreement" in this prospectus.

ADJUSTMENTS TO INTANGIBLE The customers who will be responsible for
TRANSITION CHARGES BY RATE paying intangible transition charges are
SCHEDULE MAY RESULT IN divided into 23 rate schedules. These rate
INSUFFICIENT COLLECTIONS schedules are grouped among three customer
classes. Intangible transition charges will
be assessed by rate schedule within each
customer class. Adjustments to the intangible
transition charges will also be made to each
rate schedule within each customer class. A
shortfall in collection in one rate schedule
must be made up by adjustments to the other
rate schedules within that customer class.
However, shortfalls in a customer class may
not be corrected by making adjustments to
rate schedules in any other customer class.
Some rate schedules in a particular class
have a significantly smaller number of
customers than other rate schedules in that
customer class. If customers in a rate
schedule fail to pay intangible transition
charges, the servicer may have to
substantially increase the intangible
transition charges for the remaining
customers in that rate schedule and the other
rate schedules in that customer class. The
servicer may also have to take this action if
consumers representing a significant
percentage of a rate schedule cease to be
customers. Such increases could lead to
further failures by the remaining customers
in that customer class to pay intangible
transition charges, thereby increasing the
risk of a shortfall in funds to pay the
transition bonds.

ONE CUSTOMER CLASS The Competition Act and the PUC Order do not
CANNOT COMPENSATE FOR permit costs to be shifted among customer
THE FAILURE TO COLLECT classes. As a result, a shortfall in
INTANGIBLE TRANSITION collections of intangible transition charges
CHARGES FROM ANOTHER in one customer class cannot be made up by
CUSTOMER CLASS adjustments of intangible transition charges
in the other customer classes. See "The
Competition Act" in this prospectus.

THE AMOUNT OF The Competition Act and the PUC Order set a
INTANGIBLE TRANSITION cap on intangible transition charge
CHARGES MAY NOT EXCEED adjustments through December 31, 2009. This
A STATUTORY CAP cap applies to each rate schedule within each
customer class separately. If there is a
severe or persistent shortfall in collections
of intangible transition charges in any rate
schedule, the rate cap applicable to that
rate schedule may prevent the servicer from
adjusting intangible transition charges for
that rate schedule. If this occurs, the
servicer would have to adjust intangible
transition charges for the remaining rate
schedules within that customer class. These
adjustments may result in the assessment of
intangible transition charges on the
remaining rate schedules at a level that is
limited by their rate caps. This could reduce
the amount or the rate of collections of
intangible transition charges, which may
materially and adversely affect the value of
your transition bond investment. See "The
Competition Act--The Competition Act's
General Effect on the Electric Utility
Industry in Pennsylvania" in this prospectus.

THE ISSUER MAY NOT PP&L may not charge intangible transition
CHARGE INTANGIBLE charges for electricity usage after December
TRANSITION CHARGES AFTER 31, 2009. Amounts collected from intangible
DECEMBER 31, 2009 transition charges imposed for electricity
usage through December 31, 2009, or from
credit enhancement funds, may not be
sufficient to repay the transition bonds in
full. If that is the case, no other funds
will be available to pay the unpaid balance
due on the transition bonds. See "The PUC
Order and the Intangible Transition
Charges--PP&L's Intangible Transition
Charges" in this prospectus.

SERVICING RISKS

YOUR INVESTMENT RELIES PP&L, as servicer, will be responsible for
ON PP&L OR ITS SUCCESSOR billing and collecting intangible transition
ACTING AS SERVICER OF THE charges and for submitting requests to the
INTANGIBLE TRANSITION PUC to adjust these charges. If PP&L ceased
PROPERTY servicing the intangible transition property,
it might be hard to find a successor
servicer. A successor servicer may have
difficulty performing these functions. For
example, a successor servicer that is not a
utility may not impose or adjust intangible
transition charges. A successor servicer that
is not a utility also may not terminate
electricity service to customers or otherwise
take action against customers who fail to pay
their bills. The PUC would have to approve
any adjustment to intangible transition
charges necessary to pay any increased
servicing fee for a successor servicer. The
Issuer can not assure that this approval
would be obtained. This may reduce the value
of your investment. See "The Servicing
Agreement" in this prospectus.

BILLING AND COLLECTION The methodology of determining the amount of
PRACTICES MAY REDUCE intangible transition charges the Issuer may
THE VALUE OF YOUR impose on each customer is set by the PUC.
INVESTMENT Thus, PP&L cannot change this methodology.
However, PP&L, as servicer, may set its own
billing and collection arrangements with each
customer. For example, to recover part of an
outstanding electricity bill, PP&L may agree
to extend a customer's payment schedule or to
write off the remaining portion of the bill.
Also, PP&L, or a successor to PP&L as
servicer, may change billing and collection
practices. Similarly, the PUC may require
changes to these practices. These billing and
collection adjustments may materially reduce
the value of your investment. See "The
Servicer of the Intangible Transition
Property--How PP&L Forecasts the Number of
Customers and the Amount of Electricity
Usage" in this prospectus.

PP&L HAS LIMITED If PP&L incorrectly evaluates the customers'
INFORMATION ON THE ability to pay their bills, it may experience
CUSTOMERS' ABILITY TO delays in receiving payments or it may have
PAY INTANGIBLE to write off some payments. In that case, it
TRANSITION CHARGES may have to request intangible transition
charge adjustments. If those adjustments are
not timely and accurate, your investment's
value may be materially reduced. See "The
Servicer of the Intangible Transition
Property--PP&L Maintains Limited Information
on its Customers' Creditworthiness" in this
prospectus.

IT MAY BE MORE DIFFICULT Customers may pay intangible transition
TO COLLECT INTANGIBLE charges to third parties. These third parties
TRANSITION CHARGES FROM will forward the charges to PP&L as servicer.
THIRD PARTIES THAN FROM These entities must pay PP&L the intangible
PP&L'S RETAIL transition charges even if they do not
CUSTOMERS collect them from retail customers. PP&L will
have limited rights to collect intangible
transition charges directly from those
customers who receive their electricity bills
from a third party. If many customers within
PP&L's service territory elect to receive
their electricity bills from third parties,
the issuer may have to rely on a relatively
small number of entities for the collection
of the bulk of the intangible transition
charges. This may adversely affect your
investment because:

o Third parties might use more permissive
standards in bill collection and credit
appraisal than PP&L uses towards its
retail customers or might be less
effective in billing and collecting.

o If a third party collector defaults,
PP&L or a successor servicer may
subsequently directly bill and collect
intangible transition charges due from
the third party's customers. However,
the servicer will generally have only
limited rights to pursue these
customers to pay amounts owed to the
issuer by the defaulted third party.
Also, a default by a third party which
collects from a large number of retail
customers would have a greater impact
than a default by a single retail
customer.

The adjustment mechanism and other credit
enhancement may be available to compensate
for a failure by a third party collector to
pay intangible transition charges over to the
issuer. However, the amount of credit
enhancement funds may not be sufficient to
protect your investment. See "The PUC Order
and the Intangible Transition Charges" in
this prospectus.

CUSTOMERS WITHIN Customers within PP&L's service territory may
PP&L'S SERVICE stop or delay paying intangible transition
TERRITORY MAY STOP OR charges for the following reasons:
DELAY MAKING INTANGIBLE
TRANSITION CHARGE o They may become confused by the
PAYMENTS assessment of a charge they have not
seen before.

o Economic or demographic changes may
reduce the number of customers within
one or more of PP&L's customer classes.
This would increase intangible
transition charges to other customers
in that customer class. This increase
may raise the possibility that
customers would seek legal intervention
to reduce or eliminate the intangible
transition charges.

o A significant number of consumers of
electricity may decide to generate some
or all of the electricity they need. If
they do not operate these generating
facilities in parallel with PP&L's
transmission and distribution system,
they generally will not be obligated to
pay intangible transition charges. If
they remain connected to PP&L's
distribution system, they will still be
responsible for paying intangible
transition charges. However, these
consumers, and the amount of intangible
transition charges they must pay, may
be difficult to identify.

For a discussion of electric utility
deregulation in Pennsylvania, see "The
Servicing Agreement-Potential Limitations to
Collecting Intangible Transition Charges" in
this prospectus.

POTENTIAL DELAYS IN Principal and interest payments on the
PAYMENTS ON TRANSITION transition bonds could be delayed if PP&L, in
BONDS DUE TO POTENTIAL its capacity as servicer, or the trustee
COMPUTER PROGRAM experiences problems in its computer
PROBLEMS BEGINNING IN programs, or in the computer programs of
THE YEAR 2000 those vendors on whom they rely, relating to
the year 2000. Many existing computer
programs use only two digits to identify a
year. These programs could fail or produce
erroneous results during the transition from
the year 1999 to the year 2000 and
afterwards. PP&L has evaluated the impact of
preparing its systems for the year 2000. It
has identified areas of potential impact and
is implementing conversion efforts. As of
March 31, 1999, more than 83% of PP&L's
mainframe applications were year 2000
compliant. All mainframe computer systems are
expected to be year 2000 compliant by
mid-1999.

PP&L, or a third party on whom PP&L relies
for collection of intangible transition
charges, may not have a computer system that
is year 2000 compliant by January 1, 2000. If
this occurs, PP&L's ability to service the
intangible transition property may be
materially and adversely affected. In
addition, the trustee may not have a computer
system that is year 2000 compliant by January
1, 2000. If this occurs, the trustee's
ability to make distributions on the
transition bonds may be materially and
adversely affected. See "The Servicer of the
Intangible Transition Property--PP&L's
Efforts to Deal With the Year 2000 Computer
Issue" in this prospectus.

THE RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS

PP&L WILL COMMINGLE PP&L will not segregate the intangible
INTANGIBLE TRANSITION transition charges from the other funds it
CHARGES WITH OTHER collects from its customers. The intangible
REVENUES WHICH MAY transition charges will be segregated only
HARM YOUR INVESTMENT after PP&L pays them to the trustee. PP&L
IN CASE OF BANKRUPTCY will be permitted to remit collections on a
monthly basis only if:

o at any time PP&L has the requisite credit
ratings from the rating agencies or

o PP&L provides credit enhancement
satisfactory to the rating agencies to
assure remittance by PP&L to the
trustee of the intangible transition
charges it collects.

Otherwise, PP&L will be required to remit
collections within two business days of
receipt. Despite these requirements, PP&L
might fail to pay the full amount of the
intangible transition charges to the trustee
or might fail to do so on a timely basis.
This failure could materially reduce the
value of your investment.

The Competition Act provides that the rights
of the issuer to the intangible transition
property are not affected by the commingling
of these funds with PP&L's other funds. In a
bankruptcy of PP&L, however, a bankruptcy
court might rule that federal bankruptcy law
takes precedence over the Competition Act and
does not recognize the right of the issuer to
collections of the intangible transition
charges that are commingled with other funds
of PP&L as of the date of bankruptcy. If so,
the collections of intangible transition
charges held by PP&L as of the date of
bankruptcy would not be available to pay
amounts owing on the transition bonds. In
this case, the issuer would have a general
unsecured claim against PP&L for those
amounts. This decision could cause material
delays in payment or losses on your
transition bonds and could materially reduce
the value of your investment. See "How a
Bankruptcy of PP&L or the Servicer May Affect
Your Investment" in this prospectus.

BANKRUPTCY OF PP&L The Competition Act and the PUC order provide
COULD RESULT IN LOSSES OR that as a matter of Pennsylvania state law,
DELAYS IN PAYMENTS ON
THE TRANSITION BONDS. o intangible transition property is a
continuous current property right of PP&L
for all purposes,

o PP&L may make a present transfer of
that property right, including the
right to receive future intangible
transition charges that customers do
not yet owe, and

o a transfer of the intangible transition
property from PP&L, or its affiliate,
to the issuer is a true sale of the
intangible transition property, not a
pledge of the intangible transition
property to secure a financing by PP&L.

See "The Competition Act" in this prospectus.
These three provisions are important to
maintaining payments on the transition bonds
in accordance with their terms during any
bankruptcy of PP&L. In addition, the
transaction has been structured with the
objective of keeping the issuer separate from
PP&L in the event of a bankruptcy of PP&L.

A bankruptcy court generally follows state
property law on issues such as those
addressed by the three provisions described
above. However, a bankruptcy court has
authority not to follow state law if it
determines that the state law is contrary to
a paramount federal bankruptcy policy or
interest. If a bankruptcy court in a PP&L
bankruptcy refused to enforce one or more of
the state property law provisions described
above for this reason, the effect of this
decision on you as a transition bondholder
would be similar to the treatment you would
receive in a PP&L bankruptcy if the
transition bonds had been issued directly by
PP&L. A decision by the bankruptcy court,
that despite the separateness of PP&L and the
issuer, the two companies should be
consolidated, would have a similar effect on
you as a transition bondholder. That
treatment could cause material delays in
payment of, or losses on, your transition
bonds and could materially reduce the value
of your investment. For example:

o the trustee could be prevented from
exercising any remedies against PP&L on
your behalf, from recovering funds to
repay the transition bonds or from
replacing PP&L as servicer, without
permission from the bankruptcy court;

o the bankruptcy court could order the
trustee to exchange the intangible
transition property for other property,
which might be of lower value;

o tax or other government liens on PP&L's
property that arose after the transfer of
the intangible transition property to the
issuer might nevertheless have priority
over the trustee's lien and might be paid
from intangible transition charge
collections before payments on the
transition bonds;

o the trustee's lien might not be properly
perfected in intangible transition
property collections that were commingled
with other funds PP&L collects from its
customers as of the date of PP&L's
bankruptcy, or might not be properly
perfected in all of the intangible
transition property, and the lien could
therefore be set aside in the bankruptcy,
with the result that the transition bonds
would represent only general unsecured
claims against PP&L;

o the bankruptcy court might rule that the
intangible transition charges collected
by the issuer should be used to pay a
portion of the cost of providing electric
service; or

o the bankruptcy court might rule that the
remedy provisions of the intangible
transition property sale agreement are
unenforceable, leaving the issuer with a
claim of actual damages against PP&L,
which may be difficult to prove.

See "How a Bankruptcy of PP&L or the Servicer
May Affect Your Investment" in this prospectus.

A PUC SEQUESTRATION If PP&L defaults on its obligations as
ORDER FOR INTANGIBLE servicer, the Competition Act allows the PUC
TRANSITION PROPERTY IN to order the sequestration and payment of all
CASE OF DEFAULT MIGHT intangible transition charge collections to
NOT BE ENFORCEABLE IN the transition bondholders. The Competition
BANKRUPTCY Act states that this PUC order would be
effective even if made while PP&L or its
successor is in bankruptcy. However, federal
bankruptcy law may prevent the PUC from
issuing or enforcing this order. The
indenture requires the trustee to request an
order from the bankruptcy court to permit the
PUC to issue and enforce the order. However,
the bankruptcy court may deny the request.
See "How a Bankruptcy of PP&L or the Servicer
May Affect Your Investment" in this
prospectus.

OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS

ABSENCE OF SECONDARY The underwriters for the transition bonds may
MARKET FOR TRANSITION assist in resales of the transition bonds but
BONDS COULD LIMIT YOUR they are not required to do so. A secondary
ABILITY TO RESELL market for the transition bonds may not
TRANSITION BONDS develop. If it does develop, it may not
continue or it may not be sufficiently liquid
to allow you to resell any of your transition
bonds. See "Plan of Distribution for the
Transition Bonds" in this prospectus.

POTENTIAL LOSS ON You may suffer a material loss on your
TRANSITION BONDS DUE TO transition bonds if the assets of the issuer
LIMITED ASSETS OF THE are insufficient to pay the principal amount
ISSUER the transition bonds in full. The only source
of funds for of payments on the transition
bonds will be the assets of the issuer. These
assets are limited to:

o the intangible transition property,

o the funds on deposit in the trust accounts
held by the trustee,

o contractual rights under various contracts
and

o any other credit enhancement described in
the related prospectus supplement.

The transition bonds will not be insured or
guaranteed by PP&L, including in its capacity
as servicer, or by the trustee or any other
person or entity. Thus, you must rely for
payment of the transition bonds solely upon
collections of the intangible transition
charges, funds on deposit in the trust
accounts held by the trustee and any other
credit enhancement described in the related
prospectus supplement. See "PP&L Transition
Bond Company LLC, The Issuer" in this
prospectus.

THE ISSUER MAY ISSUE The issuer may issue other series of
ADDITIONAL SERIES OF transition bonds without your prior review or
BONDS approval. These series may include terms and
provisions which would be unique to that
particular series. A new series of transition
bonds may not be issued if it would result in
the credit ratings on any outstanding series
of transition bonds being reduced or
withdrawn. However, a new series could be
issued that reduced or delayed payment on
your transition bonds. See "The Transition
Bonds" and "The Indenture" in this
prospectus. In addition, some matters may
require the vote of the holders of all series
and classes of transition bonds. Your
interests in these votes may conflict with
the interests of the transition bondholders
of another series or of another class. Thus,
these votes could result in an outcome that
is materially unfavorable to you.

LIMITED NATURE OF The transition bonds will be rated by one or
RATINGS more established rating agencies. The ratings
merely analyze the probability that the
issuer will repay the total principal amount
of the transition bonds at final maturity and
will make timely interest payments. The
ratings do not assess the speed at which the
issuer will repay the principal of the
transition bonds. Thus, the issuer may repay
the principal of your transition bonds
earlier or later than you expect, which may
materially reduce the value of your
investment. A rating is not a recommendation
to buy, sell or hold transition bonds. The
rating may change at any time. A rating
agency has the authority to revise or
withdraw its bond rating based solely upon
its own judgment. See "Ratings for the
Transition Bonds" in this prospectus.

YOU MAY HAVE TO If so provided in a prospectus supplement,
REINVEST THE PRINCIPAL OF there may be optional redemptions of the
YOUR TRANSITION BONDS AT transition bonds. Future market conditions
A LOWER RATE OF RETURN may require you to reinvest the proceeds of a
BECAUSE OF OPTIONAL redemption at a rate lower than the rate you
REDEMPTION OF THE received on the transition bonds. The issuer
TRANSITION BONDS cannot predict whether it will redeem any
series of transition bonds. See "Weighted
Average Life And Yield Considerations For The
Transition Bonds" and "The Transition
Bonds--Credit Enhancement for The Transition
Bonds" in this prospectus.

PP&L'S OBLIGATION TO The obligations of PP&L under the
INDEMNIFY THE ISSUER FOR contribution agreement to the seller have
A BREACH OF A been assigned by the seller to the issuer. If
REPRESENTATION OR PP&L breaches a representation or warranty in
WARRANTY MAY NOT BE the contribution agreement, PP&L is obligated
SUFFICIENT TO PROTECT to indemnify the issuer and the trustee for
YOUR INVESTMENT any liabilities, obligation, claims, actions,
suit or payments resulting from that breach,
as well as any reasonable costs and expenses
incurred. In addition, PP&L is obligated to
indemnify the issuer and the trustee for
principal and interest on the transition
bonds not paid when due in accordance with
their terms as a result of a breach of a
representation or warranty. The seller is
also obligated to indemnify the issuer and
the trustee for the amount of any deposits to
the issuer required to have been made which
are not made when so required as a result of
a breech of a representation or warranty.
However, the amount of any indemnification
paid by the seller may not be sufficient for
you to recover your transition bond
investment. See "The Contribution Agreement -
PP&L's Obligation to Indemnify the Issuer and
the Trustee and to Take Legal Action" in this
prospectus.

YOU MIGHT RECEIVE The amount and the rate of collection of
PRINCIPAL PAYMENTS LATER intangible transition charges that PP&L will
THAN YOU EXPECTED collect from each customer class will
partially depend on actual electricity usage
and the amount of delinquencies and
write-offs for that customer class. The
amount and the rate of collection of
intangible transition charges, together with
the intangible transition charge adjustments
described above, will generally determine
whether there is a delay in the scheduled
repayments of transition bond principal. If
PP&L collects intangible transition charges
at a slower rate than expected from any
customer class, it may have to request
adjustments of the intangible transition
charges. If those adjustments are not timely
and accurate, you may experience a delay in
payments of principal and interest or a
material decrease in the value of your
investment. Unless there is a redemption or
acceleration of the transition bonds before
maturity, the transition bonds will not be
retired earlier than scheduled. See "The PUC
Order And The Intangible Transition
Charges--The PUC Order" in this prospectus.

FORWARD-LOOKING INFORMATION

Some statements contained in this Prospectus and the related Prospectus
Supplement concerning expectations, beliefs, plans, objectives, goals,
strategies, future events or performance and underlying assumptions and
other statements which are other than statements of historical facts, are
forward-looking statements within the meaning of the federal securities
laws. Although PP&L and the Issuer believe that the expectations and the
underlying assumptions reflected in these statements are reasonable, there
can be no assurance that these expectations will prove to have been
correct. The 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:

1. state and federal legal or regulatory developments;

2. national or regional economic conditions;

3. market demand and prices for energy, capacity and fuel;

4. weather variations affecting customer energy usage;

5. the need for and effect of any business or industry restructuring;

6. new accounting requirements or new interpretations or applications o
of existing requirements;

7. operating performance of PP&L's facilities;

8. environmental conditions and requirements; and

9. system conditions, including actual results in achieving Year 2000
compliance by PP&L, its subsidiaries, affiliates, vendors and others.

Any forward-looking statements should be considered in light of these
important factors and in conjunction with PP&L Resources' and PP&L's other
documents on file with the SEC.

New factors that could cause actual results to differ materially from
those described in forward-looking statements emerge from time to time. It
is not possible for PP&L or the Issuer to predict all of these factors, or
the extent to which any factor or combination of factors may cause actual
results to differ from those contained in any forward-looking statement.
Any forward-looking statement speaks only as of the date on which the
statement is made and neither PP&L nor the Issuer undertakes any obligation
to update the information contained in the statement to reflect subsequent
developments or information.

THE ALLOCATIONS AND DISTRIBUTIONS DIAGRAM IS OMITTED

THE PARTIES TO THE TRANSACTION DIAGRAM IS OMITTED

PP&L

PP&L's Operations. PP&L is an operating electric utility,
incorporated under the laws of the Commonwealth in 1920. Operating under
the name of the Pennsylvania Power & Light Company, until its name was
changed in 1997, PP&L is the primary subsidiary of PP&L Resources, Inc., a
holding company formed in 1995. The assets of PP&L comprise approximately
92% of PP&L Resources' consolidated assets, and the financial condition and
results of operation of PP&L are currently the principal factors affecting
the financial condition and results of operations of PP&L Resources. PP&L
serves approximately 1.3 million customers in a 10,000 square mile
territory in 29 counties of central and eastern Pennsylvania, with a
population of approximately 2.6 million persons. This service area has 129
communities with populations over 5,000, the largest cities of which are
Allentown, Bethlehem, Harrisburg, Hazleton, Lancaster, Scranton,
Wilkes-Barre and Williamsport. In addition to delivering its own generation
or purchased power, PP&L delivers power supplied by licensed electricity
generation suppliers pursuant to the Competition Act. PP&L also markets
wholesale electricity in 28 states and Canada. During 1998, about 96% of
total operating revenue was derived from electric energy sales and
marketing activities, with 26% coming from residential customers, 22% from
commercial customers, 15% from industrial customers, 34% from wholesale
sales and 3% from others. PP&L Resources' other subsidiaries include:

1. PP&L Global, Inc., an international independent power company which
invests in and develops power projects, overseas and in the United
States;

2. PP&L Spectrum, Inc., which markets energy-related services and
products;

3. PP&L Capital Funding, which engages in financing for PP&L Resources
and its subsidiaries other than PP&L;

4. Penn Fuel Gas, Inc., which provides natural gas distribution,
transmission and storage services, and sells propane; and

5. H.T. Lyons, Inc., McClure Company and McCarl's Inc., which provide
mechanical contractor and engineering services.

The electric utility industry is undergoing fundamental
restructuring. See "The Competition Act" in this Prospectus. In addition to
the Competition Act, in 1996 the Federal Energy Regulatory Commission
issued Order No. 888 providing for competition in wholesale generation by
requiring that all public utilities file non-discriminatory, open-access
transmission tariffs.

Where to Find Information About PP&L Resources. PP&L Resources and
PP&L file periodic reports with the SEC as required by the Exchange Act.
Reports filed with the SEC are available for inspection without charge at
the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its regional offices located as
follows: Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048. Copies of
periodic reports and exhibits thereto may be obtained at the above
locations at prescribed rates. Information filed with the SEC can also be
inspected at the SEC site on the World Wide Web at http://www.sec.gov.

THE COMPETITION ACT

THE COMPETITION ACT'S GENERAL EFFECT ON THE ELECTRIC UTILITY INDUSTRY
IN PENNSYLVANIA

An Overview of the Competition Act. The Competition Act, enacted in
December 1996, provides for the restructuring of the electric utility
industry in Pennsylvania. The Competition Act requires the unbundling of
electric services into separate generation, transmission and distribution
services with open retail competition for generation services. While
electric utilities will continue to provide transmission and distribution
services, the Competition Act authorizes electric generation suppliers
licensed by the PUC to provide generation and related services, including
billing and metering. Under the Competition Act, electric generation
suppliers are subject to some limited financial and disclosure requirements
and some customer protection requirements, but are generally unregulated by
the PUC. When PP&L provides generation service to its Customers within its
service territory, it is referred to as serving as the provider of last
resort. Electric distribution and transmission services will remain
regulated.

Requirements for Utilities Under the Competition Act. The
Competition Act requires utilities to submit restructuring plans, which
must include unbundled rates for electricity generation and transmission
and distribution services, as well as proposed competitive transition
charges. Competitive transition charges are assessed on and collected from
all retail consumers of electricity within a utility's service territory
who access the utility's transmission and distribution system and generally
may be collected over a maximum period of nine years from enactment of the
Competition Act. This period may be extended by the PUC. Under the
Competition Act, utilities are subject to a rate cap on charges for
generation through December 31, 2005 which provides that total generation
charges, including the intangible transition charge and the competitive
transition charge, to customers generally cannot exceed rates in place at
December 31, 1996. In the case of PP&L, this generation rate cap has been
extended to December 31, 2009. The Competition Act also caps transmission
and distribution rates from December 31, 1996 through June 30, 2001. In the
case of PP&L, this transmission and distribution rate cap has been extended
to December 31, 2004. Under the Competition Act, each regulated electric
utility was required to implement a retail access pilot program for
customers representing 5% of the peak load of each customer class for the
period from November 1, 1997 through December 31, 1998.

RECOVERY OF STRANDED COSTS FOR PP&L AND OTHER PENNSYLVANIA UTILITIES

The Competition Act allows utilities an opportunity to recover their
allowed stranded costs. Stranded costs include regulatory assets, the
unfunded portion of the utility's projected nuclear generating plant
decommissioning costs and long-term power purchase commitments for which
full recovery is allowed and other costs, including investment in
generating plants, spent nuclear fuel disposal, retirement costs and other
transition costs, for which an opportunity for recovery is allowed in an
amount determined by the PUC as just and reasonable. As a mechanism to
recover these stranded costs, the Competition Act provides for the
imposition and collection of competitive transition charges on customers'
bills. Because competitive transition charges are imposed based on access
to the utility's transmission and distribution system, the customers will
be assessed regardless of whether the customers purchases electricity from
the utility or an electric generation supplier. The Competition Act
provides, however, that the utility's right to recover transition or
stranded costs is contingent on the continued operation at reasonable
availability levels of the generation facilities for which the stranded
costs were awarded, except where continued operation is no longer economic
on a production cost basis because of the transition to a competitive
market. See "Risk Factors-Unusual Nature of Intangible Transition Property"
in this Prospectus.

PP&L AND OTHER UTILITIES MAY SECURITIZE STRANDED COSTS

The Recovery of Stranded Costs May be Facilitated by the Issuance
of Transition Bonds. The Competition Act authorizes the PUC to issue
"qualified rate orders" approving the issuance of transition bonds to
facilitate the recovery or financing of stranded costs and related expenses
of an electric utility. A utility, a finance subsidiary of a utility or a
third-party assignee of a utility may issue transition bonds. Under the
Competition Act, proceeds of transition bonds are required to be used
principally to reduce stranded costs and the related capitalization costs
of the utility as well as to pay related expenses. The transition bonds are
secured by intangible transition property and payable from the intangible
transition charges and may have a maximum maturity of ten years. The
amounts of intangible transition charges must be allocated to customer
classes in a manner that does not shift interclass or intraclass costs and
maintains consistency with the allocation methodology for utility
production plant accepted by the PUC in the utility's most recent base rate
proceeding. Intangible transition charges can be imposed only when and to
the extent that transition bonds are issued.

The Competition Act contains a number of provisions designed to
facilitate the securitization of stranded costs and related expenses.

The PUC Can Declare That a Qualified Rate Order is Irrevocable. Under
the Competition Act, intangible transition property is created by the
issuance by the PUC of a qualified rate order. The Competition Act grants
to the PUC the power to specify that all or a portion of a qualified rate
order will be irrevocable. The Competition Act provides that to the extent
that the PUC declares all or a portion of a qualified rate order
irrevocable, the PUC may not, by any subsequent action, reduce, postpone,
impair or terminate either the order or the intangible transition charge
authorized therein. In addition, under the Competition Act, the
Commonwealth pledges and agrees with the holders of the transition bonds,
and with any assignee or finance party, not to limit or alter or in any way
impair or reduce the value of intangible transition property or the
intangible transition charges until the related transition bonds are fully
discharged. The Competition Act provides, however, that nothing precludes
the Commonwealth from limiting or altering intangible transition property
or the qualified rate order, provided that adequate compensation is made by
law for the full protection of the intangible transition charges collected
pursuant to the qualified rate order and of the holders of the transition
bonds and any assignee or finance party. See "Risk Factors-Legal,
Legislative or Regulatory Action That May Adversely Affect Your Investment"
in this Prospectus.

The PUC May Adjust Intangible Transition Charges. The Competition
Act requires the PUC to provide in all qualified rate orders a procedure
for expeditiously approving periodic adjustments to the intangible
transition charges. The Competition Act provides that the PUC must
determine whether the adjustments are required on each anniversary of the
issuance of the qualified rate order or at additional intervals as
specified by the PUC. The PUC must approve the adjustment, if required,
within 90 days of each request for adjustment.

Current Customers Cannot Avoid Paying Competitive Transition
Charges and Intangible Transition Charges. The Competition Act provides
that the competitive transition charges and the intangible transition
charges are non-bypassable which means that a utility collects these
charges from retail consumers of electricity within the utility's service
territory who access the utility's transmission and distribution system,
and that the utility is entitled to collect intangible transition charges
from those customers even if they elect to purchase electricity from
another supplier or choose to operate self-generation equipment while
accessing the utility's transmission and distribution system. However, the
intangible transition charges are not payable by any person who
self-generates electricity with facilities that do not access the utility's
transmission and distribution grid.

Intangible Transition Property May be Assigned. The Competition Act
further provides that to the extent that the utility, or any assignee of
intangible transition property, assigns, sells, transfers or pledges any
interest in intangible transition property, the PUC will authorize the
utility to contract with the assignee for the utility to

1. continue to operate the system to provide electric services to the
utility's customers,

2. impose and collect the applicable intangible transition charges for
the benefit and account of the assignee, and

3. account for and remit the applicable intangible transition charges
to or for the account of the assignee.

In addition, to the extent specified in the qualified rate order, the
obligations of the utility under this contract:

1. will be binding upon the utility, its successors and assigns, and

2. will be required by the PUC to be undertaken and performed by the
utility and any other entity which provides electric service to a
person that is a customer of the utility located within the
utility's service territory, as a condition to providing service to
the customer or the municipal entity providing these services in
place of the utility.

The Competition Act Protects the Transition Bonds' Lien on
Intangible Transition Property. The Competition Act provides that a valid
and enforceable security interest in intangible transition property
automatically attaches from the time the related transition bonds
are issued if:

1. value is given by purchasers of the transition bonds and

2. a filing is made with the PUC to perfect the security interest
either before or within 10 days after issuance of transition bonds.

The Competition Act provides that security interests in the intangible
transition property are created and perfected only by means of a separate
filing with the PUC in accordance with the provisions of the Competition
Act. Upon perfection, the statutorily created lien attaches both to
intangible transition property and to all revenues and proceeds of
intangible transition property, whether or not such revenues have accrued.
The Competition Act provides that this filing will take precedence over any
other filing and will be enforceable against the assignee and all third
parties, including judicial lien creditors, subject only to rights of any
third parties holding security interests in intangible transition property
previously perfected in accordance with the Competition Act. The
Competition Act provides that priority of security interests in intangible
transition property will not be defeated or adversely affected by:

1. commingling of revenues with other funds of the utility or its assignee
or

2. changes to the qualified rate order or the intangible transition
charges.

The Competition Act Characterizes the Transfer of Intangible
Transition Property as a True Sale. The Competition Act provides that a
transfer by the utility or an assignee of intangible transition property
will be treated as a true sale of the transferor's right, title and
interest and not as a pledge or other financing, other than for federal and
state income and franchise tax purposes, if:

1. the parties expressly state in governing documents that a transfer
is to be a sale or other absolute transfer and

2. the transaction is approved in a qualified rate order.

See "Risk Factors-The Risks Associated With Potential Bankruptcy
Proceedings" in this Prospectus.

ONLY A PENNSYLVANIA UTILITY MAY SUE FOR NONPAYMENT OF
INTANGIBLE TRANSITION CHARGES

The Competition Act states that only a utility, its successor or any
other entity providing electric service to consumers may bring actions
against consumers for nonpayment of the intangible transition charges. In
addition, the Competition Act grants to the PUC exclusive jurisdiction over
all disputes arising out of the obligations to impose and collect the
intangible transition charges by a utility, its successor or any other
entity which provides electric service to a consumer.

PP&L'S RESTRUCTURING PLAN

THE HISTORY OF PP&L'S RESTRUCTURING PLAN

The Initial Pennsylvania PUC Decision. In accordance with the
provisions of the Competition Act, in April 1997, PP&L filed the
Restructuring Plan with the PUC. The Restructuring Plan was a comprehensive
restructuring plan detailing its proposal to implement full customer choice
of electric generation suppliers. PP&L's restructuring plan identified $4.5
billion of retail electric generation-related stranded costs. Thirty-nine
parties intervened in the PUC proceeding and evidentiary hearings were held
during August 1997. On June 15, 1998, the PUC issued the PUC Restructuring
Order. The PUC Restructuring Order authorized PP&L to recover stranded
costs of $2.864 billion, less an adjustment associated with depreciation of
the Susquehanna nuclear plant, over 8 1/2 years beginning in 1999.

PP&L, and Other Parties, Object to the PUC Decision. On July 15,
1998, PP&L filed a complaint in the U.S. District Court for the Eastern
District of Pennsylvania seeking injunctive and monetary relief on the
grounds that the provisions of the PUC Restructuring Order were preempted
by the Federal Power Act and that implementation of the Competition Act by
the PUC in the Restructuring Order violated several provisions of the U.S.
Constitution. Also on July 15, 1998, PP&L filed a Petition for Review in
the Commonwealth Court of Pennsylvania invoking the original jurisdiction
of the Commonwealth Court on the grounds that the provisions of the PUC
Restructuring Order and implementation of the Competition Act violated the
Pennsylvania Constitution. Finally, on July 15, 1998, PP&L filed a Petition
for Review in the Commonwealth Court appealing the PUC Restructuring Order
based upon errors of law, an arbitrary and capricious abuse of
administrative discretion, and the deprivation of the due process of law.
In addition to these actions, the Anthracite Region Independent Power
Producers Association and the Schuylkill Energy Resources also filed
appeals to the Commonwealth Court challenging various aspects of the PUC's
Restructuring Order. Also, the PP&L Industrial Customer Alliance, the
Office of Consumer Advocate, Mid-Atlantic Power Supply Association, Enron
Power Marketing, Inc. and the Commission on Economic Opportunity filed
cross-appeals in PP&L's action in the Commonwealth Court. See "Prior Legal
Challenges to the Competition Act or the PUC Order--Litigation Relevant to
the Competition Act" in this Prospectus.

The Joint Petition Is Filed. On August 12, 1998, PP&L and all but
three of the parties that participated in PP&L's Restructuring Plan
proceeding filed a Joint Petition for Full Settlement of PP&L, Inc.'s
Restructuring Plan and Related Court Proceedings with the PUC. The three
parties that did not sign the Joint Petition agreed to abide by the terms
and conditions contained therein. On August 13, a slightly amended Joint
Petition was filed with the PUC. The terms and conditions of the Joint
Petition represented a comprehensive settlement which resolved all issues
on appeal before the U.S. District Court for the Eastern District of
Pennsylvania and the Commonwealth Court arising from challenges to the PUC
Restructuring Order. See "Prior Legal Challenges to the Competition Act or
the PUC Order--Litigation Relevant to the Competition Act" in this
Prospectus. On August 27, the PUC approved the Joint Petition, amended its
prior decisions and issued a Final Order. On May 21, 1999, the PUC issued
another order supplementing the Final Order. The Final Order and that
supplemental order are referred to in this Prospectus as the PUC Order.

THE PUC ORDER

PP&L May Recover $2.97 Billion in Stranded Costs. The PUC Order
authorizes PP&L to recover $2.97 billion of Stranded Costs, together with a
pre-tax return of 10.86% on the unamortized balance thereof. The PUC
authorized the recovery of PP&L's Stranded Costs over an 11-year transition
period beginning January 1, 1999 and ending December 31, 2009. Recovery of
Stranded Costs and related expenses, as well as the allowed return, are to
be through Competitive Transition Charges. PP&L is authorized to issue or
cause the issuance of transition bonds and to collect Intangible Transition
Charges designed to recover $2.85 billion of its $2.97 billion in Stranded
Costs.

The following table shows the average levels of Competitive
Transition Charges for the years 1999 through 2009. In this table, "T&D
Rate" represents the projected Transmission and Distribution Rate and "GRT"
represents Pennsylvania's Gross Receipts Tax. The gross receipts tax is
imposed on electric utilities and other public utilities which are
organized under the laws of, or doing business in, the Commonwealth and is
currently levied at the rate of 4.4% on each dollar of an electric
utility's gross receipts arising from sales of energy to particular
Customers. Also, the Revenue Requirement column is subject to adjustment
for actual collections. Under the Joint Petition, kwh are estimated to
increase 1.5 percent per year on a system average basis. The "Shopping
Credit" column represents the projected Shopping Credit for generation,
which is the bundled rate for electricity consumption that PP&L charged its
customers prior to the implementation of the Competition Act, minus PP&L's
Competitive Transition Charges and minus PP&L's Transmission and
Distribution Rate. This represents the amount that Customers can apply
towards electricity generation charges they receive from other Electricity
Generation Suppliers, less the 4% system average reduction from the current
total bundled bill of Customers in 1999. The Bundled Rate is the
Transmission & Distribution Rate plus the Shopping Credit.

TABLE 1

AVERAGE LEVELS OF COMPETITIVE TRANSITION CHARGES - 1999- __ 2009

Kwh CTC Revenue CTC Rate T&D Shopping Bundled
Year Consumed Requirement (Cents/kwh) Rate Credit Rate
With GRT (Cents/kwh) (Cents/kwh) (Cents/kwh)

- ---------------

Figures in the table result in the recovery of $2.97 billion of
Stranded Costs plus the allowed return from the estimated number of
Customers and at projected usage levels in the period during which the
Competitive Transition Charges will be collected, taking into account the
4% system average reduction from the current total bundled bill of
Customers in 1999. Both the Competitive Transition Charges and the
Intangible Transition Charges are subject to adjustment.

PP&L May Securitize Up to $2.85 Billion of its Stranded Costs.
Under the PUC Order, PP&L may securitize through the issuance of transition
bonds up to $2.85 billion of the $2.97 billion in Stranded Costs that the
PUC authorized PP&L to recover. The charging of Intangible Transition
Charges associated with the issuance of transition bonds must terminate no
later than December 31, 2009. Once the Transition Bonds are issued,
Competitive Transition Charges will be reduced by the amount of Intangible
Transition Charges, and PP&L will be required to reduce rates by an
additional amount necessary to pass through to Customers 75% of the net
savings achieved as a result of the issuance of the Transition Bonds. See
"The PUC Order and the Intangible Transition Charges" in this Prospectus.

PP&L Must Unbundle its Electric Rates. The Joint Petition requires
PP&L to unbundle its retail electric rates on January 1, 1999 into the
following components:

1. distribution charges,

2. transmission charges,

3. Competitive Transition Charges and, if applicable, Intangible
Transition Charges,

4. a Shopping Credit for generation and

5. a metering and billing credit.

PP&L Must Reduce its Electric Rates. PP&L's unbundled rates, rate
reductions and rate caps are reflected in the schedule of system-wide
average rates included in the Joint Petition and shown in Table 2 below.
The PUC Order requires PP&L to reduce rates during 1999 by 4% on a system
average basis. The Joint Petition extends the rate caps on generation rates
until December 31, 2009. It also extends rate caps on transmission and
distribution rates, which were scheduled to terminate under the Competition
Act on June 30, 2001, until December 31, 2004. Thus, there are no figures
under the Transmission and Distribution Rate column after 2004. Competitive
Transition Charges, or CTC in Table 2 below, are fixed by Rate Schedule for
each year through the year 2009 and include Intangible Transition Charges
once the Transition Bonds are issued. The Generation Rate Cap is set by the
PUC and equals the sum of the Competitive Transition Charges and the
Shopping Credit. This represents, on average, the generation portion of
bills for customers who continue to be supplied by PP&L as the supplier of
last resort. The total rate column represents the average amount that
Customers who continue to be supplied by PP&L as the supplier of last
resort will pay. There are no figures in the Total Rate column after 2004
since it equals the sum of Transmission & Distribution plus the Generation
Rate Cap.

TABLE 2

SCHEDULE OF SYSTEM-WIDE AVERAGE RATES PER KWH

Effective Transmission CTC Shopping Generation Total
Date & Distribution Credit Rate Cap Rate

Jan. 1, 1999 1.74 1.57 3.81 5.38 7.12
Jan. 1, 2000 1.74 1.55 4.13 5.68 7.42
Jan. 1, 2001 1.74 1.52 4.16 5.68 7.42
Jan. 1, 2002 1.74 1.45 4.23 5.68 7.42
Jan. 1, 2003 1.74 1.41 4.27 5.68 7.42
Jan. 1, 2004 1.74 1.35 4.33 5.68 7.42
Jan. 1, 2005 n/a 1.27 4.41 5.68 n/a
Jan. 1, 2006 n/a 1.27 4.78 6.05 n/a
Jan. 1, 2007 n/a 1.21 4.84 6.05 n/a
Jan. 1, 2008 n/a 1.14 4.91 6.05 n/a
Jan. 1, 2009 n/a 1.03 5.02 6.05 n/a
- ---------------

The Competition Act authorizes electric distribution companies to
recover changes in their state tax liability resulting from the
introduction of competition in the electric market through adjustments in
the rates charged to customers, which in some circumstances set forth in
the regulations adopted by the PUC may result in rates exceeding the
applicable Generation Rate Cap. PP&L may apply for the recovery of state
tax liability changes in accordance with the procedures outlined in the
PUC's regulations if PP&L in fact experiences increases in its state tax
liability as contemplated in the Competition Act. PP&L may seek relief from
the Generation Rate Cap for reasons specified in the Competition Act.

PP&L Must Allow Other Entities to Provide Metering and Billing
Services. As provided in the PUC Order, on January 1, 1999, PP&L unbundled
its retail electric rates for metering, meter reading and billing and
collection services to provide credits for those Customers who may elect to
have alternative suppliers perform these services. In mid-1999, for all
Rate Schedules, except for Residential Rate Schedules for which the
starting date is January 1, 2000, PUC-licensed electric generation
suppliers may provide billing, collection and meter reading services to
retail Customers. An electric generation supplier or other third party that
bills on behalf of PP&L must comply with all applicable PUC billing and
disclosure requirements, including the unbundling of transmission and
distribution rates, absent a specific waiver by the PUC. Only PP&L or any
successor electric utility, however, may disconnect or reconnect a
consumer's distribution service. Termination of the distribution service is
permitted only for failure to pay for transmission and distribution service
or provider of last resort service. However, as a result of the order in
which payments by Customers are applied, failure to pay Intangible
Transition Charges would also result in termination. See "The PUC Order and
the Intangible Transition Charges-PP&L's Intangible Transition Charges" in
this Prospectus.

Current PP&L Customers May Choose Their Electric Generation
Supplier. Under the Joint Petition, customer choice of electric generation
suppliers for commercial and industrial customers will be phased in between
January 1, 1999 and January 2, 2000 with one-third of the load of each
customer class entitled to choose their electric generation supplier by
January 1, 1999, an additional one-third by January 2, 1999 and the
remaining one-third by January 1, 2000. In a settlement of the PUC's
Interim Order regarding installed capacity issues at Docket No. I-
00980078, PP&L agreed that all residential customers can choose their
generation suppliers on and after January 2, 1999. With respect to Rate
Schedules LP-4, LP-5, IS-T, IS-P and LPEP, and the applicable riders
related to these Rate Schedules, all of which are in the Large Commercial
and Industrial Customer Class, all customers can shop on January 1, 1999,
but if the individual customer peak load subscriptions exceed the class
peak load limitation, then each customer's subscription will be reduced pro
rata to meet the class peak load limitation.

HOW THE ELECTRICITY GENERATION SERVICE PROVIDER OF LAST RESORT
WILL BE DETERMINED

Under the Restructuring Plan and the Joint Petition, PP&L will act
as a provider of last resort through December 31, 2009 for all Customers
within its service territory who do not choose or cannot choose to purchase
power from alternative suppliers, subject to specific terms, conditions and
qualifications. On January 1, 2002, 20% of the Residential Customers,
determined by random selection, including low-income and inability-to-pay
Customers, and without regard to whether these Customers are obtaining
generation service from an electric generation supplier, will be assigned
to Competitive Default Service. The Competitive Default Supplier will be
selected on the basis of an energy and capacity price bidding process
approved, established and maintained by the PUC among electric generation
suppliers who meet specified qualifications. At any time, a Customer
assigned to the Competitive Default Supplier can elect to return to PP&L as
provider of last resort. Competitive Default Service will be rebid
annually, unless an alternative bidding term is approved by the PUC. If, 30
days prior to the annual bid, the number of Residential Customers served by
Competitive Default Service has fallen below 17%, a further random
selection of Customers will be assigned to Competitive Default Service to
restore the number of Customers to the 20% level. The further random
selection will be chosen in a manner to be determined by the PUC. Terms and
conditions of the Competitive Default Service will be established,
maintained and modified by the PUC. By January 1, 2001, the PUC will issue
the final standards for PP&L governing the responsibilities and obligations
of the competitively determined provider of last resort in PP&L's service
territory.

OTHER PROVISIONS OF PP&L'S RESTRUCTURING PLAN

The Joint Petition also provides that through December 31, 2009,
Customers may choose to purchase power from alternative suppliers and later
return to take provider of last resort service from PP&L or to their
assigned Competitive Default Supplier. PP&L is also authorized to:

1. transfer its generation assets to a separate corporate entity or
entities at book value,

2. include under the capped transmission and distribution rates 0.01
cent per kilowatt-hour for a sustainable energy and economic
development fund and

3. transfer its Energy Plus division to an affiliated corporation.

THE PUC ORDER AND THE INTANGIBLE TRANSITION CHARGES

THE PUC ORDER

In the PUC Order, the PUC determined that PP&L's recovery of
Stranded Costs as set forth in the Joint Petition is just and reasonable
and in the public interest and that securitization of up to $2.85 billion
of its Stranded Costs is just and reasonable and in the public
interest.

PP&L Is Authorized to Service the Intangible Transition Property. The
PUC Order provides that, to the extent that PP&L, or any assignee, assigns,
sells, transfers, or pledges any interest in Intangible Transition Property
created by the PUC Order, the PUC authorizes PP&L to contract, for a
specified fee, with the assignee for PP&L to

1. continue to operate the system to provide electric services to
Customers in PP&L's service territory,

2. impose and collect the Intangible Transition Charges for the
benefit and account of the assignee,

3. make periodic adjustments of Intangible Transition Charges
contemplated under the PUC Order, and

4. account for and remit the applicable Intangible Transition Charges
to or for the account of the assignee free of any charge, deduction
or surcharge of any kind, other than for the specified fee referred
to above.

The PUC Order also authorizes PP&L to agree that an alternative party,
which may be a Trustee, may replace PP&L under its contract with the
assignee and perform the servicing obligations of PP&L with respect to the
Intangible Transition Charges contemplated in the PUC Order. The
obligations of PP&L, or any other servicing entity:

1. shall be binding upon PP&L or the alternative entity, its successors
and assigns and

2. shall be required by the PUC to be undertaken and performed by PP&L
and any other entity which provides transmission and distribution
services to a person that was a Customer of PP&L located within
PP&L's service territory on January 1, 1997, or that became a
Customer of electric services within the service territory after
January 1, 1997, and is still located within the service territory,
as a condition to providing service to the Customer by PP&L or
another entity. However, the Intangible Transition Charge is not
payable by any person who self-generates electricity with
facilities that are not operated in parallel with PP&L's
transmission and distribution grid.

However, any other servicing entity that is not a utility may not
be able to fulfill all of the duties of the Servicer contemplated by the
Servicing Agreement.

The PUC Authorized PP&L to Issue Transition Bonds. In the PUC
Order, the PUC authorized the issuance of transition bonds in an aggregate
principal amount not to exceed $2.85 billion. PP&L, or any assignee of PP&L
to whom Intangible Transition Property is sold, may issue and sell, in
reliance on the PUC Order, one or more series of transition bonds, each
series in one or more classes, secured by Intangible Transition Property,
provided that the final maturity of any series of transition bonds may not
be later than ten years from the date of issuance and in no event after
December 31, 2009. PP&L, or its assignee, is also authorized to refinance
transition bonds in a face amount not to exceed the unamortized principal
thereof and subject to the foregoing maturity limitation.

Consistent with the Competition Act, the PUC Order provides that
PP&L retains the sole discretion to issue or cause the issuance of
transition bonds. Within 120 days after each transition bond issuance, PP&L
is required to file with the PUC a description of the financing structure
of the transition bonds, including the principal amount, the price at which
each series or class of transition bonds was sold, payment schedules,
interest rate and other financing costs and the final plans for PP&L's use
of the proceeds of the offering. Notwithstanding this filing, the final
structure of each issuance of transition bonds is not subject to change or
revision by the PUC after the date of issuance.

The PUC Authorized PP&L to Impose Intangible Transition Charges.
Pursuant to the PUC Order, the PUC determined that it was just and
reasonable and in the public interest for PP&L to recover from Customers,
through Intangible Transition Charges, up to $2.85 billion of Stranded
Costs. Under the PUC Order, the PUC authorized PP&L to impose on and
collect from Customers, either directly or through bills rendered by
electric generation suppliers or other third parties, Intangible Transition
Charges in an amount sufficient to recover the Qualified Transition
Expenses. In addition to the Intangible Transition Charges, PP&L is
required to collect and to pay to the Commonwealth a gross receipts tax
equal to 4.4% of the amount of Intangible Transition Charges.

Upon the successful issuance of Transition Bonds, Competitive
Transition Charges will be reduced by an amount equal to the revenue
requirement of the Stranded Costs for which the Transition Bonds have been
issued. In addition, PP&L will reduce the Competitive Transition Charges
imposed on Customers by an additional amount necessary to pass through to
Customers 75% of the net savings achieved as a result of issuance of the
Transition Bonds.

PP&L Is Allowed to Make Periodic Adjustments to the Intangible
Transition Charges. In the PUC Order, the PUC approved the allocation and
methodology for imposing Competitive Transition Charges and Intangible
Transition Charges on Customers. The PUC Order also authorizes PP&L to make
annual adjustments to Intangible Transition Charges if collections of the
Intangible Transition Charges fall below the amount necessary to ensure the
receipt by the Trustee of revenues sufficient to recover fully the
Qualified Transition Expenses. Adjustments during the final 12 months
during which any series of transition bonds is outstanding may be quarterly
or monthly if necessary to ensure full payment of the transition bonds. The
PUC Order states that the revenues received by the Trustee through
Intangible Transition Charges shall be determined to be sufficient for the
foregoing purpose if, and only if, the ITC Collections are sufficient to
pay Qualified Transition Expenses when due. For each annual adjustment, the
PUC Order directs PP&L to file with the PUC:

1. an accounting of Intangible Transition Charges received by the
Trustee for the previous annual period;

2. a statement of any over- or under-receipts; and

3. the charge or credit to be added to Intangible Transition Charges
to ensure that the Intangible Transition Charges received by the
Trustee will be sufficient to amortize the Qualified Transition
Expenses in accordance with the amortization schedule for the
transition bonds and the corresponding reduction or increase in
Competitive Transition Charges.

The PUC Order provides that, in accordance with the Competition Act, the
PUC must approve each annual adjustment request within 90 days of PP&L's
adjustment filing. During the last twelve months that a Class or Series of
Transition Bonds is outstanding, the PUC will permit each adjustment
request to become effective within 15 days after filing. The PUC Order does
not provide for any other adjustments that may have a material negative
impact on the Intangible Transition Property or otherwise materially reduce
the amounts available for payment on the Transition Bonds.

The PUC Authorized PP&L to Sell Intangible Transition Property.
Under the PUC Order, the PUC concluded that it is in the public interest,
and authorized PP&L, and any assignee of PP&L, to assign, sell, transfer or
pledge Intangible Transition Property. PP&L, or the assignee of PP&L, may
assign Intangible Transition Property in an amount sufficient to recover
all of PP&L's Qualified Transition Expenses and all revenues, collections,
claims, payments or money or proceeds arising from Intangible Transition
Charges. The PUC directed PP&L to use the proceeds from the sale of
Intangible Transition Property principally to reduce Stranded Costs and
related capitalization, as well as to pay related expenses.

Irrevocable PUC Order. The PUC Order declares that the paragraphs
in the PUC Order concerning the recovery of $2.85 billion of PP&L's
Stranded Costs through the issuance of transition bonds, the imposition of
Intangible Transition Charges on Customers in an amount sufficient to
recover Qualified Transition Expenses, the methodology and allocation and
timing of adjustments to the Intangible Transition Charges and the sale of
Intangible Transition Property, among other things, are irrevocable for
purposes of the Competition Act, and the PUC accordingly agrees that it
will not, directly or indirectly, by any subsequent action, reduce,
postpone, impair or terminate the PUC Order or the Intangible Transition
Charges.

PP&L'S INTANGIBLE TRANSITION CHARGES

Calculation of PP&L's Intangible Transition Charges. The Qualified
Transition Expenses authorized in the PUC Order are to be recovered from
each Customer in each of PP&L's Customer Classes and Rate Schedules.

Recovery of Qualified Transition Expenses will be allocated among
PP&L's Customer Classes based on a one-time calculation of a percentage
representing the relative generation-related costs borne by PP&L's Rate
Schedules through current electric rates approved by the PUC. PP&L will
determine the total amount of Intangible Transition Charges required to be
billed to each Rate Schedule in order to generate ITC Collections
sufficient to ensure timely recovery of Qualified Transition Expenses.
These charges will be reflected in each Customer's bill within each Rate
Schedule. The charges will vary among Rate Schedules within a Customer
Class.

The dollar amount of the charge on a Customer's bill is the
Intangible Transition Charge payable by the Customer. To the extent that
total revenues are affected by changes in usage, number of Customers, rate
of delinquencies and write-offs or other factors, ITC Collections will vary
from projections. PP&L will recalculate the charge applied to Customers'
bills to adjust for such variations on each Calculation Date. See Tables 3,
4, 5, 6, 7, 8 and 9 under "The Servicer of The Intangible Transition
Property-PP&L's Customer Classes and Rate Schedules" in this Prospectus.

The imposition of Intangible Transition Charges as a result of the
issuance of Transition Bonds will result in a corresponding reduction in
any Competitive Transition Charges then in effect. In addition, the
Competitive Transition Charge will also be reduced by an amount equal to
75% of the savings from securitization of PP&L's Stranded Costs.

The Period When Intangible Transition Charges Will Be Billed to
Customers. Intangible Transition Charges for each Series of Transition
Bonds will be assessed on all Customer bills, which will be pro-rated in
the case of the first bill after issuance of a Series of Transition Bonds
to account for any partial month since the date of issuance. For instance,
if a particular Series Issuance Date is August 15, bills that include
current charges for services provided before August 15 will not be assessed
Intangible Transition Charges for the period prior to August 15, with
respect to that Series. Upon each adjustment of Intangible Transition
Charges or issuance of additional Series of Transition Bonds, the adjusted
Intangible Transition Charges will be assessed in the same manner.

Intangible Transition Charges Will Be Charged Only for Usage
Through December 31, 2009. The Servicer, or electric generation supplier or
other third party biller, will continue to charge the Intangible Transition
Charges for usage with respect to each Series of Transition Bonds, until
the Series has been paid in full, but in no event later than December 31,
2009. Upon payment in full of all Transition Bonds, or December 31, 2009,
whichever is sooner, the Servicer will cease assessing Intangible
Transition Charges. However, after December 31, 2009 the Servicer, or
electric generation supplier or other third party biller, will continue to
collect the Intangible Transition Charges accrued by Customers through
December 31, 2009. To the extent that ITC Collections exceed the amount
necessary to amortize fully all Transition Bonds and pay interest thereon,
to fund credit enhancement and to pay related fees, costs and charges, the
ITC Collections will be released by the Trustee to the Issuer.

The PUC's Intangible Transition Charge Adjustment Process. In order
to enhance the likelihood that actual ITC Collections, net of any amounts
on deposit in the Reserve Account, are neither more nor less than the
amount necessary to amortize the Transition Bonds of each Series in
accordance with the related Expected Amortization Schedule, to pay
interest, to fund the Overcollateralization Subaccount to the scheduled
overcollateralization level, to replenish any shortfalls in the Capital
Subaccount, and to pay the Trustee's fee, the Servicing Fee and the other
expenses and costs included in Qualified Transition Expenses, the Servicing
Agreement requires the Servicer to seek, and the Competition Act and the
PUC Order require the PUC to approve, annual adjustments to the Intangible
Transition Charges based on actual ITC Collections and updated assumptions
by the Servicer as to projected future usage of electricity by Customers,
expected delinquencies and write-offs and future expenses relating to
Intangible Transition Property and the Transition Bonds. In addition, the
PUC Order provides that adjustments during the last year that the
Transition Bonds are outstanding may be made quarterly or monthly. If at
the time of issuance of a Series, the Servicer determines any additional
adjustments are required, the dates for these adjustments will be specified
in the Prospectus Supplement for the Series. These adjustments will cease
with respect to a Series on the final Adjustment Date specified in the
related Prospectus Supplement for the Series.

The Schedule for Making Adjustments to Intangible Transition
Charges. The Servicer is required to file an Adjustment Request with the
PUC on October 1 of each year and on any other Calculation Date, requesting
modifications to the Intangible Transition Charges. These Adjustment
Requests are designed to result in:

1. the Transition Bond Balance for each Series or Class equaling the
Projected Transition Bond Balance for that Series or Class,

2. the amount on deposit in the Overcollateralization Subaccount
equaling the Scheduled Overcollateralization Level and

3. the amount in the Capital Subaccount equaling the Required Capital
Amount.

These Adjustment Requests are designed to achieve each of the above goals
by the Payment Date immediately preceding the next Adjustment Date or the
Expected Final Payment Date, as applicable, taking into account any amounts
on deposit in the Reserve Subaccount. The Competition Act and the PUC Order
require the PUC to approve whether these adjustments should be instituted
within 90 days of the Adjustment Request. The Adjustment Dates on which
adjustments to the Intangible Transition Charges are expected to be
implemented are January 1 of each year and the date or dates commencing
twelve months before the Expected Final Payment Date for each Series or
Class of Transition Bonds specified in the related Prospectus Supplement.
In order to obtain approval of the adjustment as expeditiously as possible,
on October 1 of each year PP&L, as Servicer, will file with the PUC a
schedule of actual ITC collections for the nine months ended August 31,
together with an estimate of ITC collections for the three months ending on
the immediately following November 30, and the estimated Intangible
Transition Charges for the following year. On December 15, PP&L will file a
schedule of actual ITC collections as of November 30, replacing the
estimates submitted on October 1, and the actual Intangible Transition
Charges for the following year. Adjustments commencing twelve months before
the Expected Final Payment Date for each Series or Class of Transition
Bonds will not reflect updated assumptions of projected future usage of
electricity by Customers, expected delinquencies and write-offs and future
expenses relating to Intangible Transition Property and the Transition
Bonds. During the twelve months prior to the Expected Final Payment Date
for each Series or Class of Transition Bonds, the PUC will permit each
adjustment request to become effective within 15 days after filing. The
adjustment process will continue until the earlier of the final payment of
all Series of Transition Bonds and December 31, 2009.

CUSTOMERS WITHIN PP&L'S SERVICE TERRITORY MAY CHOOSE HOW THEIR ELECTRICITY
CONSUMPTION IS BILLED

The PUC Order and subsequent orders of the PUC give Customers the
opportunity to choose from several billing options as of mid-1999 for all
Rate Schedules, except for Residential Rate Schedules for which the
starting date is January 1, 2000:

1. consolidated billing from the utility,

2. consolidated billing from the electric generation supplier or other
third party or

3. separate billing from the utility and from either the electric
generation supplier or other third party providing billing
services.

Any electric generation supplier or other third party that provides
consolidated billing is required to pay the utility amounts billed by the
utility to that entity, including the Intangible Transition Charges,
regardless of the entity's ability to collect these amounts from its
customers. In effect, through this mechanism, the electric generation
supplier or other third party will replace the consumer as the obligor on
the Intangible Transition Charges. As a result, the Servicer, on behalf of
the Issuer, will have limited rights to collect the Intangible Transition
Charges from those consumers that are served by electric generation
suppliers or other third parties. The Servicer will have the right to bill
and collect Intangible Transition Charges and other amounts payable to the
Servicer directly from all of the electric generation supplier's or other
third party's consolidated billing customers following a payment default by
an electric generation supplier or other third party and the expiration of
the applicable grace period. See "Risk Factors-Servicing Risks" in this
Prospectus.

Metering and Billing Guidelines. The PUC Order sets forth and
future orders of the PUC will set forth guidelines governing metering,
billing and other activities by electric generation suppliers and other
third parties. The PUC has determined that if an electric generation
supplier or other third party provides consolidated billing, the electric
generation supplier or other third party must first establish its
creditworthiness by either:

1. demonstrating that it has an investment-grade rating for its own
long-term debt or

2. depositing with the PUC a letter of credit or other mechanism
sufficient to cover 30 days of its expected collections from
Intangible Transition Charges.

The PUC Order provides that an electric generation supplier or other third
party that bills consumers must comply with all billing, financial and
disclosure requirements applicable to electric generation suppliers.
However, the PUC may waive any of those requirements at any time in the
future. These PUC standards include, but are not limited to, data exchange
and billing format standards to facilitate the efficient, speedy and
non-discriminatory exchange of information between PP&L and any third party
electricity generation suppliers. On October 2, 1998, the Joint Petitioners
submitted to the PUC proposed competitive metering and billing
specifications which modified the PUC's guidelines as necessary to assure
the standards are consistent with PP&L's systems. This filing resolved all
outstanding billing and metering issues except for two small issues
relating to consolidated electricity generation supplier bills. On October
16, 1998, the PUC approved the Joint Petitioners' competitive billing and
metering specifications filing. See "Risk Factors-Servicing Risks" in this
Prospectus.

Discounts PP&L Will Offer to Customers. Under the PUC Order, PP&L
will continue to provide existing discounts to some classes of Customers,
for instance industrial Customers which consume large amounts of power and
Customers in specified low-income assistance programs, among others. These
discounts are already accounted for in the average rates to be charged to
all other Customers, including the Competitive Transition Charges and the
Intangible Transition Charges. In addition, the Competition Act and the PUC
Order require PP&L to cooperate with Customer requests for an alternative
Competitive Transition Charges payment methodology that fully collects the
present value of Competitive Transition Charges without underpayment by the
Customer or over collection by PP&L. During the 1998 fiscal year, all of
PP&L's Customers became eligible to exercise this option.

PP&L'S UNIVERSAL SERVICE PROGRAM FOR LOW-INCOME CUSTOMERS

PP&L provides five programs that provide energy assistance to
low-income Customers:

1. Customer Assistance and Referral Evaluation Service;

2. Operation HELP;

3. Winter Relief Assistance Program;

4. Keep Warm Plan; and

5. On Track Payment Program Pilot.

The PUC ordered that PP&L increase its funding levels for these programs
from approximately $7 million, which represents the expense incurred for
these programs in 1997, to $18.5 million by 2002. The implementation and
management of these Universal Service Programs, or any other Universal
Service Programs which may be implemented in the future are not expected to
affect materially Intangible Transition Charge recovery.

PRIOR LEGAL CHALLENGES TO THE COMPETITION ACT OR THE PUC ORDER

LITIGATION RELEVANT TO THE COMPETITION ACT

The Union Action and the Fumo Action. Two legal actions alleged
that the adoption of the Competition Act violated provisions of the
Pennsylvania Constitution governing legislative procedure. The first action
was filed by Pennsylvania State Senator Vincent J. Fumo and other
plaintiffs; this action will be referred to as the Fumo Action in this
Prospectus. The second action was filed by the Utility Workers Union of
America. This action will be referred to as the Union Action in this
Prospectus. The plaintiffs in those cases alleged that enactment of the
Competition Act by attaching it to a bill to increase the maximum legal
operational age of taxicabs in Philadelphia, a change already enacted by
the legislature, violated the following Pennsylvania constitutional
provisions:

1. prohibiting any bill from addressing more than one subject,

2. prohibiting any bill from being altered or amended during passage
so as to change its original purpose and

3. requiring every bill to be considered on three separate days in
each house of the General Assembly.

The Commonwealth Court Upholds the Competition Act. On September
24, 1998, the Commonwealth Court ruled in favor of the PUC in the Fumo
Action. The Court first rejected Fumo's argument that the Competition Act
was altered and amended during passage so as to change its original purpose
and meaning. The Court stated that absent confusion or deception as to the
content of a bill, there is no clear violation of the Pennsylvania
Constitution. The Court then said that since the title of the bill which
was to become the Competition Act included, the words ". . . PROVIDING FOR
RESTRUCTURING OF THE ELECTRIC UTILITY INDUSTRY. . .", the Commonwealth's
representatives were on notice as to contents of the bill. The Court then
rejected Fumo's allegation that the bill encompassed more than one subject.
The Court ruled that since the bill involved amendments to the
Commonwealth's Public Utility Code and related subjects dealing with public
utility regulation, there were no obvious constitutional violations which
occurred in the enactment of the Competition Act. Finally the Court
rejected Fumo's contention that the Competition Act was not considered on
three separate days in each house of the legislature. The court held that
since the Competition Act was initially considered on three different days
in the House and three different days in the Senate, " . . . it passed
constitutional muster even though the Senate amendments themselves did not
receive a separate three days of consideration in the House of
Representatives."

On September 24, 1998 the Commonwealth Court dismissed the Union
Action on identical grounds by which it rejected the Fumo Action.
Petitioners in these two cases did not seek further court review and the
time period for doing so has expired.

The IP&L Action. A separate action, filed by Indianapolis Power &
Light Co., which is referred to as IP&L, alleged that the Competition Act's
provision allowing PECO, another electricity provider in the Commonwealth
of Pennsylvania, to recover Stranded Costs discriminates against interstate
commerce in violation of the Commerce Clause of the United States
Constitution. In an opinion dated May 7, 1998, the Commonwealth Court ruled
against IP&L, holding, as a matter of law, that the Competition Act does
not violate the Commerce Clause. IP&L then petitioned the Pennsylvania
Supreme Court for allowance of appeal. In the petition, IP&L claimed that
the payment of Stranded Costs to PECO discriminates against interstate
commerce by favoring in-state electricity producers over out-of-state
electricity producers. On September 29, 1998, the Pennsylvania Supreme
Court refused to review the Commonwealth Court's ruling in the IP&L case,
without comment. On January 11, 1999, IP&L filed a petition for a Writ of
Certiorari to the United States Supreme Court seeking a review of the
Commonwealth Court's decision. On March 8, 1999 the Supreme Court rejected
IP&L's petition without comment.

PP&L's Action Which Led to the Filing of the Joint Petition. During
July 1998, PP&L filed a petition with the Commonwealth Court requesting the
court to halt implementation of the Competition Act because the PUC had
misapplied the Competition Act in promulgating its Restructuring Order.
Also during July 1998, PP&L filed suit in the Federal District Court for
the Eastern District of Pennsylvania asking the court to halt the
implementation of the Competition Act because it violated the Interstate
Commerce Clause of the United States Constitution. In July 1998, PP&L filed
an appeal to the Commonwealth Court challenging various aspects of the
PUC's Restructuring Order. In addition to these actions, Anthracite Region
Independent Power Producers Association and Schuylkill Energy Resources
also filed appeals to the Commonwealth Court challenging various aspects of
the PUC's Restructuring Order. The PP&L Industrial Customer Alliance, the
Office of Consumer Advocate, Mid-Atlantic Power Supply Association, Enron
Power Marketing, Inc. and the Commission on Economic Opportunity filed
cross-appeals in PP&L's action in the Commonwealth Court. On August 13,
1998, PP&L and all of the parties who had participated in PP&L's
Restructuring Plan cases, with the exception of the Sierra Club, Penn PIRG
and Lehigh Greens, filed the Joint Petition with the PUC. The Joint
Petition was approved by the PUC through the PUC Order.

Under the terms of the Joint Petition, PP&L and the entities
referenced in the preceding paragraph petitioned the Commonwealth Court to
end further consideration of their actions. In addition, PP&L petitioned
the Eastern District Court to end its action. The three parties who did not
sign the Joint Petition agreed to abide by the terms and conditions
contained in the Joint Petition. The various courts have granted the
parties' requests and all of the court cases arising from PP&L's
Restructuring Plan have been terminated or withdrawn.

Litigation in Other Jurisdictions Which Could Adversely Affect
Transition Bondholders. A legal action successfully challenging under the
U.S. Constitution or federal law a state deregulation statute similar to
the Competition Act adopted by a jurisdiction other than Pennsylvania could
establish legal principles that would serve as a basis to challenge the
Competition Act. Whether or not a subsequent challenge to the Competition
Act would be successful would depend on the similarity of the other statute
and the applicability of the legal precedent to the Competition Act. While
the Competition Act would not become invalid automatically as a result of a
court decision invalidating another state's statute, this decision could
establish a legal precedent for a successful challenge to the Competition
Act that could adversely affect Transition Bondholders. Legal challenges
brought in jurisdictions other than Pennsylvania that assert claims that
are based on state laws other than the laws of Pennsylvania would not,
however, have a direct effect on the Competition Act or the interests of
the Transition Bondholders.

LEGISLATIVE ACTIVITY

Possible Federal Preemption of the Competition Act. At least one
bill was introduced in the 105th Congress prohibiting the recovery of
stranded costs, and thus threatened the existence of Intangible Transition
Property. That bill, H.R. 1230, was introduced on April 8, 1997 and
referred to the House Commerce Committee, which referred it to the
Subcommittee on Energy and Power. On October 21, 1997, the Subcommittee on
Energy and Power held hearings, but on October 22, 1997 these hearings were
concluded. The 105th Congress adjourned without taking any further action
on H.R. 1230. As of the date hereof, no member of Congress had introduced a
bill that would affect the existence or value of stranded costs in the
106th Congress. Although the 105th Congress did not pass H.R. 1230, no
prediction can be made as to whether any future bills, that prohibit the
recovery of stranded costs, will become law or, if they become law, what
their final form or effect will be. There is no assurance that the courts
would consider this preemption a "taking." The courts may consider a
preemption of the Competition Act and/or the PUC Order by the federal
government a "taking," for which the government would have to pay the
estimated market value of the Transferred Intangible Transition Property at
the time of the taking. However, there is no assurance that this
compensation would be sufficient to pay the full amount of principal of and
interest on the Transition Bonds.

Possible Commonwealth Amendment or Repeal of the Competition Act.
Under the Competition Act, the Commonwealth has pledged to and agreed with
transition bondholders that it will not limit or alter or in any way impair
or reduce the value of intangible transition property or intangible
transition charges approved by a qualified rate order, until the Transition
Bonds and interest thereon are fully paid and discharged. The Competition
Act also provides, however, that subject to the requirements of law,
nothing contained in the Competition Act precludes limitation or alteration
by the Commonwealth of the value of intangible transition property or
intangible transition charges. The Commonwealth may make this limitation or
alteration if "adequate compensation is made by law" for the full
protection of the intangible transition charges collected pursuant to a
qualified rate order and of transition bondholders. It is unclear what
compensation would be given to Transition Bondholders by the Commonwealth
if it attempts to limit or alter Intangible Transition Property or
Intangible Transition Charges. Accordingly, no assurance can be given that
this provision would fully compensate Transition Bondholders for their
investment.

In the opinion of Morgan, Lewis & Bockius, LLP, counsel to PP&L,
under the Contract Clauses of the United States and Pennsylvania
Constitutions, the Commonwealth could not repeal or amend the Competition
Act or take any other action that substantially impairs the rights of the
Transition Bondholders, unless this action is a reasonable exercise of the
Commonwealth's sovereign powers and of a character appropriate to the
public purpose justifying this action. To date, no cases addressing these
issues in the context of Transition Bonds have been decided. There have
been cases in which courts have applied the Contract Clause of the United
States Constitution and parallel state constitutional provisions to strike
down legislation, reducing or eliminating taxes or public charges which
supported bonds issued by public instrumentalities, or otherwise reducing
or eliminating the security for bonds. Based upon case law, in the opinion
of Morgan, Lewis & Bockius, LLP it would appear unlikely that the
Commonwealth could reduce, modify, alter or take any other action with
respect to the Intangible Transition Property which would substantially
impair the rights of Transition Bondholders, unless the action is
reasonable and appropriate to further a legitimate public purpose.
Moreover, in the opinion of Morgan, Lewis & Bockius, LLP, under the Taking
Clauses of the United States and Pennsylvania Constitutions, the
Commonwealth could not repeal or amend the Competition Act or take any
action in contravention of its pledge and agreement without paying just
compensation to the Transition Bondholders if doing so would constitute a
permanent appropriation of the property interest of Transition Bondholders
in the Intangible Transition Property and deprive the Transition
Bondholders of their reasonable expectations arising from their investments
in the Transition Bonds. There is no assurance, however, that, even if a
court were to award just compensation, it would be sufficient to pay the
full amount of principal of and interest on the Transition Bonds. In
addition, there can be no assurance that a repeal of or amendment to the
Competition Act will not be sought or adopted or that any action by the
Commonwealth may not occur, any of which might constitute a violation of
the Commonwealth's pledge and agreement with the Transition Bondholders. In
any event, costly and time-consuming litigation might ensue. Any litigation
might adversely affect the price and liquidity of the Transition Bonds and
the dates of payments of interest on and principal thereof and,
accordingly, the weighted average lives thereof. Moreover, given the lack
of judicial precedent directly on point, and the novelty of the
security for the Transition Bondholders, the outcome of any litigation
cannot be predicted with certainty, and accordingly, Transition Bondholders
could incur a loss of their investment.

POTENTIAL UNEXPECTED REGULATORY ACTION BY THE PUC

Even with the enactment of the Competition Act, the PUC will
continue to regulate some aspects of the electric industry in Pennsylvania.
For example, the PUC will continue to fully regulate electric distribution
companies. The PUC will also establish:

1. financial and other qualifications of electric generation suppliers
and other third parties,

2. guidelines governing customer billing and collection and

3. metering and disclosure requirements applicable to electric
generation suppliers or other third parties participating in the
new market in Pennsylvania.

Pursuant to the Competition Act, the PUC Order issued to PP&L includes an
irrevocable pledge that the PUC will not directly or indirectly, by any
subsequent action, reduce, postpone, impair or terminate the PUC Order or
the Intangible Transition Charges authorized under the PUC Order. The PUC
nevertheless might attempt to revise or rescind any of its regulations in
ways that ultimately have an adverse impact upon the Intangible Transition
Charges. Any new or amended regulations or orders by the PUC could have an
effect on the Transition Bonds. In the Contribution Agreement, PP&L agrees
to take legal or administrative actions, including instituting and
provoking legal actions as may be reasonably necessary to block or overturn
any attempts to cause a repeal, modification or supplement to the
Competition Act, the PUC Order or the Intangible Transition Property. PP&L
will resist attempts to change the Competition Act, the PUC Order or the
Intangible Transition Property by regulatory action, legislative enactment
or constitutional amendment materially adverse to the holders of Transition
Bonds. PP&L will also resist proceedings of third parties, which, if
successful, would result in a breach of representations concerning the
Intangible Transition Property, the PUC Order or the Competition Act. See
"The Contribution Agreement" in this Prospectus. There is no assurance that
PP&L would be able to take this action or that any action PP&L is able to
take would be successful. Future PUC regulations or orders may affect the
rating of the Transition Bonds, their price or the rate of Intangible
Transition Charge Collections and, accordingly, the amortization of
Transition Bonds and their weighted average lives. As a result, Transition
Bondholders could suffer a loss of their investment.

THE SERVICER OF THE INTANGIBLE TRANSITION PROPERTY

PP&L

PP&L is an operating electric utility, incorporated under the laws
of the Commonwealth of Pennsylvania in 1920. PP&L provides electricity
delivery service to approximately 1.3 million Customers in a 10,000 square
mile territory in 29 counties of central eastern Pennsylvania, with a
population of approximately 2.6 million persons. This service area has 129
communities with populations over 5,000, the largest cities of which are
Allentown, Bethlehem, Harrisburg, Hazleton, Lancaster, Scranton,
Wilkes-Barre and Williamsport. This territory is primarily urban and
suburban, with an industrial-based economy. In addition to delivery of its
own generation or purchased power, PP&L is delivering power supplied by
licensed electricity generation suppliers pursuant to the Competition Act.
PP&L also markets wholesale electricity in 28 states and Canada. During
1998, about 96% of total operating revenue was derived from electric energy
sales and marketing activities, with 26% coming from residential customers,
22% from commercial customers, 15% from industrial customers, 34% from
wholesale sales and 3% from others.

PP&L RESOURCES

PP&L is the primary subsidiary of PP&L Resources, a holding company
formed in 1995. The assets of PP&L comprise approximately 92% of PP&L
Resources's consolidated assets, and the financial condition and results of
operation of PP&L are currently the principal factors affecting the
financial condition and results of operations of PP&L Resources. PP&L
Resources' other subsidiaries include:

1. PP&L Global, Inc., an international independent power company which
invests in and develops world-wide power projects;

2. PP&L Spectrum, Inc., which markets energy-related services and
products;

3. PP&L Capital Funding, which engages in financing for PP&L Resources
and its subsidiaries other than PP&L;

4. Penn Fuel Gas, Inc., which provides natural gas distribution,
transmission and storage services and sells propane; and

5. H.T. Lyons, Inc., McClure Company and McCarl's Inc. which provide
mechanical contractor and engineering services.

PP&L'S CUSTOMER CLASSES AND RATE SCHEDULES

PP&L's Customer Rate Classes. PP&L's Customer base is divided into
three Customer Classes: Residential, Small Commercial and Industrial and
Large Commercial and Industrial. These Customer Classes are determined by
the voltage level that the class uses, and not by the characteristics of
the Customers within the class. In its rate calculation and filings, PP&L
uses the designations:

1. "Secondary Voltage Level Customers - Residential" to describe the
Residential Customer Class,

2. "Secondary Voltage Level Customers - Non-Residential" to describe
the Small Commercial and Industrial Customer Class, which includes
street-lighting and

3. Transmission/Primary Voltage Level Customers to describe the Large
Commercial and Industrial Customer Class.

Nevertheless, residential customers predominantly comprise the first
Customer Class, small commercial and industrial customers predominantly
comprise the second Customer Class and large commercial and industrial
customers predominantly comprise the third Customer Class. Each Customer
Class includes a number of Rate Schedules. Rate Schedules and Customer
Classes are created by PP&L and approved by the PUC, and are subject to
change. Any changes will be reflected in any Adjustment Request filed with
the PUC by the Servicer. The current Customer Classes and Rate Schedules
were effective on or before November 1, 1997. They are:

Residential

Rate Schedule RS - Residential Service: Single-phase Electric Delivery
Service is available to: 1) a single family dwelling and appurtenant
detached buildings; 2) a separate dwelling unit in an apartment house;
3) a single farm dwelling and general farm uses; and 4) a building
previously wired for single meter service which is converted to not
more than 8 separate dwelling units served through one meter.

Rate Schedule RTS - Residential Service - Thermal Storage: This Rate
Schedule is applicable to service which would otherwise qualify under
Rate Schedule RS except for the following: 1) two or more separate
dwelling units supplied through a single meter; 2) seasonal service and
seasonal use Customers; 3) service with separate meter controlled water
heater service; and 4) residential service with general farm use which
includes more than 2,000 watts of connected farm load. This Rate
Schedule is restricted to existing Customers in the Rate Schedule as of
December 31, 1995.

Rate Schedule RTD - Residential Service - Time-of-Day: Single-phase
Electric Delivery Service is available to: 1) a single family dwelling
and appurtenant detached building; and 2) a separate dwelling unit in
an apartment house. This Rate Schedule will be restricted to existing
Customers in this Rate Schedule as of January 1, 2000.

Small Commercial and Industrial:

Rate Schedule GS-1 - General Service: This rate schedule is for small
general service at secondary voltage or at a higher available voltage
at the option of the Customer. The billing demand is limited to 5
kilowatts for accounts served under discontinued rate schedule FC as of
June 28, 1980.

Rate Schedule GS-3 - Large General Service at Secondary Voltage or
Higher: This rate schedule is for large general service at secondary
voltage, or at a higher available voltage at the option of the
Customer.

Rate Schedule GH-1(R) - Single Meter Commercial Space Heating Service:
This rate schedule is for all electric commercial service supplied
through one meter when electricity is the sole source of all of the
Customer's energy requirements. Customers may include wholesale and
retail trade and associated warehousing operations, office buildings,
and establishments providing professional personal or business
services. This rate schedule is in the process of elimination and is
available only to service locations supplied continuously on or after
August 21, 1972, and to locations served under discontinued Rate
Schedule GH-4 as of September 26, 1984.

Rate Schedule GH-2(R) - Separate Meter General Space Heating Service:
This rate schedule is for separately metered electric space heating
service to Customers whose general use is supplied under some other
general service rate schedule, and may include service for general use
in all electric apartment buildings when individual living units in the
building are metered separately under a residential rate schedule. This
rate schedule is in the process of elimination and is available only to
service locations supplied continuously on or after August 21, 1972,
and also to prospective service locations where a definitive rate
commitment has been made as of that date for so long as service is
continuous thereafter.

Rate Schedule IS-1 - Interruptible Service to Greenhouses: This rate
schedule is for general service at secondary voltage to greenhouses or
other environmentally controlled growing facilities which use a minimum
of 300KW of interruptible lighting load as a daylight supplemental.

Rate Schedule SA - Private Area Lighting Service: This rate schedule is
for the lighting of yards, private roadways, alleys and other areas
supplied from existing overhead secondary distribution.

Rate Schedule SM - Mercury Vapor Street Lighting Service: This rate
schedule is for lighting service from overhead or underground
facilities on public areas such as streets, highways, bridges and
parks, to municipalities, other governmental agencies, or private
property Customers, when this service is supplied under Company's
standard form of contact in accordance with the various laws applicable
thereto.

Rate Schedule SHS - High Pressure Sodium Street Lighting Service: This
service is available only to the following type of Customer: metal pole
overhead - existing locations served under another of PP&L's street
lighting rate schedules and locations previously served under Hershey
Electric Company's Rate Schedule SMVO.

Rate Schedule SE - Energy Only Street Lighting Service: This rate
schedule is available only to municipalities or other governmental
agencies for the operation of mercury vapor, high pressure sodium, or
metal halide street lighting systems on public areas such as streets,
highways, bridges and parks where the municipality or other
governmental agency provides for the installation, ownership, operation
and maintenance of the street lighting equipment.

Rate Schedule SI-1(R) - Municipal Street Lighting Service: This rate
schedule is for municipal lighting service on public streets, highways,
bridges, parks, etc., to municipalities or other governmental agencies
when this service is supplied under PP&L's standard form of contract in
accordance with the various laws applicable thereto. The rates for
incandescent lamps are limited to those fixtures and lamp sizes
installed on or before and supplied continuously after March 28, 1972.
This rate schedule will be eliminated as of January 1, 2002.

Rate Schedule TS - Municipal Traffic Lighting Service: This rate
schedule is for traffic signal lighting service to cities, boroughs,
and townships. The minimum under this rate schedule is 50 watts. This
rate schedule is in the process of elimination and service hereunder is
available only to existing locations continuously supplied as of August
26, 1976. It is available to any municipality using PP&L's standard
delivery service for electric traffic signal lights installed, owned
and maintained by the municipality.

Rate Schedule BL - Borderline Service - Electric Service: Available
under reciprocal agreements to neighboring electric utilities for
resale in their adjacent territory.

Large Commercial and Industrial:

Rate Schedule LP-4 - Large General Service at 12,470 Volts or Higher:
This rate schedule is for large general service supplied from available
lines of 12,470 volts or higher when the Customer furnishes and
maintains all equipment necessary to transform the energy from line
voltage.

Rate Schedule IS-P - Interruptible Large General Service at 12,470
Volts or Higher: This rate schedule is for interruptible large general
service supplied from available lines of 12,470 volts or higher where
the Customer furnishes and maintains all equipment necessary to
transform the energy from line voltage. Interruptible service under
this rate schedule is available to Customers with at least 1,000
kilowatts of year-round interruptible power who contract to accept
interruptible service for at least one year.

Rate Schedule LP-5 - Large General Service at 69,000 Volts or Higher:
This rate schedule is for large general service supplied from available
lines of 69,000 volts or higher when the Customer furnishes and
maintains all equipment necessary to transform the energy from line
voltage. It applies to 3 phase, 60 Hertz service.

Rate Schedule LP-6 - Large General Service at 69,000 Volts or Higher:
This rate schedule is for large general service supplied from available
lines of 69,000 volts or higher when the Customer furnishes and
maintains all equipment necessary to transform the energy from line
voltage, that does not fall under the Rate Schedule LP-5.

Rate Schedule IS-T - Interruptible Large General Service at 69,000
Volts or Higher: This rate schedule is for interruptible large general
service supplied from available lines of 69,000 volts or higher where
the Customer furnishes and maintains all equipment necessary to
transform the energy from line voltage. It applies to 3 phase, 60 Hertz
service. Interruptible service under this rate schedule is available to
Customers with at least 1,000 kilowatts of year-round interruptible
power who contact to accept interruptible service for at least one
year.

Rate Schedule LPEP - Power Service to Electric Propulsion: This rate
schedule is available for electric propulsion service from PP&L's high
voltage lines of 69,000 volts or higher, where the Customer furnishes
and maintains all equipment necessary to transform the energy from line
voltage.

Rate Schedule ISM - Interruptible Service by Agreement: This service is
available to large general service Customers who take service from
available transmission lines of 69,000 volts or higher. The Customer
furnishes and maintains all equipment necessary to transform the energy
from line voltage. This service is available only to Customers who
require interruptible service which is different than that provided in
PP&L's other rate schedules, and who accept service interruptions
pursuant to a service agreement.

Rate Schedule Standby - Standby Basic Utility Supply Service: PP&L will
provide this service to Qualifying Facilities as defined in the Public
Utility Regulatory Policies Act of 1978. PP&L will also provide this
service to a Customer that contracts with a Qualifying Facility and
that must be served under the requirements of either federal or state
law. This service is provided only where PP&L has available capacity
and facilities adequate for the service requested and only pursuant to
a power purchase or interconnection agreement with PP&L.

Customers in Rate Schedules that are eliminated are expected to
remain in the same Customer Class. In addition, Customers have historically
migrated between Rate Schedules as their voltage requirements changed,
Customer migration between Rate Schedules has not been and is not expected
to be significant. Customers are not expected to migrate between Customer
Classes.

Rate Adjustment Among Rate Schedules Within the Three Classes. Each
Customer Class is responsible for a fixed percentage of the Intangible
Transition Charges. The Intangible Transition Charges will be determined
for each Rate Schedule within the three Customer Classes. The Intangible
Transition Charges will be adjusted by Rate Schedule within each Customer
Class, but not among Customer Classes. The Competition Act prohibits
allocating Intangible Transition Charges to customer classes in a manner
that results in the interclass or intraclass shifting of costs. In prior
decisions, the PUC has ruled that performing rate adjustments by Customer
Classes does not constitute interclass or intraclass shifting of costs. For
more information, refer to "The Servicing Agreement-The PUC's Intangible
Transition Cost Adjustment Process" in this Prospectus

Statistics Regarding PP&L's Total Customers. The following tables
show various operating statistics by Customer Class and Rate Schedule
within each Customer Class. Table 3 shows the number and percentage of
retail electric Customers. Table 4 shows retail electric usage. Table 5
shows retail electric revenues. All Rate Schedules will be billed
Intangible Transition Charges. For the Intangible Transition Charges
assessed to individual Rate Schedules as of any Series Issuance Date and
any adjustment thereto, in each case giving effect to the issuance of
Transition Bonds on that date, see the related Prospectus Supplement. There
can be no assurance that total Customers, the composition of total
Customers by Customer Class and Rate Schedule, or usage levels or revenues
for each Customer Class and Rate Schedule will remain at or near the levels
reflected in the following tables. For a description of the Customer Class
and Rate Schedule abbreviations used in Tables 3, 4 and 5, see "-PP&L's
Customer Classes and Rate Schedules" above.

<TABLE>
<CAPTION>
TABLE 3

NUMBER OF RETAIL ELECTRIC CUSTOMERS

Year Ended Year Ended Year Ended Year Ended Year Ended Quarter Ended
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
Rate Schedule Avg. % of Avg. % of Avg. % of Avg. % of Avg. % of Avg. % of
# Total # Total # Total # Total # Total # Total
Custom- Custom- Custom- Custom- Custom- Custom-
ers ers ers ers ers ers
--------- ------- --------- -------- --------- -------- --------- ------- --------- ------- --------- ------
Residential

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule RS 1,048,223 86.87% 1,058,939 86.79% 1,066,724 86.71% 1,074,821 86.65% 1,081,800 86.53% 1,087,255 89.68%
Rate Schedule RTS 14,028 1.16% 14,449 1.18% 14,597 1.19% 14,568 1.17% 14,495 1.16% 13,796 1.10%
Rate Schedule RTD 313 0.03% 321 0.03% 304 0.02% 294 0.02% 290 0.02% 267 0.02%
Total 1,062,564 88.06% 1,073,709 88.00% 1,081,625 87.93% 1,089,483 87.84% 1,096,585 87.71% 1,101,318 88.10%

Small Commercial & Industrial

Rate Schedule GS-1 119,146 9.87% 120,921 9.91% 122,383 9.95% 124,374 10.03% 127,090 10.17% 123,030 9.84%
Rate Schedule GS-3 18,401 1.52% 18,981 1.56% 19,801 1.61% 20,313 1.64% 20,525 1.64% 19,893 1.59%
Rate Schedule GH-1(R) 1,621 0.13% 1,588 0.13% 1,403 0.11% 1,144 0.09% 1,078 0.09% 1,008 0.08%
Rate Schedule GH-2(R) 2,964 0.25% 2,911 0.24% 2,862 0.23% 2,805 0.23% 2,739 0.22% 2,614 0.21%
Rate Schedule IS-1 4 0.00% 4 0.00% 4 0.00% 4 0.00% 4 0.00% 4 0.00%
Rate Schedule SA 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
Rate Schedule SM 135 0.01% 125 0.01% 117 0.01% 115 0.01% 112 0.01% 113 0.01%
Rate Schedule SHS 760 0.06% 825 0.07% 869 0.07% 903 0.07% 934 0.07% 910 0.07%
Rate Schedule SE 57 0.00% 59 0.00% 61 0.00% 63 0.01% 63 0.01% 62 0.00%
Rate Schedule SI-1(R) 5 0.00% 5 0.00% 3 0.00% 3 0.00% 3 0.00% 3 0.00%
Rate Schedule TS 17 0.00% 17 0.00% 17 0.00% 17 0.00% 17 0.00% 17 0.00%
Rate Schedule BL 24 0.00% 26 0.00% 21 0.00% 13 0.00% 25 0.00% 25 0.00%
Total 143,134 11.86% 145,462 11.92% 147,541 11.99% 149,754 12.07% 152,590 12.21% 147,679 11.80%

</TABLE>

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule LP-4 808 0.07% 816 0.07% 827 0.07% 826 0.07% 859 0.07% 900 0.07%
Rate Schedule IS-P 25 0.00% 32 0.00% 32 0.00% 39 0.00% 41 0.00% 34 0.00%
Rate Schedule LP-5 95 0.01% 91 0.01% 87 0.01% 88 0.01% 91 0.01% 85 0.01%
Rate Schedule LP-6 0 0.00% 5 0.00% 5 0.00% 4 0.00% 4 0.00% 4 0.00%
Rate Schedule IS-T 23 0.00% 28 0.00% 30 0.00% 35 0.00% 33 0.00% 32 0.00%
Rate Schedule LPEP 1 0.00% 1 0.00% 1 0.00% 1 0.00% 1 0.00% 1 0.00%
Rate Schedule ISM 1 0.00% 1 0.00% 1 0.00% 1 0.00% 1 0.00% 1 0.00%
Rate Schedule Standby 9 0.00% 9 0.00% 10 0.00% 9 0.00% 8 0.00% 0 0.00%
Total 962 0.08% 983 0.08% 993 0.08% 1,003 0.08% 1,038 0.08% 1,057 0.08%
- ---------------
</TABLE>

TABLE 4

ACTUAL RETAIL ELECTRIC USAGE PER MWH

Year Ended Year Ended Year Ended Year Ended Year Ended Quarter Ended
Rate Schedule 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
% of % of % of % of % of % of
mWh total mWh total mWh total mWh total mWh total mWh total
----------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ --------- ------
Residential

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule RS 11,042,348 35.70% 10,905,634 34.86% 11,417,526 35.34% 11,029,356 34.51% 10,783,774 33.56% 3,603,814 39.02%
Rate Schedule RTS 388,442 1.26% 381,659 1.22% 417,938 1.29% 391,796 1.23% 360,228 1.12% 150,083 1.63%
Rate Schedule RTD 5,519 0.02% 5,367 0.02% 5,419 0.02% 4,976 0.02% 4,674 0.01% 1,697 0.02%
Total 11,436,309 36.97% 11,292,660 36.10% 11,840,883 36.65% 11,426,128 35.75% 11,148,676 34.69% 3,755,594 40.67%

Small Commercial & Industrial

Rate Schedule GS-1 1,401,597 4.53% 1,413,913 4.52% 1,449,933 4.49% 1,458,263 4.56% 1,507,567 4.69% 453,582 4.91%
Rate Schedule GS-3 6,690,517 21.63% 6,909,728 22.09% 7,205,496 22.30% 7,330,178 22.93% 7,486,597 23.30% 1,984,697 21.49%
Rate Schedule GH-1(R) 510,845 1.65% 476,356 1.52% 439,681 1.36% 365,598 1.14% 321,752 1.00% 116,441 1.26%
Rate Schedule GH-2(R) 95,114 0.31% 85,477 0.27% 88,019 0.27% 78,940 0.25% 69,051 0.21% 33,018 0.36%
Rate Schedule IS-1 3,688 0.01% 4,092 0.01% 4,337 0.01% 4,062 0.01% 3,632 0.01% 1,756 0.02%
Rate Schedule SA 28,061 0.09% 27,494 0.09% 26,858 0.08% 26,482 0.08% 25,894 0.08% 7,256 0.08%
Rate Schedule SM 9,148 0.03% 8,049 0.03% 7,168 0.02% 6,653 0.02% 6,597 0.02% 1,756 0.02%
Rate Schedule SHS 57,854 0.19% 59,840 0.19% 60,875 0.19% 61,855 0.19% 62,355 0.19% 16,367 0.18%
Rate Schedule SE 9,160 0.03% 9,594 0.03% 10,895 0.03% 11,036 0.03% 11,901 0.04% 3,254 0.04%
Rate Schedule SI-1(R) 350 0.00% 221 0.00% 190 0.00% 189 0.00% 188 0.00% 51 0.00%
Rate Schedule TS 504 0.00% 504 0.00% 504 0.00% 504 0.00% 504 0.00% 123 0.00%
Rate Schedule BL 9,760 0.03% 2,684 0.01% 4,751 0.01% 5,730 0.02% 7,341 0.02% 1,232 0.01%
Total 8,816,598 28.50% 8,997,592 28.76% 9,298,707 28.78% 9,349,490 29.25% 9,503,379 29.57% 2,619,542 28.37%
</TABLE>

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule LP-4 4,197,312 13.57% 4,212,820 13.47% 4,371,372 13.53% 4,366,189 13.66% 4,599,955 14.31% 1,152,561 12.48%
Rate Schedule IS-P 325,211 1.05% 425,342 1.36% 437,663 1.35% 524,541 1.64% 562,350 1.75% 143,987 1.56%
Rate Schedule LP-5 3,435,484 11.11% 3,215,223 10.28% 2,962,609 9.17% 3,089,211 9.66% 3,045,536 9.48% 771,890 8.36%
Rate Schedule LP-6 0 0.00% 105,071 0.34% 556,707 1.72% 454,463 1.42% 474,633 1.48% 119,185 1.29%
Rate Schedule IS-T 2,151,956 6.96% 2,406,342 7.69% 2,208,843 6.84% 2,161,552 6.76% 2,218,105 6.90% 550,160 5.96%
Rate Schedule LPEP 146,135 0.47% 105,628 0.34% 67,986 0.21% 56,206 0.18% 73,317 0.23% 24,678 0.27%
Rate Schedule ISM 410,120 1.33% 509,520 1.63% 550,869 1.70% 526,539 1.65% 505,281 1.57% 97,481 1.06%
Rate Schedule Standby 12,008 0.04% 11,005 0.04% 11,774 0.04% 9,779 0.03% 5,847 0.02% 658 0.01%
Total 10,678,226 34.52% 10,990,951 35.14% 11,167,643 34.57% 11,188,480 35.00% 11,485,024 35.74% 2,860,600 30.97%
- ---------------
</TABLE>

Actual usage fluctuations are highly dependent on weather
conditions. See "The Servicer of the Intangible Transition Property-How
PP&L Forecasts the Number of Customers and the Amount of Electricity
Usage." The actual total annual usage has increased for each of the past
two years. The compounded annual growth rate for actual usage for all
Customer Classes for the period from 1994 through 1998 was 1.6%. There can
be no assurance that future usage rates will be similar to historical
experience. See "Risk Factors-Servicing Risks" in this Prospectus.

TABLE 5

RETAIL ELECTRIC REVENUES (DOLLARS IN THOUSANDS)

Year Ended Year Ended Year Ended Year Ended Year Ended Quarter Ended
Rate Schedule 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
% of % of % of % of % of % of
$ total $ total $ total $ total $ total $ total
----------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ --------- ------
Residential

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule RS 909,494 40.63% 904,054 40.08% 976,460 40.96% 948,796 40.32% 909,667 39.49% 285,668 47.85%
Rate Schedule RTS 20,388 0.91% 20,528 0.91% 22,986 0.96% 21,809 0.93% 20,134 0.87% 7,261 1.22%
Rate Schedule RTD 418 0.02% 407 0.02% 420 0.02% 386 0.02% 355 0.02% 123 0.02%
Total 930,300 41.56% 924,989 41.01% 999,866 41.95% 970,991 41.26% 930,156 40.38% 293,052 49.09%

Small Commercial & Industrial

Rate Schedule GS-1 154,130 6.88% 155,066 6.87% 160,011 6.71% 160,416 6.82% 162,026 7.03% 46,148 7.73%
Rate Schedule GS-3 515,183 23.01% 530,197 23.51% 556,979 23.37% 565,757 24.04% 556,156 24.15% 125,031 20.94%
Rate Schedule GH-1(R) 40,740 1.82% 38,313 1.70% 36,481 1.53% 30,222 1.28% 25,411 1.10% 7,917 1.33%
Rate Schedule GH-2(R) 7,488 0.33% 6,771 0.30% 7,235 0.30% 6,492 0.28% 5,533 0.24% 2,596 0.43%
Rate Schedule IS-1 187 0.01% 202 0.01% 211 0.01% 197 0.01% 167 0.01% 75 0.01%
Rate Schedule SA 4,256 0.19% 4,237 0.19% 4,412 0.19% 4,433 0.19% 4,438 0.19% 1,086 0.18%
Rate Schedule SM 1,522 0.07% 1,324 0.06% 1,257 0.05% 1,185 0.05% 1,170 0.05% 184 0.03%
Rate Schedule SHS 14,699 0.66% 15,251 0.68% 16,396 0.69% 16,739 0.71% 16,943 0.74% 4,295 0.72%
Rate Schedule SE 365 0.02% 395 0.02% 457 0.02% 462 0.02% 507 0.02% 102 0.02%
Rate Schedule SI-1(R) 71 0.00% 48 0.00% 36 0.00% 36 0.00% 36 0.00% 6 0.00%
Rate Schedule TS 60 0.00% 60 0.00% 60 0.00% 60 0.00% 60 0.00% 10 0.00%
Rate Schedule BL 863 0.04% 245 0.01% 436 0.02% 527 0.02% 669 0.03% 110 0.02%
Total 739,564 33.04% 752,109 33.34% 783,971 32.89% 786,526 33.43% 773,116 33.56% 187,560 31.41%

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rate Schedule LP-4 263,108 11.75% 264,014 11.70% 277,112 11.63% 274,889 11.68% 282,324 12.26% 57,516 9.63%
Rate Schedule IS-P 15,650 0.70% 19,939 0.88% 21,221 0.89% 24,618 1.05% 26,363 1.14% 5,339 0.89%
Rate Schedule LP-5 181,183 8.09% 168,894 7.49% 156,344 6.56% 159,623 6.78% 155,182 6.74% 28,797 4.82%
Rate Schedule LP-6 0 0.00% 5,794 0.26% 29,961 1.26% 24,736 1.05% 24,544 1.07% 3,956 0.66%
Rate Schedule IS-T 82,970 3.71% 92,926 4.12% 88,611 3.72% 87,559 3.72% 87,810 3.81% 15,604 2.61%
Rate Schedule LPEP 8,180 0.37% 6,204 0.28% 4,679 0.20% 4,076 0.17% 4,948 0.21% 1,507 0.25%
Rate Schedule ISM 16,532 0.74% 19,571 0.87% 20,645 0.87% 18,955 0.81% 18,002 0.78% 3,513 0.59%
Rate Schedule
Standby 1,171 0.05% 1,145 0.05% 1,290 0.05% 1,106 0.05% 908 0.04% 112 0.02%
Total 568,794 25.41% 578,487 25.65% 599,863 25.17% 595,562 25.31% 600,081 26.05% 116,344 19.47%
- ---------------
</TABLE>

There can be no assurance that current Customers will remain
Customers or that the levels of Customer concentration in the future will
be similar to those set forth above.

PP&L's Delinquency and Write-Off Experience. The following table
sets forth the delinquency and write-off experience with respect to
payments to PP&L for Residential Customers as well as for all other
Customers, for each of the periods indicated below. During the last three
years, the delinquency experience for all Customers has improved
substantially due to more aggressive collection efforts. However, these
efforts have increased the amount of write-offs. The amount of write-offs
is expected, but is not assured, to decline in coming years due to the
completion of a residential security deposit policy which is scheduled for
December 31, 1999 See "-PP&L Maintains Limited Information on Its
Customers' Creditworthiness." PP&L does not expect, but cannot assure, that
the delinquency or write-off experience with respect to ITC Collections
will differ substantially from the rates indicated. For example, changes in
the retail electric market, including but not limited to the introduction
of electric generation suppliers, or other third parties, who, beginning in
mid-1999, will be permitted to provide consolidated billing to PP&L's
Customers, could mean that historical delinquency and write-off ratios will
not be indicative of the future rates:

TABLE 6

DELINQUENCIES AS PERCENTAGE OF TOTAL BILLED REVENUES

As Of As Of As Of As Of As Of As Of
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
----------- -------------- ------------ ------------ ------------ --------------
Residential

<C> <C> <C> <C> <C> <C> <C>
30-59 days 0.79 % 0.95 % 0.84 % 0.89 % 0.83 % 1.29 %
60-89 days 0.28 % 0.29 % 0.26 % 0.33 % 0.36 % 0.87 %
90+ days 4.50 % 4.49 % 3.63 % 3.16 % 2.85 % 2.78 %

All Other

30-59 days 0.14 % 0.21 % 0.21 % 0.11 % 0.09 % 0.31 %
60-89 days 0.04 % 0.03 % 0.03 % 0.02 % 0.03 % 0.08 %
90+ days 0.15% 0.11 % 0.11 % 0.13 % 0.10 % 0.10 %
</TABLE>

TABLE 7

NET WRITE-OFFS AS A PERCENTAGE OF BILLED RETAIL ELECTRIC REVENUES

As Of As Of As Of As Of As Of As Of
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 3/31/99
------------- ------------ ------------- ------------ ------------- -------------

<S> <C> <C> <C> <C> <C> <C>
Residential 1.60 % 1.67 % 2.05 % 2.02 % 2.33 % 1.14 %

All Other 0.14 % 0.15 % 0.14 % 0.11 % 0.14 % 0.19 %

Total 0.74 % 0.77 % 0.94 % 0.90 % 1.02 % 0.66 %
</TABLE>

The net write-offs for the first quarter of 1999 are lower due to a
delay in write-offs for January and February 1999 resulting from the
conversion to PP&L's new billing system on February 1, 1999. It is expected
that during the second quarter, those delinquent accounts will be reviewed
and write-offs adjusted to more normal levels. Also, due to the conversion,
there was less than normal collection activity during January and February
of 1999, resulting in higher delinquencies in the 30 and 60-day categories.
However, those activities were resumed in March. Thus, delinquency levels
are expected to return to normal levels by the end of the second quarter.

HOW PP&L FORECASTS THE NUMBER OF CUSTOMERS AND THE AMOUNT OF ELECTRICITY USAGE

Accurate projections of the number of Customers, usage and retail
electric revenue are important in setting, maintaining and adjusting the
Intangible Transition Charges to sufficient levels. These levels must be
sufficient to recover interest on and principal of the Transition Bonds, to
maintain the Scheduled Overcollateralization Level, to fund any shortfalls
in the Capital Subaccount and to pay the Trustee's fee, the Servicing Fee
and the other expenses and costs included in Qualified Transition Expenses.
See "The PUC Order and the Intangible Transition Charges-PP&L's Intangible
Transition Charges" and "Risk Factors-Unusual Nature of Intangible
Transition Property" in this Prospectus.

On a monthly basis, PP&L compares its sales forecast to actual
consumption to determine the accuracy of its forecasting model. PP&L
historically has prepared annual forecasts of electric energy sales for the
following year and several years thereafter. The principal uses of the
electric energy forecasts have been for short-term budgeting and
rate-setting purposes. PP&L has also prepared longer-term forecasts of
customer peak demand and energy consumption, primarily for use in
facilities planning. PP&L most recently updated its electric energy
forecasting models in 1998. PP&L uses sophisticated models to generate
forecasts of short-term monthly sales as well as reasonable long-term
forecasts for all customer classes. The residential model forecasts
electric energy sales bases on electricity price, real income, household
size, weather and changes in the saturation and efficiency of appliances
other than heating and cooling. The commercial and industrial models
forecast electric energy sales based on electricity price, employment,
industrial output and weather. Known and measurable industrial plant
additions, expansions and closures are incorporated into the electricity
sales projections, based on information obtained by PP&L. PP&L uses
economic forecasts, prepared by an independent economic forecasting and
consulting firm employed by PP&L, as inputs to its forecasting models.
Weather inputs to the forecasting models are based on normal weather
conditions, which are developed from historical averages.

In addition, PP&L will use its annual sales forecast to determine
the appropriate levels of Intangible Transition Charges from time to time.
As a result, PP&L's ability to accurately predict energy consumption may
affect the timing of collections of Intangible Transition Charges.

Actual sales can deviate from forecasted sales for many reasons,
including the general economic climate in PP&L's service territory as it
impacts net migration of Customers; weather as it impacts air conditioning
and heating usage; levels of business activity; and the availability of
more energy efficient appliances, new energy conservation technologies and
the Customer's ability to acquire these new products.

The table below compares actual usage for a particular year to the
related forecast prepared during the previous year. For example, the annual
1994 variance is based on a forecast prepared in 1993. The variances for
the Residential Customer Class, ranged from a low of 1.03% to a high of
5.78%. The variances for the Small Commercial and Industrial Customer
Class, ranged from a low of 0.30% to a high of 2.91%. The variances for the
Large Commercial and Industrial Customer Class, ranged from a low of 1.74%
to a high of 3.66% . There can be no assurance that the future variance
between actual and expected consumption in the aggregate or by Customer
Class will be similar to the historical experience set forth below.

TABLE 8

ANNUAL FORECAST VARIANCE FOR THE AMOUNT OF ELECTRICITY CONSUMED

1994 1995 1996 1997 1998
RESIDENTIAL
<S> <C> <C> <C> <C> <C>
Forecast (in mWh) 11,303,504 11,520,139 11,720,216 11,698,717 11,832,734
Actual (in mWh) 11,436,309 11,292,660 11,840,883 11,426,128 11,148,676
Variance (in percentage) 1.17% 1.97% 1.03% 2.33% 5.78%
SMALL COMMERCIAL & INDUSTRIAL
Forecast (in mWh) 8,779,169 8,860,528 9,035,471 9,321,124 9,292,308
Actual (in mWh) 8,816,598 8,997,592 9,298,707 9,349,490 9,503,379
Variance (in percentage) 0.43% 1.55% 2.91% 0.30% 2.27%
LARGE COMMERCIAL & INDUSTRIAL
Forecast (in mWh) 10,301,327 10,662,333 10,943,314 11,386,159 11,159,958
Actual (in mWh) 10,678,226 10,990,951 11,167,643 11,188,480 11,485,024
Variance (in percentage) 3.66% 3.08% 2.05% 1.74% 2.91%
TOTAL
Forecast 30,384,000 31,043,000 31,699,000 32,406,000 32,285,000
Actual 30,931,133 31,281,203 32,307,233 31,964,098 32,137,079
Variance 1.80% 0.77% 1.92% 1.36% 0.46%
</TABLE>

During the last five years, there has been no discernible trend in
the variance between projected electricity consumption and actual
electricity consumption.

The table below compares actual number of Customers for a
particular year to the related forecast prepared during the previous year.
For example, the annual 1994 variance is based on a forecast prepared in
1993. The variances for the Residential Customer Class, ranged from a low
of 0.01% to a high of 0.66%. The variances for the Small Commercial and
Industrial Customer Class, ranged from a low of 0.20% to a high of 1.33%.
The variances for the Large Commercial and Industrial Customer Class,
ranged from a low of 0.25% to a high of 2.47%. There can be no assurance
that the future variance between actual and expected number of Customers in
the aggregate or by Customer Class will be similar to the historical
experience set forth below.

TABLE 9

ANNUAL FORECAST VARIANCE FOR THE NUMBER OF CUSTOMERS

1994 1995 1996 1997 1998
RESIDENTIAL

<S> <C> <C> <C> <C> <C>
Forecast (in units) 1,062,493 1,078,402 1,086,567 1,092,868 1,103,905

Actual (in units) 1,062,564 1,073,709 1,081,625 1,089,483 1,096,585

Variance (in percentage) 0.01% 0.44% 0.45% 0.31% 0.66%

SMALL COMMERCIAL & INDUSTRIAL

Forecast (in units) 142,843 144,941 146,367 148,058 150,580

Actual (in units) 143,134 145,462 147,541 149,754 152,590

Variance (in percentage) 0.20% 0.36% 0.80% 1.15% 1.33%

LARGE COMMERCIAL & INDUSTRIAL

Forecast (in units) 968 978 984 1,001 1,013

Actual (in units) 962 983 993 1,003 1,038

Variance (in percentage) 0.60% 0.54% 0.94% 0.25% 2.47%

TOTAL

Forecast (in units) 1,206,304 1,224,312 1,233,918 1,241,926 1,255,499

Actual (in units) 1,206,660 1,220,154 1,230,159 1,240,240 1,250,213

Variance (in percentage) 0.03% 0.34% 0.30% 0.14% 0.42%
</TABLE>

During the last five years, there has been no discernible trend in
the variance between projected number of Customers and actual number of
Customers.

PP&L'S BILLING PROCESS

PP&L operates on a continuous billing cycle, with an approximately
equal number of bills being distributed each business day. Accordingly, the
initial collection of initial Intangible Transition Charges and changes in
the amount of Intangible Transition Charges will occur at different points
in each Customer's billing cycle. For the year ended December 31, 1998,
PP&L mailed out an average of 65,000 bills daily. Normal billing is for a
period of approximately 30 days ending one or two days prior to the mailing
of the bill. When a particular Intangible Transition Charge is imposed, or
ceases to be imposed, as of a specific date, PP&L customarily pro rates
each Customer's usage during its meter reading and billing cycle for
purposes of imposing the charge. Accounts with potential billing errors are
held by the computer system for review. This review examines accounts that
have abnormally high or low bills, potential meter-reading errors, safety
problems as identified by the meter-reading staff and possible meter
malfunctions. Subject to statutory and legal requirements, PP&L may change
its billing policies and procedures from time to time. It is expected that
any change would be designed to enhance PP&L's ability to make timely
recovery of amounts billed to Customers.

PP&L MAINTAINS LIMITED INFORMATION ON ITS CUSTOMERS' CREDITWORTHINESS

Under the Servicing Agreement, any changes to customary billing and
collection practices instituted by PP&L will apply to the servicing of
Intangible Transition Property so long as PP&L is the Servicer.

Under Pennsylvania law, PP&L is obligated to provide service to new
residential customers. New residential and non-residential customers will
be required to post a security deposit equal to two months of estimated
electricity usage when they apply for electric service. These new customers
may avoid the security deposit requirement if they can demonstrate
creditworthiness or were previously a customer of PP&L with a satisfactory
payment history. The principal means of establishing creditworthiness is by
a letter from another utility indicating satisfactory payment history. To
help prevent fraud, PP&L uses an on-line identification process for new
applicants. The implementation of the on-line identification process will
begin during the second quarter of 1999, and will be completed by December
31, 1999.

PP&L's reduced payment program for low income Residential Customers
is called OnTrack. Customers must apply for OnTrack and must demonstrate an
inability to pay overdue electric bills, and annual household gross income
under 150% of the federal poverty level. Customers in OnTrack qualify for
reduced payment amounts and arrearage forgiveness if monthly payments are
made on or before the due date.

PP&L estimates the annual cost of OnTrack at $5.875 million in 1999
and, pursuant to the settlement of PP&L's Restructuring Plan, increasing to
a maximum annual cost of $11.7 million in 2002. These costs are reflected
in the residential distribution rates set forth in the settlement of PP&L's
restructuring plan. As of December 31, 1998, there were approximately 2,000
customers enrolled in OnTrack accounting for approximately $_____ million of
revenues for the twelve months ended December 31, 1998. The PUC has adopted
regulations that establish reporting requirements for universal service
programs, such as the OnTrack Payment Program, that are applicable to all
electric distribution companies.

In 1998, approximately 79% of total bill payments were received by
PP&L via the U.S. mail. During the same period, approximately 9% of total
payments were paid in person at third party collectors throughout the
service territory. Other payment methods include pay-by-phone, payment by
credit card and direct debits of Customer accounts through local banks,
which accounted for approximately 12% of bill payments collected in 1998.

PP&L's Collection Process for Residential Customers. Customer bills
for residential Customers are due 20 days after mailing. If a Customer has
an overdue balance in excess of $150, or is 60 days overdue in paying his
or her bill, PP&L will mail a notice stating that PP&L will shut off
electricity service within 10 days if the Customer takes no action to
reduce the outstanding balance. At least three days prior to the
termination date, another service termination notice is delivered by
telephone or by a PP&L service representative in person. On the date of
service termination, the PP&L service representative must knock on the
Customer's door. If someone answers the door, termination proceeds. If
there is no answer at the door, a 48 hour notice is left at the residence.
If the Customer does not make a payment or does not agree to pay the
overdue amount to PP&L's satisfaction within 48 hours, PP&L terminates
electricity service.

Termination of Service for Residential Customers in the Winter.
Power is not customarily disconnected if the delinquent Customer is subject
to a PUC-mandated winter moratorium, which requires special approval from
the PUC prior to the disconnection of electricity to some residential
Customers during the period from December 1 of each year through March 31
of the following year. Currently, residential accounts are managed during
the winter moratorium through a combination of letters, proactive telephone
contacts and negotiated payment plans. Company communications with the
delinquent Customer during the winter moratorium do not contain the warning
that electricity service will be terminated by a particular date.

PP&L's Collection Process for Governmental Customers. The accounts
from Customers in either federal, state or local government have 30 days to
pay their electricity charges from the date the bill is mailed. Service
termination is generally not used as a means of collection for government
accounts. Some government accounts have difficulty paying within the 30
days due to cash flow, payment approval and other factors. Government
accounts that are frequently delinquent are referred to a collection agency
that specializes in the collection of overdue amounts from commercial
accounts.

PP&L's Collection Process for All Other Customers. Customer bills
for commercial and industrial Customers are due 15 days after the bill is
mailed. If the Customer does not pay the bill, collection action can begin
on the 16th day with a three-day service termination notice delivered via
telephone or U.S. mail, if PP&L cannot contact the Customer by telephone.
If the overdue balance is not paid within three days after the collection
action has begun, service will be terminated.

Referrals of Delinquent Accounts to Third-Parties. Residential
accounts are referred to a collection agency 30 days after the final bill
is mailed. The collection agency manages this account for a total of seven
and one half months. Unpaid Residential account balances are written-off 90
days after the final bill is mailed. If any unpaid balance remains after
seven and one half months of collection activity, it is sold as bad debt.
Non-residential accounts with unpaid balances are referred to a collection
agency within 30 days of the date that the final bill is mailed. Unpaid
non-residential accounts are written-off 90 days after the final bill is
mailed.

Referrals of Delinquent Accounts in Special Circumstances. In some
cases, service termination may prove difficult due to certain factors such
as, among other items, medical illness and landlord-owned property. If this
type of Customer does not have limited income, and has property that PP&L
believes to be valuable in attachment, PP&L will refer the entire overdue
balance to an attorney. Outside counsel approved by PP&L will litigate the
amount in question, perfect a judgment, and take the amount to a sheriff
sale for collection. After the judgment is taken, the Customer also becomes
responsible for the payment of counsel fees, court costs and interest.
Attorney-referred amounts are exempt from the service termination process.
PP&L uses attorney referrals for overdue accounts for commercial and
residential Customers. Certain commercial accounts may also be deemed
sensitive, such as nursing homes, daycare centers and hospitals. In these
cases, PP&L will refer the entire overdue amount to Dun & Bradstreet for
collection. The Dun & Bradstreet collection process consists of telephone
and letter communications to Customers. These Customers pay the amounts
outstanding through Dun & Bradstreet, which transmits the payments to PP&L.

Definition of a Delinquent Account. If a Residential Customer fails
to pay any portion of the Intangible Transition Charges within 30 days
after these payments are due, or within 50 days after the Intangible
Transition Charge bills have been mailed to the Customer, then the Servicer
will consider the entire amount of the Intangible Transition Charges to be
delinquent. If a third party biller or other entity fails to pay any
portion of the Intangible Transition Charges within 25 calendar days after
the charges are communicated to the electric generation supplier or other
third party for Residential Class Customers, then the Servicer will
consider the entire amount of the Intangible Transition Charges to be
delinquent. Similarly, if a third party biller or other entity fails to pay
any portion of the Intangible Transition Charges within 20 calendar days
after the charges are communicated to the electric generation supplier or
other third party for all other Customers, then the Servicer will consider
the entire amount of the Intangible Transition Charges to be delinquent.
Finally, if any other Customer, except a governmental Customer, fails to
pay any portion of the Intangible Transition Charges within 15 days after
these payments are due, then the Servicer will consider the entire amount
of the Intangible Transition Charges to be delinquent.

How PP&L Will Apply Partial Payments by its Customers. On July 11,
1997, the PUC ruled that all electricity distribution companies must apply
partial payments of electricity bills in the following manner:

1. For a Customer who has an outstanding balance for periods prior to
the time that the Customer was permitted to choose its electricity
generation supplier, which is referred to as Pre-Retail Access, the
payment will be applied as follows:

(a) to the outstanding Pre-Retail Access balance or the installment
amount for a payment agreement on this amount;

(b) to intangible transition charges and competitive transition
charges;

(d) to supply charges; and

(e) to non-basic services charges.

If the Customer's account develops an outstanding balance for periods
after the time that the Customer was permitted to choose its
electricity generation supplier, which is referred to as Post-Retail
Access, partial payments will be applied to the Pre-Retail Access
balance, according to the terms of the Pre-Retail Access payment
agreement, before being applied to any other outstanding Post-Retail
Access charges.

2. For a Customer with no Pre-Retail Access but with a Post-Retail
Access balance, the payment will be applied as follows:

(a) to the balance due for prior intangible transition charges,
competitive transition charges and transmission and distribution
charges;

(b) to current intangible transition charges and competitive
transition charges;

(d) to the balance due for prior supply charges;

(e) to current supply charges; and

(f) to non-basic services.

In its Restructuring Order, the PUC adopted this priority allocation
methodology for PP&L.

PP&L'S PROCEDURES FOR COLLECTING INTANGIBLE TRANSITION CHARGES FROM ELECTRIC
GENERATION SUPPLIERS AND OTHER THIRD PARTY BILLERS

PP&L's Restructuring Plan and subsequent orders of the PUC provide
specific standards for metering, billing and other activities by electric
generation suppliers and other third parties participating in the new
market in Pennsylvania. Although PP&L's Restructuring Plan provides that an
electric generation supplier that bills customers must comply with all
billing, financial and disclosure requirements applicable to electric
generation suppliers, the PUC may waive any of those requirements at any
time in the future.

In an order adopted on July 1, 1998, in a case involving PECO, the
PUC ordered that third parties that are neither electric distribution
companies nor electric generation suppliers, and who have no relationship
with end users, are permitted to provide billing and collection services
for electric distribution charges, including intangible transition charges
and electric generation charges. These third parties will be subject to the
same requirements as electric generation suppliers. Except in limited
circumstances, the Servicer, on behalf of the Issuer, will have no rights
to collect Intangible Transition Charges from Customers electing
consolidated billing from a third party. Rather, the Issuer will be subject
to the risk that the third party does not remit Intangible Transition
Charges.

The Servicer, on behalf of the Issuer, will pursue any electric
generation supplier or other third party that fails to remit the applicable
Intangible Transition Charges. The Servicer will do so in a manner similar
to the manner in which the Servicer pursues any failure by its Customers to
remit Intangible Transition Charges. Except in cases of disputed charges,
if PP&L does not receive payment within 25 calendar days for Residential
Class Customers or 20 calendar days for all other Customers after the
charges are communicated to the electric generation supplier or other third
party, then PP&L may provide notice of breach to the electric generation
supplier or other third party at any time thereafter, at PP&L's discretion.
Upon notice of a breach, the electric generation supplier or other third
party will have 20 calendar days to cure this breach. If the electric
generation supplier or other third party has not cured this breach within
20 calendar days, PP&L may terminate consolidated billing by the electric
generation supplier or other third party and take over billing functions.
In no event will these procedures result in a Customer being sent two bills
covering the same service.

Neither the Seller nor the Servicer will pay any shortfalls
resulting from the failure of any electric generation suppliers or other
third parties to forward ITC Collections to PP&L, as Servicer. There can be
no assurance that third parties will use the same customer credit standards
as the Servicer. Also, there can be no assurance that the Servicer will be
able to mitigate credit risks relating to these third parties in the same
manner in or to the same extent to which it mitigates the risks relating to
its Customers. Any changes in billing and collection regulation might
adversely affect the value of the Transition Bonds and their amortization
and, accordingly, their weighted average lives. These changes may adversely
affect the Transition Bonds by affecting billing terms and the terms of
remittances by electric generation suppliers and other third parties to the
Servicer or by making it more difficult for the Servicer to collect
Intangible Transition Charges. See "Risk Factors-Servicing Risks" in this
Prospectus.

PP&L'S EFFORTS TO DEAL WITH THE YEAR 2000 COMPUTER ISSUE

PP&L is faced with the task of addressing the Year 2000 issue. The
Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year and other programming
techniques which limit date calculations or assign special meanings to some
dates. Any of PP&L's computer systems that have date-sensitive software or
microprocessors may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to measure usage, read meters, process
transactions, send bills or operate electric generation stations. In
addition, the Year 2000 issue could affect the ability of Customers to
receive bills sent by PP&L or to make payments on these bills.

A Company-wide Year 2000 coordination committee was formed to raise
the awareness of the Year 2000 issue, share information and review progress
towards compliance. A seven-step approach was developed to achieve Year
2000 compliance by assessing and remediating the problem in application
software, hardware, plant control systems and devices containing embedded
microprocessors. The seven steps in the plan include awareness, inventory,
assessment, remediation, testing, implementation, and contingency planning.

Delivery of electricity is dependent on the overall reliability of
the electric grid. PP&L is cooperating and coordinating with the North
American Electric Reliability Council, which is referred to as NERC in this
Prospectus, and the PJM Interconnection regarding Year 2000 remediation
efforts.

As of March 31, 1999, PP&L estimated that approximately 83% of
mainframe applications that will remain in production have been determined
as being Year 2000 compliant. It is anticipated that all mission-critical
systems--for example, mainframe, embedded technologies, and client server
applications--will be Year 2000 ready by July 1, 1999 and all systems ready
by November 30, 1999. Year 2000 compliant means computer systems or
equipment with date-sensitive chips will accurately process date and time
data. Year 2000 ready means that the computer systems or equipment with
date-sensitive chips can be used on January 1, 2000, and beyond, but are
not fully year 2000 compliant.

For many years, PP&L has had basic contingency plans in place to
address issues such as blackouts on the electrical grid, cold starts of
generating facilities and disaster recovery procedures for the computing
environment. PP&L recognizes that additional contingency plans are
necessary and, as part of the seven-step remediation process, continues to
develop additional contingency plans that may be needed.

The additional plans that have been developed address loss of
telecommunications, loss of off-site power to various generating stations,
degradation of emergency planning capabilities, running out of consumables,
electrical system disturbance or failure, power plant control system
failures, fuel delivery problems, problems with various relays or
programming logic control, and staffing concerns. PP&L expects to complete
the contingency planning phase of the Year 2000 project by July 1, 1999.

In May 1998, NERC, issued a notification requirement under which
nuclear utilities are required to inform NERC, in writing, that they are
working to solve the Year 2000 computer problem. In addition, nuclear
utilities have until July 1, 1999, to inform NERC that their computers are
Year 2000 compliant and Year 2000 ready or to submit a status report
summarizing the on-going work. PP&L filed its written response with NERC in
August 1998, detailing its Year 2000 compliance activities. PP&L plans a
further NERC filing by July 1, 1999, concerning the year 2000 readiness of
the nuclear power plant.

In February 1999, an independent assessment of the Year 2000
Program Readiness Plan for PP&L's nuclear department was performed with no
significant adverse findings identified. The results of that assessment are
being incorporated into the overall Year 2000 Program Readiness Plan for
PP&L's nuclear department. In May 1999, NERC will be conducting an audit of
PP&L's nuclear-related Year 2000 compliance activities. This audit will be
observed by the PUC.

In July 1998, the PUC initiated a non-adversarial investigation to
be conducted by the Office of Administrative Law Judge "to accurately
assess any and all steps taken and proposed to be taken to resolve the Year
2000 compliance issue by all jurisdictional fixed utilities and
mission-critical service providers such as the PJM." The PUC required all
jurisdictional utilities to file a written response to a list of questions
concerning Year 2000 compliance; and that, if mission-critical systems
cannot be made Year 2000 compliant on or before March 31, 1999, to file a
detailed contingency plan by that date. PP&L filed its written response to
the PUC questions in August 1998 and in November 1998 submitted testimony
to the PUC that PP&L would have its mission-critical systems Year 2000
ready by July 1, 1999, and all systems ready by November 30, 1999. On March
31, 1999, PP&L filed its contingency plans with the PUC and will continue
to update these plans on an ongoing basis.

In early March 1999, the PUC conducted an audit of PP&L's Year 2000
compliance activities. In conjunction with this audit, PP&L submitted to
the PUC an update to its November 1998 testimony. On March 26, 1999, PP&L
filed its Year 2000 testing schedule with the PUC; meanwhile the PUC staff
has been on-site observing some of the testing being performed. PP&L, along
with utilities throughout the country, participated in an emergency
exercise that simulated the loss of normal communications on the power grid
as the result of Year 2000 computer problems. The results of this exercise
demonstrated that all backup communication systems operated properly.

An internal audit performed during the first quarter of 1999
evaluated the approaches used by each business entity within PP&L to
address Year 2000 issues. This review indicated that some improvements are
required by certain business entities to improve their Year 2000 efforts to
ensure that all mission-critical systems are either Year 2000 compliant or
Year 2000 ready by July 1, 1999. The audit recommendations are being
incorporated into the respective business entities' Year 2000 remediation
efforts. PP&L also plans to follow-up on the status of the remediation
efforts of mission-critical systems in order to ensure they will be Year
2000 compliant or Year 2000 ready by July 1, 1999.

At this time, PP&L has achieved the following completion
percentages on the seven steps referenced above for Year 2000 compliance:
awareness, 95%; inventory, 99%; assessment, 99%; remediation, 89%; testing,
92%; implementation, 78%; and additional contingency plans, beyond the
basic plans referenced above, 63%.

Third-party relationships are very important to the continued
operations of PP&L. These third-party relationships are the means to
acquire equipment, services, consumables and fuel that are needed to keep
the generating and transmission and distribution facilities running
smoothly. PP&L began addressing third-party relationships with respect to
the Year 2000 issue during the fourth quarter of 1998 by identifying the
suppliers that are important to PP&L's day-to-day operations. PP&L has
identified approximately 400 of these suppliers. An introductory letter, as
well as 2 follow-up letters, have been mailed to the suppliers asking for
their Year 2000 compliance status. Approximately 91% of the responses have
been received to date. PP&L will make a fourth request for information from
its suppliers in June of 1999. PP&L is responding to those suppliers whose
Year 2000 compliance status does not meet PP&L's expectations.

PP&L is also working closely with the PJM on the Year 2000 issue.
PP&L has participated in three Year 2000 tests with the PJM and plans to
participate in a fourth. The first test with the PJM focused on basic data
communications. The second test with the PJM was done in conjunction with
NERC on April 9, 1999, and focused on redundant communications. The third
test focused on system interfaces. PP&L is planning on participating with
the PJM on the next North American Electric Reliability Council sponsored
Year 2000 test on September 9, 1999, which will be a full simulation of
generation, transmission and distribution operational plans.

Based upon present assessments, PP&L Resources estimates that it
will incur approximately $14 million in Year 2000 remediation costs.
Through March 31, 1999, PP&L Resources spent approximately $10 million in
remediation costs, which included assistance from outside consultants.
These costs are being funded through internally generated funds and are
being expensed as incurred.

PP&L TRANSITION BOND COMPANY LLC, THE ISSUER

The Issuer is PP&L Transition Bond Company LLC, a Delaware limited
liability company, which was formed on March 25, 1999. The sole member of
the Issuer is PP&L. PP&L has executed the Limited Liability Company
Agreement of the Issuer as its sole member. The assets of the Issuer are
limited to the Transferred Intangible Transition Property, the other
Collateral, any third-party credit enhancement and any money distributed to
the Issuer from the Collection Account in accordance with the Indenture. As
of the date of this Prospectus, the Issuer has not carried on any business
activities and has no operating history. Audited financial statements of
the Issuer are included as an exhibit to this Prospectus.

The Issuer's Purpose. The Issuer has been created for the sole
purpose of:

1. purchasing and owning the Transferred Intangible Transition Property,

2. issuing one or more Series of Transition Bonds, each of which may
be comprised of one or more Classes, from time to time,

3. pledging its interest in the Transferred Intangible Transition
Property and other Collateral to the Trustee under the Indenture in
order to secure the Transition Bonds and

4. performing activities that are necessary, suitable or convenient to
accomplish these purposes.

The Interaction Among PP&L, the Seller and the Issuer. On each
Series Issuance Date, except in the event of a refunding of outstanding
Transition Bonds, CEP Securities, as the Seller, will sell Intangible
Transition Property to the Issuer pursuant to the Sale Agreement between
the Seller and the Issuer. The Seller obtained the Intangible Transition
Property from PP&L pursuant to the Contribution Agreement dated May 13,
1999 among PP&L, the Seller and two affiliated companies. Pursuant to the
Sale Agreement, the Seller will assign its rights under the Contribution
Agreement to the Issuer. The Servicer will service the Transferred
Intangible Transition Property pursuant to the Servicing Agreement.

The Issuer's Management. The Issuer's business will be managed by
five Managers. The Issuer will have at all times following the initial
Series Issuance Date at least two Managers who, among other things, are not
and have not been for at least three years from the date of his or her or
its appointment

1. a direct or indirect legal or beneficial owner of the Issuer or
PP&L or any of their respective affiliates,

2. a relative, supplier, employee, officer, director, manager,
contractor or material creditor of the Issuer or PP&L or any of
their respective affiliates or

3. a person who controls PP&L or its affiliates.

These Managers are referred to as the Independent Managers. The remaining
Managers will be employees or officers of PP&L.

The Managers will devote the time necessary to conduct the affairs
of the Issuer. The following are the Managers as of the date of this
Prospectus:

NAME AGE POSITION AT PP&L

John R. Biggar 54 Senior Vice President and Chief Financial
Officer
James E. Abel 48 Vice President - Finance and Treasurer
Jim Pennington 48 Manager - Treasury Operations

The Managers' Business Experience. Each of the three managers
listed above currently work for PP&L, the parent of the Issuer, and have
worked for PP&L continuously since January 1994: The Managers current and
prior positions at PP&L are as follows:

o John R. Biggar - John Biggar is currently serving as Senior Vice
President and Chief Financial Officer of PP&L; his prior positions
at PP&L during the past five years include Vice President -
Finance, Vice President - Finance and Treasurer and Senior Vice
President - Financial.

o James E. Abel - James Abel is currently serving as Vice President -
Finance and Treasurer; his prior positions at PP&L during the past
five years include Treasurer and Manager of PP&L's Corporate Audit
Services Department.

o James S. Pennington - James Pennington is Manager - Treasury
Operations; his prior positions at PP&L during the past five years
include Supervisor of PP&L's Remittance Processing Department and
Accounting Analyst.

None of the Managers has been involved in any legal proceedings which are
specified in Item 401 (f) of the SEC's Regulation S-K.

The Managers' Compensation and Limitation on Liabilities. The
Issuer has not paid any compensation to any Manager since the Issuer was
formed. The Managers other than the Independent Managers will not be
compensated by the Issuer for their services on behalf of the Issuer. The
Independent Managers will be paid quarterly fees from the revenues of the
Issuer and will be reimbursed for their reasonable expenses. These expenses
include, without limitation, the reasonable compensation, expenses and
disbursements of agents, representatives, experts and counsel as the
Independent Managers may employ in connection with the exercise and
performance of their rights and duties under the Limited Liability Company
Agreement, the Indenture, the Sale Agreement and the Servicing Agreement.
The Limited Liability Company Agreement provides that the Managers will not
be personally liable under any circumstances except for:

1. liabilities arising from their own willful misconduct or gross
negligence,

2 liabilities arising from the failure by any of the Managers to
perform obligations expressly undertaken in the Limited Liability
Company Agreement or

3. taxes, fees or other charges, based on or measured by any fees,
commissions or compensation received by the Managers in connection
with the transactions described in this Prospectus.

The Limited Liability Company Agreement further provides that, to the
fullest extent permitted by law, the Issuer shall indemnify the Managers
against any liability incurred in connection with their services as
Managers for the Issuer, except in the cases described in clauses 1 through
3 above.

The Issuer is a Separate and Distinct Legal Entity. Under the
Limited Liability Company Agreement, the Issuer may not file a voluntary
petition for relief under the Bankruptcy Code without a unanimous vote of
its Managers, including the Independent Manager. PP&L has agreed that it
will not cause the Issuer to file a voluntary petition for relief under the
Bankruptcy Code. The Limited Liability Company Agreement requires the
Issuer:

o to take all reasonable steps to continue its identity as a separate
legal entity,

o to make it apparent to third persons that it is an entity with
assets and liabilities distinct from those of PP&L, other
affiliates of PP&L, the Managers or any other person and

o to make it apparent to third persons that, except for federal and
Commonwealth tax purposes, it is not a division of PP&L or any of
its affiliated entities or any other person.

The principal place of business of the Issuer is Two North Ninth
Street; Allentown, PA 18101, and its telephone number is (610) 774-____.

Administration Agreement. PP&L will provide administrative services
for the Issuer pursuant to an administration agreement between the Issuer
and PP&L. The Issuer will pay PP&L a market rate fee for performing these
services.

HOW THE ISSUER WILL USE THE PROCEEDS OF THE TRANSITION BONDS

The Issuer will use the proceeds of the issuance of the Transition
Bonds to pay expenses of issuance and to purchase the Transferred
Intangible Transition Property from PP&L. PP&L proposes using the proceeds
it receives from the sale of the Transferred Intangible Transition Property
principally to reduce Stranded Costs and related capitalization as well as
to pay related expenses.

INCORPORATION OF DOCUMENTS BY REFERENCE

The Issuer has filed with the SEC a Registration Statement under the
Securities Act, with respect to bonds the Transition Bonds. This
Prospectus, which forms a part of the Registration Statement, and any
Prospectus Supplement describe the material terms of some documents filed
as exhibits to the Registration Statement. However, this Prospectus and any
Prospectus Supplement do not contain all of the information contained in
the Registration Statement and its exhibits. Any statements contained in
this Prospectus or any Prospectus Supplement concerning the provisions of
any document filed as an exhibit to the Registration Statement or otherwise
filed with the SEC are not necessarily complete, and in each instance
reference is made to the copy of the document so filed. Each statement
concerning those provisions is qualified in its entirety by reference to
the complete document. For further information, reference is made to the
Registration Statement and the exhibits thereto, which are available for
inspection without charge at the public reference facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
regional offices located as follows: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and New York Regional Office, 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of the Registration Statement and exhibits thereto
may be obtained at the above locations at prescribed rates. Information
filed with the SEC can also be inspected at the SEC site on the World Wide
Web at http://www.sec.gov. The Issuer will file with the SEC all periodic
reports as are required by the Exchange, and the rules, regulations or
orders of the SEC thereunder. The Issuer may discontinue filing periodic
reports under the Exchange Act at the beginning of the fiscal year
following the issuance of the Transition Bonds of any Series if there are
fewer than 300 holders of the Transition Bonds.

All reports and other documents filed by the Issuer pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Transition Bonds will be deemed to be incorporated by reference into this
Prospectus and to be a part hereof. Any statement contained in this
Prospectus, in a Prospectus Supplement or in a document incorporated or
deemed to be incorporated by reference in this Prospectus will be deemed to
be modified or superseded for purposes of this Prospectus and any
Prospectus Supplement to the extent that a statement contained in this
Prospectus, in a Prospectus Supplement or in any separately filed document
which also is or is deemed to be incorporated by reference herein modifies
or supersedes that statement. Any statement so modified or superseded will
not be deemed, except as so modified or superseded, to constitute part of
this Prospectus or any Prospectus Supplement. The Issuer will provide
without charge to each person to whom a copy of this Prospectus is
delivered, on the written or oral request of this person, a copy of any or
all of the documents incorporated herein by reference, except for the
exhibits which are not specifically incorporated by reference in the
documents. Written requests for these copies should be directed to the
Issuer, 2 North Ninth Street; Allentown, PA 18101. Telephone requests for
these copies should be directed to the Issuer at (610) 774-____.

THE TRANSITION BONDS

The Transition Bonds will be issued under and secured by the
Indenture substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The terms of each Series
of Transition Bonds will be provided in a Supplemental Indenture. The
following summary describes some general terms and provisions of the
Transition Bonds. The particular terms of the Transition Bonds of any
Series offered by any Prospectus Supplement will be described in the
Prospectus Supplement. This summary does not purport to be complete and is
subject to, and is qualified by reference to, the terms and provisions of
the Transition Bonds and the Indenture.

The Prospectus Supplement for a Series of Transition Bonds will
describe the following terms of the Series and, if applicable, the Classes
thereof:

1. the designation of the Series and, if applicable, the Classes thereof,

2. the aggregate principal amount of the Transition Bonds of the
Series and, if applicable, each Class thereof,

3. the Bond Rate of the Series or, if applicable, each Class thereof,

4. the Payment Date,

5. the Expected Final Payment Date of the Series and, if applicable,
each Class thereof,

6. the Series Final Maturity Date and, if applicable, each Class Final
Maturity Date,

7. the Series Issuance Date for the Series,

8. the place or places for payments on the Series,

9. the authorized initial denominations for the Series,

10. the redemption provisions, if any, of the Series,

11. the Expected Amortization Schedule for the Series, and,
if applicable, each Class thereof,

12. the Overcollateralization Amount with respect to the Series and
the aggregate Overcollateralization Level as of each Payment Date,

13. the required funding level for the Capital Subaccount,

14. the Calculation Dates and Adjustment Dates for the Series,

15. the terms of any credit enhancement applicable to the Series and

16. any other terms of the Series or Class that are not inconsistent with
the provisions of the Indenture.

The Indenture requires, as a condition to the issuance of each Series of
Transition Bonds, that this issuance will not result in any Rating Agency
reducing or withdrawing its then current rating of any outstanding Series
or Class of Transition Bonds. The notification in writing by each Rating
Agency to the Seller, the Servicer, the Trustee and the Issuer that any
action will not result in a reduction or withdrawal is referred to as the
Rating Agency Condition. The Indenture also declares that failure to pay
the entire outstanding principal amount of the Transition Bonds of any
Class by the Expected Final Payment Date will not result in a default on
the Class of Transition Bonds until after the Final Maturity Date for the
Class.

GENERAL TERMS OF THE TRANSITION BONDS

The Transition Bonds may be issued in one or more Series, each made
up of one or more Classes. The terms of a Series may differ from the terms
of another Series, and the terms of a Class may differ from the terms of
another Class of these Series. The terms of each Series will
be specified in the related Prospectus Supplement.

The Issuer's Transition Bonds Will be Maintained in Book-Entry
Format. The applicable Prospectus Supplement will set forth the procedure
for the manner of the issuance of the Transition Bonds of each Series.
Generally, each Series of Transition Bonds will initially be represented by
one or more Transition Bonds registered in the name of Cede & Co., as the
nominee of DTC. The Transition Bonds will be available for purchase in
initial denominations specified in the applicable Prospectus Supplement,
which will be not less than $1,000. Unless and until definitive Transition
Bonds are issued under the limited circumstances described in this
Prospectus, no Transition Bondholder will be entitled to receive a physical
bond representing a Transition Bond. All references in this Prospectus to
actions by Transition Bondholders will refer to actions taken by DTC upon
instructions from DTC Participants. In addition, all references in this
Prospectus to payments, notices, reports and statements to Transition
Bondholders will refer to payments, notices, reports and statements to DTC
or Cede, as the registered holder of each Series of Transition Bonds. DTC
or Cede will receive these payments, notices, reports and statements for
distribution to the beneficial owners of the Transition Bonds in accordance
with DTC's procedures with respect thereto. See "--Transition Bonds Will be
Issued in Book-Entry Form" and "--Definitive Transition Bonds" below.

PAYMENTS OF INTEREST AND PRINCIPAL ON THE TRANSITION BONDS

Interest will accrue on the principal balance of Transition Bonds
of a Series or Class at the Bond Rate specified in or determined in the
manner specified in the applicable Prospectus Supplement. Interest will be
payable to the Transition Bondholders of the Series or Class on each
Payment Date, commencing on the Payment Date specified in the related
Prospectus Supplement. On any Payment Date with respect to any Series, the
Issuer will make principal payments on that Series only until the
outstanding principal balance thereof has been reduced to the principal
balance specified for that Payment Date in the Expected Amortization
Schedule for that Series on that Payment Date, but only to the extent funds
are available therefor as described in this Prospectus. Accordingly,
principal of the Series or Class of Transition Bonds may be paid later, but
not sooner, than reflected in the Expected Amortization Schedule therefor.
See "Risk Factors--Other Risks Associated With An Investment In The
Transition Bonds" and "Weighted Average Life and Yield Considerations for
the Transition Bonds" in this Prospectus.

The failure to make a scheduled payment of principal on the
Transition Bonds, other than upon redemption or on the Final Maturity Date
of a Series or Class, does not constitute an Event of Default under the
Indenture. The entire unpaid principal amount of the Transition Bonds will
be due and payable if:

1. an Event of Default under the Indenture occurs and is continuing and

2. the Trustee or the holders of a majority in principal amount of the
Transition Bonds of all Series then outstanding, voting as a group,
have declared the Transition Bonds to be immediately due and
payable.

See "The Indenture-What Constitutes an Event of Default on the Transition
Bonds" and "Weighted Average Life and Yield Considerations for the
Transition Bonds" in this Prospectus.

REDEMPTION OF THE TRANSITION BONDS

Redemption provisions, if any, for any Series will be specified in
the related Prospectus Supplement, including the premiums, if any, payable
upon redemption. Unless the context requires otherwise, all references in
this Prospectus to principal of the Transition Bonds of a Series insofar as
it relates to redemption includes any premium that might be payable thereon
if Transition Bonds of the Series are redeemed, as described in the
applicable Prospectus Supplement. Notice of redemption of any Series of
Transition Bonds will be given by the Trustee to each registered holder of
a Transition Bond by first-class mail, postage prepaid, mailed not less
than five days nor more than 45 days prior to the date of redemption or in
another manner or at another time as may be specified in the related
Prospectus Supplement. Notice of redemption may be conditioned upon the
deposit of moneys with the Trustee before the redemption date and this
notice will be of no effect unless these moneys are so deposited. All
Transition Bonds called for redemption will cease to bear interest on the
specified redemption date, provided funds for their redemption are on
deposit with the Trustee at that time, and will no longer be considered
"outstanding" under the Indenture. The Transition Bondholders will have no
further rights with respect thereto, except to receive payment of the
redemption price thereof and unpaid interest accrued to the date fixed for
redemption from the Trustee.

CREDIT ENHANCEMENT FOR THE TRANSITION BONDS

Credit enhancement with respect to the Transition Bonds of all
Series will be provided principally by adjustments to the Intangible
Transition Charges and amounts on deposit in the Reserve Subaccount, the
Overcollateralization Subaccount and the Capital Subaccount. In addition,
for any Series of Transition Bonds or one or more Classes thereof,
additional credit enhancement may be provided with respect thereto. The
amounts and types of credit enhancement, and the provider of credit
enhancement, if any, with respect to each Series of Transition Bonds or one
or more Classes thereof will be described in the applicable Prospectus
Supplement. Credit enhancement may be in the form of:

1. an additional reserve account,

2. subordination,

3. additional overcollateralization,

4. a financial guaranty insurance policy,

5. a letter of credit,

6. a credit or liquidity facility,

7. a repurchase obligation,

8. a third party payment or other support,

9. a cash deposit or other credit enhancement, or

10. any combination of the foregoing, as may be set forth in the applicable
Prospectus Supplement.

If specified in the applicable Prospectus Supplement, credit enhancement
for a Series of Transition Bonds may cover one or more other Series of
Transition Bonds.

If any additional credit enhancement is provided with respect to a
Series offered hereby, the applicable Prospectus Supplement will include a
description of:

1. the amount payable under the credit enhancement,

2. any conditions to payment thereunder not otherwise described in this
Prospectus,

3. the conditions, if any, under which the amount payable under the
credit enhancement may be reduced and under which the credit
enhancement may be terminated or replaced and

4. any material provisions of any applicable agreement relating to the
credit enhancement.

Additionally, in some cases, the applicable Prospectus Supplement may
describe information with respect to the provider of any third-party credit
enhancement, including:

1. a brief description of its principal business activities,

2. its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business,

3. if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business and

4. its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date specified in the applicable
Prospectus Supplement.

TRANSITION BONDS WILL BE ISSUED IN BOOK-ENTRY FORM

Unless otherwise specified in the related Prospectus Supplement,
all Classes of Transition Bonds will initially be represented by one or
more bonds registered in the name of Cede & Co., as nominee of DTC, or
another securities depository. The Transition Bonds will be available to
investors only in the form of Book-Entry Transition Bonds. Transition
Bondholders may also hold Transition Bonds through CEDEL, or the Euroclear
Operator in Europe, if they are participants in one of those systems or
indirectly through Participants.

The Role of Cede, CEDEL and Euroclear. Cede, as nominee for DTC,
will hold the global bond or bonds representing the Transition Bonds. CEDEL
and Euroclear will hold omnibus positions on behalf of their Participants
through customers' securities accounts in CEDEL's and Euroclear's names on
the books of their respective depositories. These depositories will, in
turn, hold these positions in customers' securities accounts in the
depositories' names on the books of DTC. Citibank, N.A. will act as
depository for CEDEL and Morgan Guaranty Trust Company of New York will act
as depository for Euroclear.

The Function of DTC. DTC is a limited purpose trust company
organized under the laws of the State of New York, and is a member of the
Federal Reserve System. DTC is a "clearing corporation" within the meaning
of the New York Uniform Commercial Code and a "clearing agency" registered
pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through
electronic book-entries, thereby eliminating the need for physical movement
of bonds. Direct Participants of DTC include securities brokers and
dealers, banks, trust companies, clearing corporations and some other
organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the Nasdaq-Amex Market Group and the
National Association of Securities Dealers, Inc. Access to DTC's system is
also available to Indirect Participants.

The Function of CEDEL. CEDEL is incorporated under the laws of
Luxembourg. CEDEL holds securities for its customers and facilitates the
clearance and settlement of securities transactions by electronic
book-entry transfers between their accounts. CEDEL provides various
services, including safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
CEDEL also deals with domestic securities markets in over 30 countries
through established depository and custodial relationships. CEDEL has
established an electronic bridge with Morgan Guaranty Trust as the Operator
of the Euroclear system in Brussels to facilitate settlement of trades
between CEDEL and MGT/EOC. CEDEL currently accepts over 110,000 securities
issues on its books.

CEDEL Customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies, and
clearing corporations and may include any underwriters, agents or dealers
with respect to a Series of Transition Bonds offered hereby. CEDEL's U.S.
customers are limited to securities brokers and dealers and banks.

The Function of Euroclear. Euroclear was created in 1968 to hold
securities for Euroclear Participants and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment. By performing these functions, Euroclear
eliminated the need for physical movement of securities and also eliminated
any risk from lack of simultaneous transfers of securities and cash.
Transactions may now be settled in any of 30 currencies, including Euros
and United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing, and arrangements with
domestic markets in several countries generally similar to the arrangements
for cross-market transfers with DTC described below. The Euroclear System
is operated by the Euroclear Operator, under contract with the Cooperative.
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear
Participants include central banks, commercial banks, securities brokers
and dealers and other professional financial intermediaries. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.

The Euroclear Operator is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As a
Federal Reserve System Member, it is regulated and examined by the Board of
Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission.

Terms and Conditions of Euroclear. Securities clearance accounts
and cash accounts with the Euroclear Operator are governed by the Terms and
Conditions Governing Use of Euroclear and the related Operating Procedures
of Euroclear and applicable Belgian law, which are referred to in this
Prospectus as the Terms and Conditions. The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of
securities and cash from Euroclear and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific securities to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants and has no record of or
relationship with persons holding through Euroclear Participants.

The Rules for Transfers Among DTC, CEDEL or Euroclear Participants.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Customers and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Customers or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depository. Cross-market transactions
will require delivery of instructions to the relevant European
international clearing system by the counterparty in this system in
accordance with its rules and procedures and within its established
deadlines, in European time. The relevant European international clearing
system will, if the transaction meets its settlement requirements, deliver
instructions to its Depository to take action to effect final settlement on
its behalf by delivering or receiving Transition Bonds in DTC, and making
or receiving payments in accordance with normal procedures for same-day
funds settlement applicable to DTC. CEDEL Customers and Euroclear
Participants may not deliver instructions directly to the Depositories.

Cede Will be the Holder of the Issuer's Transition Bonds. Unless
and until definitive Transition Bonds are issued, it is anticipated that
the only "holder" of Transition Bonds of any Series will be Cede, as
nominee of DTC. Transition Bondholders will only be permitted to exercise
their rights as Transition Bondholders indirectly through Participants and
DTC. All references herein to actions by Transition Bondholders thus refer
to actions taken by DTC upon instructions from its Participants. In
addition, all references herein to payments, notices, reports and
statements to Transition Bondholders refer to payments, notices, reports
and statements to Cede, as the registered holder of the Transition Bonds,
for payments to the beneficial owners of the Transition Bonds in accordance
with DTC procedures.

Book-Entry Transfers and Transmission of Payments. Except under the
circumstances described below, while any Book-Entry Transition Bonds of a
Series are outstanding, under DTC's rules, DTC is required to make
book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Transition Bonds. In addition, DTC is required to
receive and transmit payments of principal of, and interest on, the
Book-Entry Transition Bonds. Participants with whom Transition Bondholders
have accounts with respect to Book-Entry Transition Bonds are similarly
required to make book-entry transfers and receive and transmit these
payments on behalf of their respective Transition Bondholders. Accordingly,
although Transition Bondholders will not possess physical bonds, DTC's
rules provide a mechanism by which Transition Bondholders will receive
payments and will be able to transfer their interests.

DTC can only act on behalf of Participants, who in turn act on
behalf of indirect Participants and some banks. Thus, the ability of
holders of beneficial interests in the Transition Bonds to pledge
Transition Bonds to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of these Transition Bonds, may
be limited due to the lack of definitive Transition Bonds.

DTC has advised the Trustee that it will take any action permitted
to be taken by a Transition Bondholder under the Indenture only at the
direction of one or more Participants to whose account with DTC the
Transition Bonds are credited.

How Transition Bond Payments Will Be Credited by CEDEL and
Euroclear. Payments with respect to Transition Bonds held through CEDEL or
Euroclear will be credited to the cash accounts of CEDEL Customers or
Euroclear Participants in accordance with the relevant systems' rules and
procedures, to the extent received by its Depository. These payments will
be subject to tax reporting in accordance with relevant United States tax
laws and regulations. See "Material Income Tax Matters for the Transition
Bonds" in this Prospectus. CEDEL or the Euroclear Operator, as the case may
be, will take any other action permitted to be taken by a Transition
Bondholder under the Indenture on behalf of a CEDEL Participant or
Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depository's ability to effect these actions
on its behalf through DTC.

DTC, CEDEL and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Transition Bonds among Participants of
DTC, CEDEL and Euroclear. However, they are under no obligation to perform
or continue to perform these procedures and these procedures may be
discontinued at any time.

Management of DTC is aware that some systems that are dependent
upon calendar dates, including dates before, on, and after January 1, 2000,
may encounter "Year 2000 problems." DTC has informed the industry that it
has developed and is implementing a program so that its systems, as the
same relate to the timely payment of principal payments, interest payments
and related distributions to security-holders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of
which is complete. Additionally, DTC's plan includes a testing phase, which
is expected to be completed within appropriate time frames.

However, DTC's ability to perform properly its services is also
dependent upon other parties, including, but not limited to, issuers and
their agents, as well as DTC's Direct Participants and Indirect
Participants, third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the Industry that it is
contacting, and will continue to contact, third party vendors from whom DTC
acquires services to

1. impress upon them the importance of these services being Year
2000 compliant; and

2. determine the extent of their efforts for Year 2000 remediation and
testing of their services.

In addition, DTC is in the process of developing the contingency plans that
it deems appropriate.

According to DTC, the information in the preceding two paragraphs
with respect to DTC has been provided to the Industry for informational
purposes only and is not intended to serve as a representation, warranty,
or contract modification of any kind.

DEFINITIVE TRANSITION BONDS

The Circumstances That Will Result in the Issuance of Definitive
Transition Bonds. Unless otherwise specified in the applicable Prospectus
Supplement, each Class of Transition Bonds will be issued in fully
registered, certificated form to Transition Bondholders or their nominees,
rather than to DTC or its nominee, only if:

1. the Issuer advises the Trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to this Class of Transition Bonds and the
Issuer is unable to locate a qualified successor;

2. the Issuer, at its option, elects to terminate the book-entry system
through DTC; or

3. after the occurrence of an Event of Default under the Indenture,
Transition Bondholders representing at least a majority of the
outstanding principal amount of the Transition Bonds of all Series
advise the Trustee through DTC in writing that the continuation of
a book-entry system through DTC, or a successor thereto, is no
longer in the Transition Bondholders' best interest.

The Delivery of Definitive Transition Bonds. Upon the occurrence of
any event described in the immediately preceding paragraph, DTC will be
required to notify all affected beneficial owners of Transition Bonds
through Participants of the availability of definitive Transition Bonds.
Upon surrender by DTC of the definitive bonds representing the applicable
Transition Bonds and receipt of instructions for re-registration, the
Trustee will authenticate and deliver definitive Transition Bonds.
Thereafter the Trustee will recognize the holders of these definitive
Transition Bonds as Transition Bondholders under the Indenture.

The Payment Mechanism for Definitive Transition Bonds. Payments of
principal of, and interest on, Definitive Transition Bonds will be made by
the Trustee, as paying agent, in accordance with the procedures set forth
in the Indenture. These payments will be made directly to holders of
definitive Transition Bonds in whose names the definitive Transition Bonds
were registered at the close of business on the related Record Date
specified in each Prospectus Supplement. These payments will be made by
check mailed to the address of the holder as it appears on the register
maintained by the Trustee. The final payment on any Transition Bond,
however, will be made only upon presentation and surrender of the
Transition Bond at the office or agency specified in the notice of final
payment to Transition Bondholders.

The Transfer or Exchange of Definitive Transition Bonds. Definitive
Transition Bonds will be transferable and exchangeable at the offices of
the transfer agent and registrar, which will initially be the Trustee. No
service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in
connection therewith.

WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE TRANSITION BONDS

The rate of principal payments on each Series or Class of
Transition Bonds, the aggregate amount of each interest payment on each
Series or Class of Transition Bonds and the actual final Payment Date of
each Series or Class of Transition Bonds will be dependent on the rate and
timing of receipt of ITC Collections. Accelerated receipts of ITC
Collections will not, however, result in payment of principal on the
Transition Bonds earlier than the related Expected Final Payment Dates.
This is because receipts in excess of the amounts necessary to amortize the
Transition Bonds in accordance with the applicable Expected Amortization
Schedules will be allocated to the Capital Subaccount, the
Overcollateralization Subaccount or the Reserve Subaccount. However,
delayed receipts of ITC Collections may result in principal payments on the
Transition Bonds occurring more slowly than as reflected in the Expected
Amortization Schedules or later than the related Expected Final Payment
Dates. Redemption of any Class or Series of Transition Bonds and
acceleration of the Final Maturity Date after an Event of Default in
accordance with the terms thereof will result in payment of principal
earlier than the related Expected Final Payment Dates.

The Effect of ITC Collections on the Timing of Transition Bond
Payments. The actual payments on each Payment Date for each Series or Class
of Transition Bonds and the weighted average life thereof will be affected
primarily by the rate of ITC Collections and the timing of receipt of ITC
Collections. Amounts available in the Reserve Subaccount, the
Overcollateralization Subaccount and the Capital Subaccount will also
affect the weighted average life of the Transition Bonds. The aggregate
amount of ITC Collections and the rate of principal amortization on the
Transition Bonds will depend, in part, on actual energy usage by Customers
and the rate of delinquencies and write-offs. This is because the
Intangible Transition Charges will be calculated based on estimates of
usage and revenue. The Intangible Transition Charges will be adjusted from
time to time based in part on the actual rate of ITC Collections. However,
there can be assurance that the Servicer will be able to forecast
accurately actual electricity usage and the rate of delinquencies and
write-offs or implement adjustments to the Intangible Transition Charges
that will cause ITC Collections to be received at any particular rate. See
"Risk Factors-Unusual Nature of Intangible Transition Property" and "The
PUC Order and the Intangible Transition Charges-PP&L's Intangible
Transition Charges" in this Prospectus; see also "PP&L" in this Prospectus.
If ITC Collections are received at a slower rate than expected, Transition
Bonds may be retired later than expected. Except in the event of a
redemption or the acceleration of the final Payment Date of the Transition
Bonds after an Event of Default as specified in the Indenture, the
Transition Bonds are not expected to be paid earlier than scheduled. This
is because principal will not be paid at a rate faster than that
contemplated in the Expected Amortization Schedule for each Series or
Class. A payment on a date that is earlier than forecasted might result in
a shorter weighted average life, and a payment on a date that is later than
forecasted might result in a longer weighted average life. In addition, if
a larger portion of the delayed payments on the Transition Bonds is
received in later years, this might result in a longer weighted average
life of the Transition Bonds.

THE CONTRIBUTION AGREEMENT

The following summary describes particular material terms and
provisions of the Contribution Agreement pursuant to which PP&L has
assigned the Intangible Transition Property to CEP Securities, as the
Seller. The Contribution Agreement may be amended by the parties thereto,
with the consent of the Trustee, provided notice of the substance of any
amendment is provided by the Issuer to each Rating Agency and the Rating
Agency Condition has been satisfied. The form of the Contribution Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. This summary does not purport to be complete and
is subject to, and is qualified by reference to, the provisions of the
Contribution Agreement.

ASSIGNMENT OF THE INTANGIBLE TRANSITION PROPERTY AND RELATED RIGHTS
TO THE SELLER

Pursuant to the Contribution Agreement, PP&L has:

1. assigned to CEP Securities, without recourse, all right, title and
interest of PP&L in and to the Intangible Transition Property
including, as provided in the Competition Act, the assignment of
all revenues, collections, claims, payments, money or proceeds of
or arising from the Intangible Transition Charges related to the
Intangible Transition Property, as the same may be adjusted from
time to time in accordance with the Competition Act and the PUC
Order and

2. agreed that PP&L's representations, warranties, covenants and
obligations under the Contribution Agreement, including the
indemnification obligations, all of which were granted by PP&L
pursuant to the Contribution Agreement, inure to the benefit of CEP
Securities.

The assignment of the Intangible Transition Property to CEP
Securities is expressly stated to be an absolute transfer. Pursuant to the
Competition Act, this assignment is treated as an absolute transfer of all
of PP&L's right, title and interest, as in a true sale of the Intangible
Transition Property. PP&L agrees that, after giving effect to the
assignment, it has no rights in the Intangible Transition Property.

PP&L'S REPRESENTATIONS AND WARRANTIES

In the Contribution Agreement, the PP&L makes the following
representations and warranties:

1. all information provided by PP&L to CEP Securities or the Issuer
with respect to the Transferred Intangible Transition Property is
correct in all material respects;

2. the assignment contemplated by the Contribution Agreement
constitutes an absolute transfer of the Intangible Transition
Property from PP&L to CEP Securities as provided in the Competition
Act, and the beneficial interest in and title to the Transferred
Intangible Transition Property would not be part of the debtor's
estate in the event of the filing of a bankruptcy petition by or
against PP&L under any bankruptcy law;

3. (a) PP&L was the sole owner of the Intangible Transition Property
assigned to CEP Securities as of the date of the execution of the
Contribution Agreement,

(b) upon the execution and delivery of the assignment, the
Intangible Transition Property was validly assigned, transferred
and conveyed to CEP Securities free and clear of all Liens and

(c) all filings, including filings with the PUC under the
Competition Act, necessary in any jurisdiction to give CEP
Securities and its permitted assignees a valid ownership
interest in the Intangible Transition Property, free and clear
of all Liens of PP&L or anyone claiming through PP&L, have been
made, other than any of these filings, except for filings with
the PUC under the Competition Act, the absence of which would
not have an adverse impact on

(1) the ability of the Servicer to collect Intangible Transition
Charges with respect to the Serviced Intangible Transition
Property or

(2) the rights of CEP Securities, the Issuer or the Trustee with
respect to the Transferred Intangible Transition Property;

4. the PUC Order, as issued on August 27, 1998 and as supplemented on
May 21, 1999, has been issued by the PUC in accordance with the
Competition Act; the PUC Order and the process by which it was issued
comply with all applicable laws, rules and regulations; and the PUC
Order is and as of the date of issuance of any Transition Bonds will
be in full force and effect;

5. as of the date of issuance of any Series of Transition Bonds, the
Transition Bonds will be entitled to the protections provided by
the Competition Act and in accordance with the Competition Act the
provisions of the PUC Order relating to Intangible Transition
Property and Intangible Transition Charges are not revocable by the
PUC;

6. (a) under the Competition Act, neither the Commonwealth of
Pennsylvania nor the PUC may limit, alter or in any way impair
or reduce the value of Intangible Transition Property or
Intangible Transition Charges approved by the PUC Order or any
rights thereunder, except such a limitation or alteration may be
made by the Commonwealth of Pennsylvania or the PUC if adequate
compensation is made by law for the full protection of the
Intangible Transition Charges and of Transition Bondholders and

(b) under the Contract Clauses of the Constitutions of the
Commonwealth of Pennsylvania and of the United States, none of
the Commonwealth of Pennsylvania, the PUC or any other
governmental entity may take any action that substantially
impairs the rights of the Transition Bondholders unless such
action is a reasonable exercise of the Commonwealth of
Pennsylvania's sovereign powers and appropriate to further a
legitimate public purpose, and, under the Takings Clauses of the
Pennsylvania and United States Constitutions, in the event such
action constitutes a permanent appropriation of the property
interest of Transition Bondholders in the Intangible Transition
Property and deprives the Transition Bondholders of their
reasonable expectations arising from their investments in
Transition Bonds, unless just compensation, as determined by a
court of competent jurisdiction, is provided to Transition
Bondholders;

7. there is no order by any court providing for the revocation,
alteration, limitation or other impairment of the Competition Act,
the PUC Order, the Intangible Transition Property or the Intangible
Transition Charges or any rights arising under any of them or which
seeks to enjoin the performance of any obligations under the PUC
Order;

8. no other approval, authorization, consent, order or other action
of, or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is
required in connection with the creation of the Intangible
Transition Property, except those that have been obtained or made;

9. except as disclosed by PP&L, there are no proceedings or
investigations pending, or to PP&L's best knowledge, threatened
before any court, federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over PP&L, CEP Securities or the Issuer or their respective
properties challenging the PUC Order or the Competition Act;

10. no failure on the date of execution of the Contribution
Agreement or any time hereafter to satisfy any condition imposed
by the Competition Act with respect to the recovery of stranded
costs will adversely affect the creation of the Intangible
Transition Property, the transfer and assignment of the
Intangible Transition Property to CEP Securities, the sale,
transfer and assignment of the Intangible Transition Property to
the Issuer or the right to collect Intangible Transition
Charges;

11. the assumptions used in calculating Intangible Transition
charges are reasonable and made in good faith;

12. (a) Intangible Transition Property constitutes a current property right;

(b) Intangible Transition Property includes, without limitation;

(1) the irrevocable right of PP&L to receive through Intangible
Transition Charges, subject to the limitations on
electricity rates specified in the Competition Act, an
amount sufficient to recover all of the Qualified Transition
Expenses described in the PUC Order in an amount equal to
the aggregate principal amount of the Transition Bonds plus
an amount sufficient to provide for any credit enhancement,
including the Overcollateralization Amount relating to each
Series of Transition Bonds, to fund any reserves, and to pay
interest, premium, if any, servicing fees and other expenses
relating to the Transition Bonds,

(2) all right, title and interest of CEP Securities or the
Issuer in the PUC Order and in all revenues, collections,
claims, payments, money or proceeds of or arising from the
Intangible Transition Charges pursuant to the PUC Order to
the extent that in accordance with the Competition Act, the
PUC Order and the rates and charges authorized under the PUC
Order are declared to be irrevocable, and

(3) the right to obtain adjustments to the Intangible Transition
Charges pursuant to the PUC Order and

(c) paragraphs five through twenty-one of the PUC Order as issued on
August 27, 1998, including the right to collect Intangible
Transition Charges, have been declared to be irrevocable by the
PUC, and any supplemental order of the PUC adopted pursuant to
paragraph 19 of the PUC's August 27, 1998 order when issued will
have been declared to be irrevocable by the PUC;

13. PP&L is a corporation duly organized and in good standing under
the laws of the Commonwealth of Pennsylvania, with corporate
power and authority to own its properties and conduct its
business as currently owned and conducted, and each of CEP
Securities and the Issuer is a limited liability company duly
organized and in good standing under the laws of the State of
Delaware, with power and authority to own its properties and
conduct its business as currently owned and conducted;

14. each of the parties to the Contribution Agreement has the power
and authority to execute and deliver, and to perform its
obligations under, the Contribution Agreement and the execution,
delivery and performance of the Contribution Agreement has been
duly authorized by it and

(a) PP&L has the power and authority to own the Intangible
Transition Property and to assign, transfer and convey the
Intangible Transition Property, and PP&L has duly authorized
such assignment, transfer and conveyance to CEP Securities
pursuant to the Assignment and

(b) CEP Securities has the power and authority to own the Intangible
Transition Property and to sell, assign, transfer and convey the
Intangible Transition Property to the Issuer, and CEP Securities
has duly authorized this sale, assignment, transfer and
conveyance to the Issuer pursuant to the Sale Agreement;

15. the Contribution Agreement constitutes a legal, valid and
binding obligation of each of the parties to the Contribution
Agreement enforceable against each of them in accordance with
its terms, subject to bankruptcy, receivership, insolvency,
fraudulent transfer, reorganization, moratorium or other similar
laws affecting creditors' rights generally from time to time in
effect and to general principles of equity;

16. the execution and delivery by each of the parties to the
Contribution Agreement of the Contribution Agreement, the
performance by each of them of the transactions contemplated
thereby or the fulfillment by each of them of the terms thereof
do not conflict with, result in any breach of any of the terms
and provisions of, or constitute a default under, the
organizational document of any of them, or any indenture,
agreement or other instrument to which any of these entities is
a party or by which it is bound; or result in the creation or
imposition of any lien upon any of these entities properties
pursuant to the terms of any indenture, agreement or other
instrument; or violate any law or any order, rule or regulation
applicable to any of these entities of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over any of
these entities or its properties;

17. no approval, authorization, consent, order or other action of,
or filing with, any court, federal or state regulatory body,
administrative agency or other governmental instrumentality is
required in connection with the execution and delivery of the
Contribution Agreement by each of the parties to the
Contribution Agreement, the performance by it of the
transactions contemplated thereby or the fulfillment by it of
the terms thereof, except those that have been obtained or made;

18. there are no proceedings or investigations pending or, to PP&L's
best knowledge, threatened, before any court, federal or state
regulatory body, administrative agency or other governmental
instrumentality:

(a) asserting the invalidity of the Basic Documents or the
Transition Bonds,

(b) seeking to prevent the issuance of Transition Bonds or the
consummation of the transactions contemplated by the Basic
Documents or the Transition Bonds or

(c) seeking any determination or ruling that could reasonably be
expected to materially and adversely affect the performance by
PP&L, CEP Securities or the Issuer of its obligations under, or
the validity or enforceability of, the Basic Documents or the
Transition Bonds;

19. after giving effect to the assignment, transfer and conveyance
of the Intangible Transition Property to CEP Securities pursuant
to the assignment, PP&L:

(a) is solvent and expects to remain solvent,

(b) is adequately capitalized to conduct its business and affairs
considering its size and the nature of its business and
intended purposes,

(c) is not engaged nor does it expect to engage in a business for
which its remaining property represents an unreasonably
small portion of its capital,

(d) believes that it will be able to pay its debts as they become
due and that this belief is reasonable, and

(e) is able to pay its debts as they mature and does not intend
to incur, and does not believe that it will incur,
indebtedness that it will not be able to repay at its
maturity and

20. each of the parties to the Contribution Agreement and the Issuer
is duly qualified to do business as a foreign corporation or
limited liability company, as applicable, in good standing, and
has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property or
the conduct of its business requires such qualifications,
licenses or approvals except where the failure to so qualify or
to obtain such licenses or approvals would not be reasonably
likely to have a material adverse effect on it.

PP&L further agrees that these representations and warranties shall
inure to the benefit of CEP Securities and that CEP Securities shall have
the right to enforce such representations and warranties directly against
PP&L. Also, PP&L agrees that CEP Securities shall have the right to assign
or otherwise convey its rights with respect to such representations and
warranties, including such right of enforcement, to the Issuer. In
addition, PP&L agrees that the Issuer shall have the right to further
assign such rights to the Trustee for the benefit of the Transition
Bondholders. These representations and warranties shall survive the
assignment of the Intangible Transition Property to CEP Securities, the
further assignment of the Intangible Transition Property to the Issuer and
the pledge thereof by the Issuer to the Trustee pursuant to the Indenture.
PP&L represents, warrants and agrees that these representations and
warranties will be true and correct on and as of each date on which
Intangible Transition Property is sold by CEP Securities to the Issuer as
if made by it on that date.

PP&L'S COVENANTS

In the Contribution Agreement, PP&L makes the following covenants
and agrees that these covenants inure to the benefit of CEP Securities:

1. so long as any of the Transition Bonds are outstanding, PP&L
shall keep in full force and effect its corporate existence and
remain in good standing under the laws of the Commonwealth of
Pennsylvania, and shall obtain and preserve its qualification to
do business in each jurisdiction in which such qualification is
necessary to protect the validity and enforceability of the
Contribution Agreement and each other instrument or agreement to
which PP&L is a party necessary to the proper administration of
the Contribution Agreement and the transactions contemplated
hereby;

2. except for the conveyances in the Contribution Agreement, PP&L
shall not sell, pledge, assign or transfer to any other person,
or grant, create, incur, assume or suffer to exist any lien on,
any of the Intangible Transition Property, whether now existing
or hereafter created, or any interest therein;

3. PP&L shall not at any time assert any lien against or with
respect to any Intangible Transition Property, and shall defend
the right, title and interest of CEP Securities, and upon
transfer by CEP Securities to the Issuer, the Issuer and the
Trustee, in, to and under the Intangible Transition Property,
whether now existing or hereafter created, against all claims of
third parties claiming through or under PP&L;

4. if PP&L receives collections in respect of the Intangible
Transition Charges or the proceeds thereof, PP&L agrees to pay
the Servicer, on behalf the Issuer, all payments received by
PP&L in respect thereof as soon as practicable after receipt
thereof by PP&L, but in no event later than two Business Days
after such receipt;

5. PP&L shall notify CEP Securities, the Issuer and the Trustee
promptly after becoming aware of any lien on any Intangible
Transition Property other than the conveyances under the
Contribution Agreement or under the Sale Agreement or the
Indenture;

6. PP&L hereby agrees to comply with its organizational or
governing documents and all laws, treaties, rules, regulations
and determinations of any governmental instrumentality
applicable to PP&L, except to the extent that failure to so
comply would not adversely affect the interests of CEP
Securities, the Issuer or the Trustee in the Intangible
Transition Property or under any of the Basic Documents or
PP&L's performance of its obligations hereunder or under any of
the other Basic Documents to which it is a party;

(a) so long as any of the Transition Bonds are outstanding,
PP&L shall treat the Transition Bonds as debt of PP&L for
federal income tax purposes;

(b) so long as any of the Transition Bonds are outstanding, PP&L
shall:

(1) clearly disclose in its financial statements that it is not
the owner of the Intangible Transition Property and that the
assets of CEP Securities or the Issuer are not available to pay
creditors of PP&L or any of its other affiliates, and

(2) clearly disclose the effects of all transactions between
PP&L and CEP Securities and the Issuer in accordance with
generally accepted accounting principles;

8. PP&L agrees that upon the assignment, transfer and conveyance by
PP&L of the Intangible Transition Property to CEP Securities
pursuant to the Assignment:

(a) to the fullest extent permitted by law, including applicable
PUC orders and regulations, CEP Securities shall have all of
the rights originally held by PP&L with respect to the
Intangible Transition Property, other than the rights of an
electric distribution company set forth in the Competition Act,
including the right to collect any amounts payable by any
Customer or third party in respect of such Intangible
Transition Property, notwithstanding any objection or direction
to the contrary by PP&L, and

(b) any payment by any Customer or third party in respect of the
Intangible Transition Charges to the Issuer shall discharge
such Customer's or such third party's obligations in respect of
such Intangible Transition Property to the extent of such
payment, notwithstanding any objection or direction to the
contrary by PP&L;

9. so long as any of the Transition Bonds are outstanding:

(a) PP&L shall not make any statement or reference in respect of
Transferred Intangible Transition Property that is inconsistent
with the ownership thereof by the Issuer, and

(b) PP&L shall not take any action in respect of the Intangible
Transition Property except solely in its capacity as the
Servicer thereof pursuant to the Servicing Agreement or as
otherwise contemplated by the Basic Documents;

10. in connection with the issuance of any Transition Bonds, PP&L
agrees to execute and deliver, or cause to be delivered, such
amendments to the Contribution Agreement and such additional
agreements, certificates, documents and opinions as may in
PP&L's judgment be required to obtain the highest possible
rating for the Transition Bonds from each rating agency rating
these bonds and to effect the sale of the Transition Bonds to
the underwriters of these bonds;

11. PP&L shall deliver to CEP Securities, the Issuer and the
Trustee, promptly after having obtained knowledge thereof,
written notice in a certificate, signed by the chairman of the
board, the president, the vice chairman of the board, the
executive vice president or any vice president of PP&L and a
treasurer, assistant treasurer, secretary or assistant secretary
of PP&L, of the occurrence of any event which requires or which,
with the giving of notice or the passage of time or both, would
require PP&L to make any indemnification payment pursuant to the
Contribution Agreement;

12. PP&L shall execute and file or cause to be executed and filed
any filings, including filings with the PUC pursuant to the
Competition Act, in the manner and in the places as may be
required by law fully to preserve, maintain and protect the
interests of CEP Securities and its permitted assigns in the
Intangible Transition Property, including all filings
contemplated by the Competition Act relating to the transfer of
the ownership of the Intangible Transition Property by PP&L to
CEP Securities;

13. PP&L shall deliver to CEP Securities file-stamped copies of, or
filing receipts for, any document filed as provided above, as
soon as available following such filing;

14. PP&L agrees to take such legal or administrative actions,
including defending against or instituting and pursuing legal
actions and appearing or testifying at hearings or similar
proceedings, as may be reasonably necessary:

(a) to protect CEP Securities and its permitted assigns from
claims, state actions or other actions or proceedings of
third parties which, if successfully pursued, would result
in a breach of any representation or warranty set forth in
the Contribution Agreement or

(b) to block or overturn any attempts to cause a repeal of,
modification of or supplement to the Competition Act or the
PUC Order or the rights of holders of Intangible Transition
Property by legislative enactment or constitutional
amendment that would be adverse to the holders of
Intangible Transition Property; and

15. so long as any of the Transition Bonds are outstanding, PP&L
shall, and shall cause each of its subsidiaries to, pay all
material taxes, including gross receipts taxes, assessments and
governmental charges imposed upon it or any of its properties or
assets or with respect to any of its franchises, business,
income or property before any penalty accrues thereon if the
failure to pay any such taxes, assessments and governmental
charges would, after any applicable grace periods, notices or
other similar requirements, result in a lien on the Intangible
Transition Property; provided that no such tax need be paid if
PP&L or any of its subsidiaries, is contesting the same in good
faith by appropriate proceedings promptly instituted and
diligently conducted and if PP&L or that subsidiary, has
established appropriate reserves as shall be required in
conformity with generally accepted accounting principles.

PP&L agrees that CEP Securities will have the right to enforce the
covenants listed above directly against PP&L, and that CEP Securities shall
have the right to assign its rights with respect to these covenants,
including that right of enforcement, to the Issuer. PP&L also agrees that
the Issuer shall have the right to further assign these rights to the
Trustee for the benefit of the Transition Bondholders.

PP&L'S OBLIGATION TO INDEMNIFY THE ISSUER AND THE TRUSTEE AND TO TAKE LEGAL
ACTION

Under the Contribution Agreement, the PP&L is obligated to indemnify
CEP Securities, the Issuer and the Trustee and related parties specified
therein, against:

1. any and all taxes, other than any taxes imposed on Transition
Bondholders solely as a result of their ownership of Transition
Bonds, that may at any time be imposed on or asserted against any
person as a result of the acquisition or holding of Intangible
Transition Property by CEP Securities or the Issuer or the issuance
and sale by the Issuer of the Transition Bonds, including any
sales, gross receipts, general corporation, personal property,
privilege or license taxes; and

2. any and all amounts of principal and interest on the Transition
Bonds not paid when due in accordance with their terms and the
amount of any deposits to the Issuer required to have been made in
accordance with the terms of the Basic Documents which are not made
when so required and any and all liabilities, obligations, claims,
actions, suits, or payments of any kind whatsoever that may be
imposed on or asserted against any such person, together with any
reasonable costs and expenses incurred by that person, as a result
of PP&L's breach of any of its representations, warranties or
covenants contained in the Contribution Agreement.

These indemnification obligations will rank pari passu with other general
unsecured obligations of PP&L. The indemnities described above will survive
the termination of the Contribution Agreement and include reasonable fees
and expenses of investigation and litigation, including
reasonable attorneys' fees and expenses.

PP&L Is Not Obligated to Undertake Legal Action. Notwithstanding
the foregoing, PP&L will not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability. However, this provision is subject to PP&L's
covenant to fully preserve, maintain and protect the interests of the
Issuer in the Intangible Transition Property.

SUCCESSORS TO PP&L

The Contribution Agreement provides that any person which succeeds
to the major part of the electric distribution business of PP&L will be the
successor to PP&L if this person is considered a "successor" as defined by
the Competition Act. The Contribution Agreement further requires that:

1. immediately after giving effect to any transaction referred to in
this paragraph, no representation or warranty made in the
Contribution Agreement will have been breached and no Servicer
Default, and no event that, after notice or lapse of time, or both,
would become a Servicer Default will have occurred and be
continuing;

2. the Rating Agencies will have received prior written notice of the
transaction and the Rating Agency Condition will have been
satisfied; and

3. officers' certificates and opinions of counsel specified in the
Contribution Agreement will have been delivered to the Issuer and
the Trustee.

THE TREATMENT OF THE ASSIGNMENT OF INTANGIBLE TRANSITION PROPERTY

PP&L's regulatory accounting records and computer systems will
reflect the assignment of transferred Intangible Transition Property to the
Seller. However, PP&L will treat the Transition Bonds as debt of PP&L for
federal and Commonwealth income, gross receipts and franchise tax purposes
and for financial accounting purposes.

THE SALE AGREEMENT

The following summary describes particular material terms and
provisions of the Sale Agreement pursuant to which the Seller is selling
and the Issuer is purchasing Intangible Transition Property. The Sale
Agreement may be amended by the parties thereto, with the consent of the
Trustee, provided notice of the substance of this amendment is provided by
the Issuer to each Rating Agency and the Rating Agency Condition has been
satisfied. The form of the Sale Agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. This
summary does not purport to be complete and is subject to, and is qualified
by reference to, the provisions of the Sale Agreement.

CEP SECURITIES' SALE AND ASSIGNMENT OF INTANGIBLE TRANSITION PROPERTY
AND RIGHTS UNDER THE CONTRIBUTION AGREEMENT

On the Initial Transfer Date, pursuant to the Sale Agreement, the
Seller will sell and assign to the Issuer, without recourse, except as
provided therein, Initial Intangible Transition Property. The Initial
Intangible Property represents the irrevocable right to receive through
Intangible Transition Charges amounts sufficient to recover Qualified
Transition Expenses with respect to the applicable Series of Transition
Bonds. On the Initial Transfer Date, the Seller will also assign to the
Issuer all of the Seller's rights under the Contribution Agreement,
including the right to enforce PP&L's representations, warranties,
covenants and indemnities under the Contribution Agreement. The net
proceeds received from the sale of the Transition Bonds issued on the
Initial Transfer Date will be applied to the purchase of the Transferred
Intangible Transition Property and the Seller's rights under the
Contribution Agreement.

In addition, the Seller may from time to time offer to sell additional
Intangible Transition Property to the Issuer, subject to the satisfaction
of the conditions specified in the Sale Agreement and the Indenture. Each
Subsequent Sale will be financed through the issuance of an additional
Series of Transition Bonds. If this offer is accepted by the Issuer, the
Subsequent Sale will be effective on a Subsequent Transfer Date.

In accordance with the Competition Act, upon the execution and
delivery of the Sale Agreement and the related bill of sale, the transfer
of the Initial Intangible Transition Property will be perfected as against
all third persons, including judicial lien creditors. In addition, upon the
execution of a subsequent bill of sale and an additional notice, a transfer
of Subsequent Intangible Transition Property will also be perfected against
all third persons, including judicial lien creditors.

Initial Intangible Transition Property means Intangible Transition
Property, as identified in the related bill of sale, sold to the Issuer on
the Initial Transfer Date pursuant to the Sale Agreement in connection with
the issuance of the initial Series of Transition Bonds. Subsequent
Intangible Transition Property means Intangible Transition Property, as
identified in the related bill of sale, sold to the Issuer on any
Subsequent Transfer Date pursuant to the Sale Agreement in connection with
the subsequent issuance of a Series of Transition Bonds.

Conditions to the Sale of Intangible Transition Property to the
Issuer. Each sale of Intangible Transition Property under the Sale
Agreement is subject to the satisfaction or waiver of each of the following
conditions:

1. on or prior to the Initial Transfer Date or Subsequent Transfer
Date, as applicable, the Seller shall have delivered to the Issuer
a duly executed bill of sale identifying the Intangible Transition
Property to be conveyed on that date, in the form required by the
Sale Agreement;

2. as of the Initial Transfer Date or the Subsequent Transfer Date, as
applicable, the Seller shall not be insolvent and shall not have
been made insolvent by the sale, and the Seller shall not be aware
of any pending insolvency with respect to itself;

3. as of the Initial Transfer Date or the Subsequent Transfer Date, as
applicable, no breach by PP&L of its representations, warranties or
covenants in the Contribution Agreement shall exist, and no
Servicer Default shall have occurred and be continuing;

4. as of the Initial Transfer Date or the Subsequent Transfer Date, as
applicable, the Issuer shall have sufficient funds available to pay
the purchase price for the Transferred Intangible Transition
Property to be conveyed on that date, and all conditions to the
issuance of one or more Series of Transition Bonds intended to
provide sufficient funds set forth in the Indenture shall have been
satisfied or waived;

5. on or prior to the Initial Transfer Date or Subsequent Transfer
Date, as applicable, the Seller shall have taken all action
required to transfer to the Issuer ownership of the Transferred
Intangible Transition Property to be conveyed on that date, free
and clear of all liens other than liens created by the Issuer
pursuant to the Indenture, and the Issuer shall have taken, or the
Servicer shall have taken on behalf of the Issuer, any action
required for the Issuer to grant the Trustee a first priority
perfected security interest in the Collateral and to maintain this
security interest;

6. in the case of a sale of Subsequent Intangible Transition Property
only, the Seller shall have provided the Issuer and the Rating
Agencies with a timely additional notice specifying the Subsequent
Transfer Date for the Subsequent Intangible Transition Property not
later than 10 days prior to the Subsequent Transfer Date;

7. the Seller shall have delivered to the Rating Agencies, the Issuer
and the Trustee the opinions of counsel specified in the Sale
Agreement;

8. the Seller shall have delivered to the Trustee and the Issuer an
officers' certificate confirming the satisfaction of each condition
precedent specified above; and

9. the Rating Agency Condition shall have been satisfied with respect
to any Subsequent Intangible Transition Property sale.

THE SERVICING AGREEMENT

The following summary describes the material terms and provisions
of the Servicing Agreement pursuant to which the Servicer is undertaking to
service Intangible Transition Property. The form of the Servicing Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. This summary does not purport to be complete and
is subject to, and is qualified by reference to, the provisions of the
Servicing Agreement.

The Servicing Agreement may be amended by the parties thereto with
the consent of the Trustee under the Indenture, provided the Rating Agency
condition has been satisfied.

PP&L'S SERVICING PROCEDURES

General. The Servicer, as agent for the Issuer, will manage, service,
administer and make collections in respect of Intangible Transition Property.
The Servicer's duties will include:

1. calculating and billing the Intangible Transition Charges and
collecting the Intangible Transition Charges from Customers,
electric generation suppliers and other third parties, as
applicable;

2. responding to inquiries by Customers, electric generation suppliers
and other third parties, the PUC, or any federal, local or other
state governmental authority with respect to the Intangible
Transition Property and Intangible Transition Charges;

3. accounting for ITC Collections, investigating delinquencies,
processing and depositing collections, making periodic remittances
and furnishing periodic reports to the Issuer, the Trustee and the
Rating Agencies;

4. selling, as agent for the Issuer, defaulted or written-off accounts
in accordance with the Servicer's usual and customary practices;
and

5. taking action in connection with adjustments to the Intangible
Transition Charges as described below.

See also "The PUC Order and the Intangible Transition Charges-Customers
Within PP&L's Service Territory May Choose How Their Electricity
Consumption Is Billed." The Servicer is required to notify the Issuer, the
Trustee and the Rating Agencies in writing of any laws or PUC regulations
promulgated after the execution of the Servicing Agreement that have a
material adverse effect on the Servicer's ability to perform its duties
under the Servicing Agreement.

The Servicer is required to institute any action or proceeding
necessary to compel performance by the PUC or the Commonwealth of any of
their obligations or duties under the Competition Act or the PUC Order with
respect to the Intangible Transition Property. The cost of any action
reasonably allocated by the Servicer to the serviced Intangible Transition
Property would be payable from ITC Collections as an operating expense.

Periodically, the Servicer will prepare a forecast of the
percentages of amounts billed in a particular calendar month, which is
referred to as a Billing Month, that are expected to be received during
each of the following seven months. These forecasts are referred to as the
Collections Curve. There will be a separate Collections Curve for each
Customer Class.

The Servicer will remit actual ITC Collections for any Billing
Month to the Trustee for deposit in the Collection Account not later than
the Reconciliation Date for that Billing Month. In addition, the Servicer
will make periodic payments on account of ITC Collections to the Trustee
for deposit in the Collection Account. On each Monthly Remittance Date,
for so long as:

1. PP&L or any successor to PP&L Inc.'s electric distribution business
remains the Servicer,

2. no Servicer Default has occurred and is continuing, and

a. PP&L, or any successor referred to in this paragraph, maintains
a short-term rating of "A-1" or better by S&P, "P-1" or better
by Moody's and "F-1" or better by Fitch or

b. the Rating Agency Condition has been satisfied, and any conditions
or limitations imposed by the Rating Agencies in connection
therewith are complied with;

the Servicer will remit to the Trustee for each of the seven preceding
Billing Months an amount equal to the amount of ITC Collections estimated
to have been received during the preceding calendar month, based on the
Collections Curve for each Customer Class then in effect, for those Billing
Months. On each Daily Remittance Date, if the Servicer has not satisfied
the conditions specified above, the Servicer shall remit to the Trustee for
each of the seven preceding Billing Months an amount equal to:

1. the amount of ITC Collections estimated to have been received
during the preceding calendar month, based on the Collections Curve
for each Customer Class then in effect, for those Billing Months,
divided by

2. the number of Business Days in the current remittance month.

The sum of the amounts paid to the Trustee over a seven-month period,
following a particular Billing Month based on the Collections Curves for
that Billing Month is referred to as the Collections Curve Payment for that
Billing Month.

On or before the Reconciliation Date for each Billing Month, the
Servicer will compare the Actual ITC Collections to the Collections Curve
Payments previously made to the Trustee for that Billing Month. If the
Collections Curve Payments previously made for that Billing Month exceed
Actual ITC Collections for that Billing Month, this excess is referred to
as an Excess Curve Payment. In that case, the Servicer may either:

1. reduce the amount that the Servicer remits to the Trustee for
deposit in the Collection Account on the corresponding Remittance
Date, and if necessary, succeeding Remittance Dates, by the amount
of the Excess Curve Payment, or

2. require the Trustee to pay the Servicer from the Collection Account
the amount of the Excess Curve Payments, which upon payment becomes
property of the Servicer.

If the Collections Curve Payments made for a Billing Month are less than
Actual ITC Collections for that Billing Month, this deficiency is referred
to as a Curve Payment Shortfall. In that case, the Servicer must pay the
Curve Payment Shortfall to the Trustee on that Reconciliation Date for
deposit in the Collection Account. Any Excess Curve Payment or Curve
Payment Shortfall for a Reconciliation Date will not affect the underlying
Collections Curve Payments otherwise due on that date.

POTENTIAL LIMITATIONS TO COLLECTING INTANGIBLE TRANSITION CHARGES

Uncertainties Created by Changes in General Economic Conditions and
Electricity Usage. General economic conditions and technological changes
may significantly alter power consumption or reduce the Customer base in
PP&L's historical service area. Additionally, changes in business cycles,
departures of Customers from PP&L's historical service area, weather,
occurrence of natural disasters, dramatic changes in energy prices,
implementation of energy conservation efforts and increased efficiency of
equipment, among other things, affect energy usage. If a sufficient number
of Customers within a Customer Class leave PP&L's service territory,
self-generate while bypassing PP&L's transmission and distribution
services, significantly reduce their electricity consumption, or cease
consuming electricity altogether, the Intangible Transition Charges, as
adjusted from time to time, required to be paid by remaining Customers may
become burdensome. This could cause the required Intangible Transition
Charge to exceed the capped amount that may be charged to the Rate
Schedules within that Customer Class. It also could result in greater
delinquencies and write-offs or petitions to the PUC, or in legislative
proposals to reduce Intangible Transition Changes.

The Potential for Customers Within PP&L's Service Territory to
Generate Their Own Electricity. The Servicer's current forecasts of future
electricity demand do not include any shift by Customers to
self-generation, because self-generation of electricity by Customers is not
expected to be economically viable during the period in which the
Transition Bonds will be outstanding. The Customer must pay Intangible
Transition Charges on all electricity delivered by PP&L even if it elects
to purchase electricity from another supplier or to self generate a portion
of its electricity needs.

Uncertainties Associated with Collecting Intangible Transition
Charges. PP&L has no historical performance data for Intangible Transition
Charges, although Customer and energy usage records are available. These
Customer and energy usage records, however, do not reflect Customers'
payment patterns or energy usage in a competitive market. These records
also do not reflect consolidated billing by electric generation suppliers
or other third parties, so these records may have limited predictive value
with respect to the Intangible Transition Charges. Furthermore, the
Servicer does not have any experience administering this type of asset.

PP&L's Customers Have Limited Experience in Paying Intangible
Transition Charges. Changes in Customer billing and payment arrangements
may result in Customer confusion and the misdirection or delay of payments,
which could have the effect of causing shortfalls in ITC Collections. Any
problems arising from new and untested systems or any lack of experience on
the part of the electric generation suppliers or other third parties with
customer billing and collections could cause delays in billing and
collecting the Intangible Transition Charges. These delays could result in
shortfalls in ITC Collections.

THE PUC'S INTANGIBLE TRANSITION CHARGE ADJUSTMENT PROCESS

Among other things, the Servicing Agreement requires the Servicer
to file, and the Competition Act and the PUC Order require the PUC to
approve, Adjustment Requests on each Calculation Date. These Adjustment
Requests are based on actual ITC Collections and updated assumptions by the
Servicer as to projected future usage of electricity by Customers, expected
delinquencies and write-offs and future payments and expenses relating to
Intangible Transition Property and the Transition Bonds. In addition, the
PUC Order provides that adjustments during the final calendar year during
which any series of transition bonds is outstanding may be implemented
quarterly or monthly. The Servicer agrees to calculate these adjustments to
result in:

1. the Transition Bond Balance equaling the Projected Transition Bond
Balance,

2. the amount on deposit in the Overcollateralization Subaccount
equaling the Scheduled Overcollateralization Level and

3. the replenishment of any shortfalls in the Capital Subaccount to
its required level

by the Payment Date immediately preceding the next Adjustment Date or the
Expected Final Payment Date, as applicable, taking into account any amounts
on deposit in the Reserve Subaccount. The Servicer will file Adjustment
Requests on each Calculation Date for the Issuer as specified in the
Servicing Agreement. In accordance with the Competition Act and the PUC
Order, the PUC has 90 days to approve the adjustments. The adjustments to
the Intangible Transition Charges are expected to occur on each Adjustment
Date. During the last year the Transition Bonds are outstanding, the PUC
will permit each adjustment request to become effective within 15 days
after filing. Adjustments to the Intangible Transition Charges will cease
with respect to each Series on the final Adjustment Date specified in the
Prospectus Supplement for that Series.

Each report and certificate delivered in connection with any filing
made to the PUC by the Servicer on behalf of the Issuer with respect to
Intangible Transition Charges or Adjustment Requests will constitute a
representation and warranty by the Servicer that each such report or
certificate, as the case may be, is true and correct in all material
respects. However, to the extent any such report or certificate is based in
part upon or contains assumptions, forecasts or other predictions of future
events, the representation and warranty of the Servicer with respect
thereto will be limited to the representation and warranty that such
assumptions, forecasts or other predictions of future events are reasonable
based upon historical performance.

PP&L's Intangible Transition Charge Collections. The Servicer is
required to remit all ITC Collections from whatever source, based on the
Collections Curve, to the Issuer and all proceeds of other Collateral, if
any, of the Issuer, received by the Servicer to the Trustee for deposit
pursuant to the Indenture on each Remittance Date. As long as PP&L or any
successor to PP&L's electric distribution business is the Servicer and no
Servicer Default has occurred and is continuing, the Remittance Date is the
twentieth calendar day of each month, or if this day is not a Business Day,
the next Business Day, provided that, among other things:

1. PP&L or its successor maintains a short-term rating of at least
"A-1" by S&P, "P-1" by Moody's or F-1 by Fitch or

2. the Rating Agency Condition has been satisfied and any conditions
or limitations imposed by the Rating Agencies in connection
therewith are complied with.

If PP&L does not meet these conditions it will be required to remit ITC
Collections within two Business Days of receipt. Until ITC Collections are
remitted to the Collection Account, the Servicer will not segregate them
from its general funds. Remittances of ITC Collections will not include
interest thereon prior to the Remittance Date or late fees from Customers,
which the Servicer may retain. See "Risk Factors-The Risks Associated With
Potential Bankruptcy Proceedings" in this Prospectus.

PP&L MAY PROVIDE A LETTER OF CREDIT TO ENSURE REMITTANCES ON EACH
REMITTANCE DATE

If specified in the annex to the Servicing Agreement relating to
any Series or Class of Transition Bonds and the related Prospectus
Supplement, the Servicer will provide a letter of credit. The letter of
credit will assure remittances of collections of Intangible Transition
Charges on each Remittance Date as specified in the related Prospectus
Supplement.

PP&L'S COMPENSATION FOR ITS ROLE AS SERVICER AND ITS RELEASE OF OTHER PARTIES

The Issuer agrees to pay the Servicer a Servicing Fee on each
Payment Date. The Servicing Fee for each Series, together with any portion
of the Servicing Fee that remains unpaid from prior Payment Dates, will be
paid solely to the extent funds are available therefor as described under
"The Indenture -- How Funds in the General Subaccount Will Be Allocated" in
this Prospectus. The Servicing Fee will be paid prior to the payment of or
provision for any amounts in respect of interest on and principal of the
Transition Bonds. In the Servicing Agreement, the Servicer releases the
Issuer and the Trustee from any and all claims whatsoever relating to
Intangible Transition Property or the Servicer's servicing activities with
respect thereto.

PP&L'S DUTIES AS SERVICER

In the Servicing Agreement, the Servicer has agreed, among other
things, that, in servicing Intangible Transition Property:

1. except where the failure to comply with any of the following would
not adversely affect the Issuer's or the Trustee's respective
interests in Intangible Transition Property,

(a) it will manage, service, administer and make collections in
respect of Intangible Transition Property with reasonable care
and in material compliance with applicable law, including all
applicable PUC regulations and guidelines, using the same
degree of care and diligence that the Servicer exercises with
respect to billing and collection activities that the Servicer
conducts for itself and others;

(b) it will follow standards, policies and procedures in
performing its duties as Servicer that are customary in the
Servicer's industry;

(c) it will use all reasonable efforts, consistent with its
customary servicing procedures, to enforce and maintain rights
in respect of Intangible Transition Property;

(d) it will calculate Intangible Transition Charges in compliance
with the Competition Act, the PUC Order and any applicable
tariffs;

2. it will keep on file, in accordance with customary procedures, all
documents related to Intangible Transition Property and will
maintain accurate and complete accounts, records and computer
systems pertaining to Intangible Transition Property; and

3. it will use all reasonable efforts consistent with its customary
servicing procedures to collect all amounts owed in respect of
Intangible Transition Property as they become due.

The duties of the Servicer set forth in the Servicing Agreement are
qualified by any PUC regulations or orders in effect at the time these
duties are to be performed.

P&L'S REPRESENTATIONS AND WARRANTIES AS SERVICER

In the Servicing Agreement, the Servicer will make representations
and warranties as of the date the Seller sells or otherwise transfers
Intangible Transition Property to the Issuer to the effect, among other
things, that:

1. the Servicer is a corporation duly organized and in good standing
under the laws of the state of its incorporation, with the
corporate power and authority to own its properties and conduct its
business as its properties are currently owned and its business is
presently conducted and to execute, deliver and carry out the terms
of the Servicing Agreement and has the power, authority and legal
right to service the Intangible Transition Property;

2. the Servicer is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions in which it is
required to do so;

3. the Servicer's execution, delivery and performance of the Servicing
Agreement have been duly authorized by the Servicer by all
necessary corporate action;

4. the Servicing Agreement constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, subject to customary exceptions relating
to bankruptcy and equitable principles;

5. the consummation of the transactions contemplated by the Servicing
Agreement does not conflict with or result in any breach of the
terms and provisions of nor constitute a default under the
Servicer's articles of incorporation or by-laws or any material
agreement to which the Servicer is a party or bound, nor result in
the creation or imposition of any lien upon the Servicer's
properties or violate any law or any order, rule or regulation
applicable to the Servicer or its properties;

6. except for filings with the PUC for revising Intangible Transition
Charges and continuation notices filed under the Pennsylvania
Uniform Commercial Code, no governmental approvals, authorizations,
consents, orders, or other actions or filings are required for the
Servicer to execute, deliver and perform its obligations under the
Servicing Agreement, except those which have previously been
obtained or made; and

7. no proceeding or investigation is pending or, to the Servicer's
best knowledge, threatened before any court, federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties:

(a) except as disclosed by the Servicer to the Issuer, seeking any
determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations
under, or the validity or enforceability against the Servicer
of, the Servicing Agreement; or

(b) relating to the Servicer and which might adversely affect the
federal or state income, gross receipts or franchise tax
attributes of the Transition Bonds.

PP&L, AS SERVICER, WILL INDEMNIFY THE ISSUER AND OTHER RELATED ENTITIES

Under the Servicing Agreement, the Servicer agrees to indemnify,
defend and hold harmless the Issuer, the Trustee, for itself and on behalf
of the Transition Bondholders, and related parties specified in the
Servicing Agreement, against any costs, expenses, losses, damages and
liabilities of any kind whatsoever that may be imposed upon, incurred by or
asserted against any of those persons as a result of:

1. the Servicer's willful misfeasance, bad faith or gross negligence
in the performance of its duties or observance of its covenants
under the Servicing Agreement or the Servicer's reckless disregard
of its obligations and duties under the Servicing
Agreement;

2. the Servicer's breach of any of its representations or warranties
under the Servicing Agreement; and

3. litigation and related expenses relating to its status and
obligations as Servicer.

PP&L, AS SERVICER, WILL PROVIDE STATEMENTS TO THE ISSUER AND TO THE TRUSTEE

For each Calculation Date, the Servicer will provide to the Issuer
and the Trustee a statement indicating, with respect to the Transferred
Intangible Transition Property, among other things:

1. the Transition Bond Balance and the Projected Transition Bond Balance
for each Series as of the immediately preceding Payment Date;

2. the Projected Transition Bond Balance for the Payment Date
immediately preceding the next succeeding Adjustment Date;

3. the amount on deposit in the Overcollateralization Subaccount and
the Scheduled Overcollateralization Level as of the immediately
preceding Payment Date;

4. the amount on deposit in the Reserve Subaccount as of the
immediately preceding Payment Date;

5. the amount on deposit in the Capital Subaccount as of the
immediately preceding Payment Date;

6. the Projected Transition Bond Balance for the next Payment Date and
the Servicer's projection of the Transition Bond Balance as of the
next Payment Date;

7. the Scheduled Overcollateralization Level and the Servicer's
projection of the amount on deposit in the Overcollateralization
Subaccount as of the next Payment Date;

8. the required Capital Subaccount balance as of the next Payment Date;
and

9. the Servicer's projection of the Reserve Subaccount balance as of
the Payment Date immediately preceding the next Payment Date.

Moreover, on or before each Remittance Date, the Servicer will prepare and
furnish to the Issuer and the Trustee a statement setting forth the
aggregate amount remitted or to be remitted by the Servicer to the Trustee
for deposit on that Remittance Date pursuant to the Indenture. In addition,
on or before each Payment Date, the Servicer will prepare and furnish to
the Issuer and the Trustee a statement setting forth the transfers and
payments to be made on that Payment Date and the amounts thereof. Further,
on or before each Payment Date for each Series of Transition Bonds, the
Servicer will prepare and furnish to the Issuer and the Trustee a statement
setting forth the amounts to be paid to the holders of Transition Bonds of
that Series. On the basis of this information, the Trustee will furnish to
the Transition Bondholders on each Payment Date the report described under
"The Indenture--Reports to Holders of the Transition Bonds" in this
Prospectus.

PP&L TO PROVIDE COMPLIANCE REPORTS CONCERNING THE SERVICING AGREEMENT

The Servicing Agreement will provide that a firm of independent
public accountants will furnish to the Issuer, the Trustee and the Rating
Agencies, on or before March 31 of each year, a statement as to compliance
by the Servicer during the preceding calendar year, or the relevant portion
thereof, with procedures relating to the servicing of Intangible Transition
Property. This report, which is referred to in this Prospectus as the
Annual Accountant's Report, will state that the firm has performed the
procedures in connection with the Servicer's compliance with the servicing
obligations of the Servicing Agreement, identifying the results of these
procedures and including any exceptions noted. The Annual Accountant's
Report will also indicate that the accounting firm providing the report is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants. The
Servicing Agreement will also provide for delivery to the Issuer and the
Trustee, on or before March 31 of each year, a certificate signed by an
officer of the Servicer. This certificate will state that the Servicer has
fulfilled its obligations under the Servicing Agreement for the preceding
calendar year, or the relevant portion thereof, or, if there has been a
default in the fulfillment of any relevant obligation, describing each
default. The Servicer has agreed to give the Issuer, each Rating Agency,
and the Trustee notice of any Servicer Default under the Servicing
Agreement.

MATTERS REGARDING PP&L AS SERVICER

Pursuant to the PUC Order, PP&L may assign its obligations under
the Servicing Agreement to any electric distribution company, as this term
is defined in the Competition Act, which succeeds to the major part of
PP&L's electric distribution business. Under the Servicing Agreement, any
person which succeeds to the major part of the electric distribution
business of the Servicer, which assumes the obligations of the Servicer,
will be the successor of the Servicer under the Servicing Agreement. The
Servicing Agreement further requires that:

1. immediately after giving effect to the transaction referred to in
this paragraph, no representation or warranty made by the Servicer
in the Servicing Agreement will have been breached and no Servicer
Default, and no event which, after notice or lapse of time, or
both, would become a Servicer Default will have occurred and be
continuing;

2. officers' certificates and opinions of counsel will have been
delivered to the Issuer, the Trustee, and the Rating Agencies; and

3. prior written notice will have been received by the Ratings
Agencies, and the Rating Agency Condition will have been satisfied.

The Servicing Agreement provides that, subject to the foregoing
provisions, PP&L may not resign from the obligations and duties imposed on
it as Servicer. However, PP&L may resign as Servicer upon a determination,
communicated to the Issuer, the Trustee and each Rating Agency and
evidenced by an opinion of counsel, that the performance of PP&L's duties
under the Servicing Agreement are no longer permissible under applicable
law. This resignation will not become effective until a Successor Servicer
has assumed the servicing obligations and duties of PP&L under the
Servicing Agreement.

In addition, the PUC Order and the Competition Act require that the
Servicer's responsibility to collect the applicable Intangible Transition
Charges and other obligations under the Servicing Agreement be undertaken
and performed by any other entity that provides transmission and
distribution service to the Customers.

Except as expressly provided in the Servicing Agreement, the
Servicer will not be liable to the Issuer for any action taken or for
refraining from taking any action pursuant to the Servicing Agreement or
for errors in judgment. However, the Servicer will be liable to the extent
this liability is imposed by reason of the Servicer's wilful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason
of reckless disregard of obligations and duties under the Servicing
Agreement.

EVENTS CONSTITUTING A DEFAULT BY PP&L IN ITS ROLE AS SERVICER

Servicer Defaults under the Servicing Agreement will include, among
other things:

1. any failure by the Servicer to deliver to the Trustee, on behalf of
the Issuer, any required remittance that continues unremedied for a
period of five Business Days after written notice of such failure
is received by the Servicer from the Issuer or the Trustee;

2. any failure by the Servicer duly to observe or perform in any
material respect any other covenant or agreement in the Servicing
Agreement or any other Basic Document to which it is a party, which
failure materially and adversely affects Intangible Transition
Property and which continues unremedied for 60 days after notice of
this failure has been given to the Servicer, by the Issuer or the
Trustee or after discovery of this failure by an officer of the
Servicer, as the case may be;

3. any representation or warranty made by the Servicer in the
Servicing Agreement proves to have been incorrect when made, which
has a material adverse effect on any of the Transition Bondholders
or the Issuer and which continues unremedied for 60 days after
notice of this failure has been given to the Servicer by the Issuer
or the Trustee or after discovery of this failure by an officer of
the Servicer, as the case may be; or

4. an event of insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings with respect to the
Servicer or an action by the Servicer indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to
pay its obligations as specified in the Servicing Agreement.

The Trustee with the consent of the holders of the majority of the
principal amount of the Transition Bonds of all Series and Classes may
waive any default by the Servicer, except a default in making any required
remittances to the Trustee.

THE TRUSTEE'S RIGHTS IF PP&L DEFAULTS IN ITS ROLE AS SERVICER

As long as a Servicer Default under the Servicing Agreement remains
unremedied, the Trustee, with the consent of the holders of a majority of
the outstanding principal amount of the Transition Bonds of all Series, may
terminate all the rights and obligations of the Servicer under the
Servicing Agreement. However, the Servicer's indemnification obligation and
obligation to continue performing its functions as Servicer may not be
terminated until a Successor Servicer is appointed. Under the Servicing
Agreement, the Trustee, with the consent of the holders of a majority of
the outstanding principal amount of the Transition Bonds of all Series, may
appoint a Successor Servicer which will succeed to all the rights and
duties of the Servicer under the Servicing Agreement. The Trustee may make
arrangements for compensation to be paid to any Successor Servicer. Only a
Successor Servicer that is an electric utility may bring an action against
a Customer for nonpayment of Intangible Transition Charges, or terminate
service for failure to pay Intangible Transition Charges.

Upon a Servicer Default based upon the commencement of a case by or
against the Servicer under the Insolvency Laws, the Trustee and the Issuer
may be prevented from effecting a transfer of servicing. See "Risk
Factors--The Risks Associated With Potential Bankruptcy Proceedings" and
"How a Bankruptcy of PP&L or the Servicer May Affect Your Investment" in
this Prospectus. Upon a Servicer Default because of a failure to make
required remittances, the Issuer, its pledgees or transferees, or an
assignee of the Issuer, which includes the Trustee, will have the right to
apply to the PUC for sequestration and payment of revenues arising from the
Intangible Transition Property.

THE OBLIGATIONS OF A SERVICER THAT SUCCEEDS PP&L

In accordance with the provisions of the PUC Order and pursuant to
the provisions of the Servicing Agreement, if for any reason a third party
assumes or succeeds to the role of the Servicer under the Servicing
Agreement, the Servicing Agreement will require the Servicer to cooperate
with the Issuer, the Trustee and the Successor Servicer in terminating the
Servicer's rights and responsibilities under the Servicing Agreement. This
procedure includes the transfer to the Successor Servicer of all
documentation pertaining to Intangible Transition Property and all cash
amounts then held by the Servicer for remittance or subsequently acquired
by the Servicer. The Servicing Agreement will provide that the Servicer
will be liable for all reasonable costs and expenses incurred in
transferring servicing responsibilities to the Successor Servicer. A
Successor Servicer may not resign unless it is prohibited from serving by
law. The predecessor Servicer is obligated, on an ongoing basis, to
cooperate with the Successor Servicer and provide whatever information is,
and take whatever actions are reasonably necessary to assist the Successor
Servicer in performing its obligations under the Servicing Agreement.

The Competition Act states that only an electric utility, its
successor or any other entity which provides electric service to a person
that was a customer of an electric utility located within the utility's
service territory on January 1, 1997, or that became a customer of
electricity generation services within the utility's service territory
after January 1, 1997, and is still located within the service territory
may sue a retail Customer for failure to pay intangible transition
charges. Thus, a third-party entity that is not an electric utility may not
sue for non payment of PP&L's Intangible Transition Property, unless this
third-party entity is a successor to PP&L.

THE INDENTURE

The following summary describes some of the terms of the Indenture
pursuant to which Transition Bonds will be issued. The form of the
Indenture, including the form of the Supplemental Indenture, has been filed
as an exhibit to the Registration Statement of which this Prospectus forms
a part. This summary does not purport to be complete and is subject to, and
is qualified by reference to, the provisions of the Indenture. See "PP&L"
in this Prospectus.

THE SECURITY FOR THE TRANSITION BONDS

To secure the payment of principal of and premium, if any, and
interest on, and any other amounts owing in respect of, the Transition
Bonds pursuant to the Indenture, the Issuer will grant to the Trustee for
the benefit of the Transition Bondholders a security interest in all of the
Issuer's right, title and interest in and to the following Collateral:

1. the Transferred Intangible Transition Property sold by the Seller to
the Issuer pursuant to the Sale Agreement and all proceeds thereof;

2. the Sale Agreement;

3. all bills of sale delivered by the Seller pursuant to the Sale
Agreement;

4. the Servicing Agreement;

5. the Collection Account and all amounts on deposit therein from time
to time, with the exception of $100,000 which is to be held in the
Collection Account free of the lien of the Indenture to ensure that
the Issuer has sufficient assets to pay its expenses as they come
due;

6. all other property of whatever kind owned from time to time by the
Issuer, which other property is not expected to be substantial;

7. all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing; and

8. all payments on or under, and all proceeds of every kind and nature
whatsoever in respect of, any or all of the foregoing,

provided that cash or other property released to the Issuer from the
Collection Account in accordance with the provisions of the Indenture will
not be subject to the lien of the Indenture. See "-How Funds in the General
Subaccount Will Be Allocated" below.

TRANSITION BONDS MAY BE ISSUED IN VARIOUS SERIES OR CLASSES

Transition Bonds may be issued under the Indenture from time to
time to finance the purchase by the Issuer of Intangible Transition
Property, which is referred to as a Financing Issuance. Transition Bonds
may also be issued to pay the cost of refunding, through redemption or
payment, all or part of the Transition Bonds, which is referred to as a
Refunding Issuance. The aggregate principal amount of Transition Bonds that
may be authenticated and delivered under the Indenture may not exceed $2.85
billion plus the amount of any Refunding Issuance. Any Series of Transition
Bonds may include one or more Classes which differ, among other things, as
to interest rate and amortization of principal. The terms of all Transition
Bonds of the same Series will be identical, unless a Series includes more
than one Class, in which case the terms of all Transition Bonds of the same
Class will be identical. The particular terms of the Transition Bonds of
any Series and, if applicable, Classes thereof, will be set forth in the
Supplemental Indenture for that Series. The terms of this Series and any
Classes thereof will not be subject to prior review by, or consent of, the
Transition Bondholders of any previously issued Series. See "Risk
Factors-Other Risks Associated With An Investment In The Transition Bonds,"
"The Transition Bonds" and "PP&L's Restructuring Plan" in this Prospectus.

The issuance of more than one Series of Transition Bonds is not
expected to adversely affect collections of Intangible Transition Charges
to make payments on the other Series. This is because Intangible Transition
Charges and adjustments thereof are generally based on the total
principal amount of all Transition Bonds outstanding.

Under the Indenture, the Trustee will authenticate and deliver an
additional Series of Transition Bonds only upon receipt by the Trustee of,
among other things, a certificate of the Issuer that no Event of Default
has occurred and is continuing, an opinion of counsel to the Issuer
and evidence of satisfaction of the Rating Agency Condition.

Opinion of Independent Certified Public Accountants Required for
Each Series or Class. In addition, in connection with the issuance of each
new Series, the Trustee will have to receive a certificate or opinion of a
firm of independent certified public accountants of recognized national
reputation. This certificate will be based on the assumptions used in
calculating the initial Intangible Transition Charges with respect to the
Transferred Intangible Property or, if applicable, the most recent revised
Intangible Transition Charges with respect to the Transferred Intangible
Transition Property. The certificate will state to the effect that, after
giving effect to the issuance of the new Series and the application of the
proceeds therefrom, the Intangible Transition Charges will be sufficient to
pay:

1. all fees, costs and charges,

2. interest of each Series of Transition Bonds when due,

3. principal of each Series of Transition Bonds in accordance with the
Expected Amortization Schedule therefor, and

4. to fund the Scheduled Overcollateralization Level and replenish any
shortfalls in the Capital Subaccount

as of each Payment Date taking into account any amounts on deposit in the
Reserve Subaccount.

If the issuance is a Refunding Issuance, the amount of money
necessary to pay premiums, if any, and the outstanding principal balance of
and interest on the Transition Bonds being refunded will be deposited into
a separate account with the Trustee.

THE COLLECTION ACCOUNT FOR THE TRANSITION BONDS

Under the Indenture, the Issuer will establish the Collection
Account, with the Trustee or at another Eligible Institution. Funds
received from collections of the Intangible Transition Charges will be
deposited into the Collection Account. The Collection Account will be
divided into the following subaccounts, which need not be separate bank
accounts:

1. the General Subaccount,

2. one or more Series Subaccounts,

3. the Overcollateralization Subaccount,

4. the Capital Subaccount,

5. the Reserve Subaccount, and

6. if required by the Indenture, one or more Defeasance Subaccounts.

All amounts in the Collection Account not allocated to any other subaccount
will be allocated to the General Subaccount. Unless the context indicates
otherwise, references in this Prospectus to the Collection Account include
all of the subaccounts contained therein. All monies deposited from time to
time in the Collection Account, all deposits therein pursuant to the
Indenture, and all investments made in Eligible Investments with these
monies, will be held by the Trustee in the Collection Account as part of
the Collateral.

The Definition of "Eligible Institution". Eligible Institution means:

1. the corporate trust department of the Trustee; or

2. a depository institution organized under the laws of the United
States of America or any state or any domestic branch of a foreign
bank, which:

(a) has either:

(1) a long-term unsecured debt rating of "AAA" by S&P and Fitch
and "A1" by Moody's; or

(2) a certificate of deposit rating of "A-1+" by S&P and "P-1"
by Moody's, or any other long-term, short-term or
certificate of deposit rating acceptable to the Rating
Agencies; and

(b) whose deposits are insured by the Federal Deposit Insurance
Corporation.

Appropriate Investments for Funds in the Collection Account. So
long as no Default or Event of Default has occurred and is continuing, all
funds in the Collection Account shall be invested in any of the following,
each of which is referred to as an Eligible Investment in this Prospectus:

1. direct obligations of, and obligations fully and unconditionally
guaranteed as to the timely payment by, the United States of America;

2. demand deposits, time deposits, certificates of deposit of
depository institutions or trust companies specified in the
Indenture;

3. commercial paper having, at the time of investment, a rating in the
highest rating category from each Rating Agency;

4. demand deposits, time deposits and certificates of deposit which
are fully insured by the Federal Deposit Insurance Corporation;

5. money market funds which have the highest rating from each Rating
Agency, including funds for which the Trustee or any of its
affiliates is investment manager or advisor;

6. banker's acceptances issued by any depository institution or trust
company referred to in clause 2 above;

7. repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or agencies or instrumentalities thereof, entered into with
depository institutions or trust companies in each case as
specified in the Indenture; or

8. any other investment permitted by each Rating Agency; provided,
however, that:

(a) any book-entry security, instrument or security having a
maturity of one month or less that would be an Eligible
Investment but for its failure, or the failure of the obligor
thereon, to have the rating specified above shall be an
Eligible Investment if the book-entry security, instrument or
security, or the obligor thereon has a long-term unsecured
debt rating of at least "A2" by Moody's, or the equivalent
thereof by the other Rating Agencies, or a short-term rating
of at least "P-1" by Moody's, or the equivalent thereof by the
other Rating Agencies; and

(b) any book-entry security, instrument or security having a
maturity of greater than one month that would be an Eligible
Investment but for its failure, or the failure of the obligor
thereon, to have the rating specified above shall be an
Eligible Investment if this book-entry security, instrument or
security, or the obligor thereon, has a long-term unsecured
debt rating of at least "A1" by Moody's, or the equivalent
thereof by the other Rating Agencies, and a short-term rating
of at least "P-1" by Moody's, or the equivalent thereof by the
other Rating Agencies.

These Eligible Investments may not:

1. mature later than the Business Day prior to the next Payment Date; or

2. be sold, liquidated or otherwise disposed of at a loss prior to the
maturity thereof.

In the case of a defeasance, the Issuer will deposit U.S. government
obligations in the Defeasance Subaccount to fund the defeasance of that
Series. No moneys held in the Collection Account may be invested, and no
investment held in the Collection Account may be sold, unless the security
interest granted and perfected in the Collection Account will continue to
be perfected in the investment or the proceeds of the sale in either case
without any further action by any person.

Remittances to the Collection Account. On each Remittance Date, the
Servicer will remit all ITC Collections, any Indemnity Amounts and all
proceeds of other Collateral received by the Servicer to the Trustee under
the Indenture for deposit in the Collection Account. Indemnity Amounts
means any amounts paid by PP&L or the Servicer to the Trustee, for the
Trustee or on behalf of the Transition Bondholders, in respect of
indemnification obligations pursuant to the Contribution Agreement or the
Servicing Agreement. See "The Contribution Agreement" and "The Servicing
Agreement" in this Prospectus.

General Subaccount. ITC Collections remitted by the Servicer to the
Trustee, will be deposited into the General Subaccount. All investment
earnings realized on the General Subaccount will be released to the Issuer.
On each Payment Date, the Trustee will allocate amounts in the General
Subaccount to make the allocation described under "How Funds in the General
Subaccount Will Be Allocated" below.

Series Subaccount. Upon the issuance of each Series of Transition
Bonds, a Series Subaccount will be established with respect to that Series.
On the Business Day preceding each Payment Date, the Trustee will allocate
from amounts on deposit in the General Subaccount to the Series Subaccount
for each Series an amount sufficient to pay:

1. Interest payable on that Series on that Payment Date;

2. the Principal of that Series payable as a result of an acceleration
following the occurrence an Event of Default, the Principal of that
Series payable on the Final Maturity Date of that Series, or the
Principal of that Series payable on a Redemption Date; and

3. Principal scheduled to be paid on that Series on the next Payment
Date, excluding amounts provided for in clause 2 above;

On the Business Day preceding each Payment Date, allocations will be made
to each Series Subaccount as described under "How Funds in the General
Subaccount Will Be Allocated" below. On each Payment Date, the Trustee will
withdraw funds from the Series Subaccount to make payments on the related
Series of Transition Bonds.

Capital Subaccount. Upon the issuance of each Series of Transition
Bonds, PP&L will make a capital contribution in an amount equal to the
Required Capital Amount to the Issuer. The Issuer will pay this amount to
the Trustee for deposit into the Capital Subaccount which will be invested
in Eligible Investments. The Trustee will draw on amounts in the Capital
Subaccount to the extent that, after the allocation of funds in accordance
with clauses 1 through 9 in "How Funds in the General Subaccount Will Be
Allocated" below, amounts on deposit in the General Subaccount, the Series
Subaccounts, the Reserve Subaccount and the Overcollateralization
Subaccount are insufficient to make scheduled distributions and to pay
expenses of the Issuer, the Trustee and the Servicer and other fees, costs
and charges specified in the Indenture. If any Series of Transition Bonds
has been retired as of any Payment Date, the amounts on deposit in the
Capital Subaccount allocable to that Series will be released to the Issuer,
free of the lien of the Indenture.

Overcollateralization Subaccount. ITC Collections to the extent
available as described in "How Funds in the General Subaccount Will Be
Allocated" below will be allocated to the Overcollateralization Subaccount
on each Payment Date. Each Prospectus Supplement will specify the Scheduled
Overcollateralization Level on each Payment Date for the
Overcollateralization Subaccount for the related Series of Transition
Bonds. The overcollateralization amount will be funded over the life of the
Transition Bonds for each Series as specified in the related Prospectus
Supplement, and in aggregate will equal an amount funded over the life of
each Series of Transition Bonds as specified in the related Prospectus
Supplement for that Series, and in aggregate will equal the amount stated
in the related Prospectus Supplement for that Series, which is referred to
as the Overcollateralization Amount.

Amounts in the Overcollateralization Subaccount will be invested in
Eligible Investments. On each Payment Date, the Trustee will draw on
amounts in the Overcollateralization Subaccount to the extent that, after
allocation of funds in accordance with clauses 1 through 9 in "How Funds in
the General Subaccount Will Be Allocated" below, amounts on deposit in the
General Subaccount, the Series Subaccounts and the Reserve Subaccount are
insufficient to make scheduled distributions and to pay expenses of the
Issuer, the Trustee and the Servicer and other fees, costs and charges
specified in the Indenture. If any Series of Transition Bonds has been
retired as of any Payment Date, the amounts on deposit in
the Overcollateralization Subaccount allocable to that Series will be
released to the Issuer, free of the lien of the Indenture.

Reserve Subaccount. ITC Collections and earnings on amounts in the
Collection Account available on any Payment Date that are not required to
be allocated pursuant to clauses 1 to through 11 in "How Funds in the
General Subaccount Will Be Allocated" below will be allocated
to the Reserve Subaccount.

Amounts in the Reserve Subaccount will be invested in Eligible
Investments. On each Payment Date, the Trustee will draw on amounts in the
Reserve Subaccount, if any, to the extent that, after the allocation of
funds in accordance with clauses 1 through 9 in "How Funds in the General
Subaccount Will Be Allocated" below, amounts on deposit in the General
Subaccount and the Series Subaccounts are insufficient to make scheduled
distributions and pay expenses of the Issuer, the Trustee, the Servicer and
other fees, costs and charges specified in the Indenture.

Defeasance Account. In the event funds are remitted to the Trustee
in connection with the exercise of the Legal Defeasance Option or the
Covenant Defeasance Option, the Issuer will establish a Defeasance Account
for each Series. If this occurs, funds set aside for future payment of the
Transition Bonds will be deposited into the Defeasance Account. All amounts
in a Defeasance Account will be applied by the Trustee to the payment to
the holders of the particular Transition Bonds for the payment or
redemption of which these amounts were deposited with the Trustee. These
amounts will include all sums due for principal, premium, if any, and
interest. These amounts will be applied in accordance with the provisions
of the Transition Bonds and the Indenture. See "The Issuer's Legal
Defeasance and Covenant Defeasance Options" below.

HOW FUNDS IN THE GENERAL SUBACCOUNT WILL BE ALLOCATED

Amounts remitted from the Servicer to the Trustee, and all
investment earnings on the subaccounts in the Collections Account, will be
deposited into the General Subaccount of the Collection Account. On the
Business Day preceding each Payment Date, the Trustee will allocate all
amounts on deposit in the General Subaccount of the Collection Account in
the following priority:

1. all amounts owed to the Trustee will be paid to the Trustee;

2. all amounts owed to the Independent Managers will be paid to the
Independent Managers;

3. the Servicing Fee and all unpaid Servicing Fees from prior Payment
Dates will be paid to the Servicer;

4. the administration fee payable under the Administration Agreement
between the Issuer and PP&L will be paid to PP&L.

5. so long as no Event of Default has occurred and is continuing or
would be caused by this payment, all operating expenses of the
Issuer other than those specified in clauses 1, 2, 3 and 4 above
will be paid to the Persons entitled thereto, provided that the
amount paid on any Payment Date pursuant to this clause 5 may not
exceed [$ ] in the aggregate for all Series;

6. an amount equal to Interest payable on each Series of Transition
Bonds for the Payment Date will be allocated to the corresponding
Series Subaccount or will be paid to the counterparty on any
interest rate swap between the Issuer and that counterparty if so
specified in the related Prospectus Supplement;

7. an amount equal to Principal of each Series or Class of Transition
Bonds payable as a result of acceleration triggered by an Event of
Default, principal of any Series or Class of Transition Bonds
payable on the Final Maturity Date for that Series or Class, or the
principal payable with respect to a Redemption Date will be
allocated to the corresponding Series Subaccount;

8. an amount equal to Principal scheduled to be paid on each Series of
Transition Bonds on the next Payment Date, excluding amounts
provided for pursuant to clause 7 above, will be allocated to the
corresponding Series Subaccount;

9. all remaining unpaid operating expenses and Indemnity Amounts of
the Issuer will be paid to the persons entitled thereto;

10. any amount necessary to replenish the Capital Subaccount will be
allocated to that subaccount;

11. an amount will be allocated to the Overcollateralization Subaccount
to cause the amount in the Overcollateralization Subaccount to equal
the Scheduled Overcollateralization Level;

12. an amount equal to investment earnings on amounts in the Capital
Subaccount will be released to the Issuer;

13. the balance, if any, will be allocated to the Reserve Subaccount; and

14. following repayment of the outstanding Series of Transition Bonds,
the balance, if any, will be released to the Issuer free from the
lien of the Indenture.

Interest means, for any Payment Date for any Series of Transition
Bonds, the sum, without duplication, of:

1. an amount equal to the amount of interest accrued at the applicable
interest rates from the prior Payment Date with respect to that
Series;

2. any unpaid interest plus any interest accrued on this unpaid
interest;

3. if the Transition Bonds have been declared due and payable, all
accrued and unpaid interest thereon; and

4. with respect to a Series to be redeemed prior to the next Payment
Date, the amount of interest that will be payable as interest on
the Series on that Redemption Date.

Principal means, with respect to any Payment Date and any Series of
Transition Bonds:

1. the amount of principal scheduled to be paid on the next Payment Date;

2. the amount of principal due on the Final Maturity Date of any Series;

3. the amount of principal due as a result of the occurrence and
continuance of an Event of Default and acceleration of the
Transition Bonds;

4. the amount of principal and premium, if any, due as a result of a
redemption of Transition Bonds prior to the next Payment Date
pursuant to the Indenture; and

5. any overdue payments of principal.

If on any Payment Date funds in the General Subaccount are
insufficient to make the allocations contemplated by clauses 1 through 9 of
the first paragraph of this subsection, the Trustee will draw from amounts
on deposit in the following subaccounts in the following order up to the
amount of the shortfall:

1. from the Reserve Subaccount,

2. from the Overcollateralization Subaccount, and

3. from the Capital Subaccount.

REPORTS TO HOLDERS OF THE TRANSITION BONDS

With respect to each Series of Transition Bonds, on or prior to
each Payment Date, the Trustee will deliver a statement prepared by the
Trustee to each Transition Bondholder of that Series. This statement will
include, to the extent applicable, the following information, as well as
any other information so specified in the applicable Supplemental
Indenture, as to the Transition Bonds of that Series with respect to that
Payment Date or the period since the previous Payment Date, as applicable:

1. the amount paid to Transition Bondholders of that Series in respect
of principal;

2. the amount paid to Transition Bondholders of that Series in respect
of interest;

3. the Transition Bond Balance and the Projected Transition Bond Balance
for that Series as of the relevant Payment Date;

4. the amount on deposit in the Overcollateralization Subaccount and
the Scheduled Overcollateralization Level, with respect to that
Series and as of the relevant Payment Date;

5. the amount on deposit in the Capital Subaccount as of the relevant
Payment Date; and

6. the amount, if any, on deposit in the Reserve Subaccount for all
Series as of the most recent Payment Date.

THE ISSUER AND THE TRUSTEE MAY MODIFY THE INDENTURE

Modifications of the Indenture that Do Not Require Consent of
Transition Bondholders. Without the consent of any of the holders of the
outstanding Transition Bonds but with prior notice to the Rating Agencies,
the Issuer and the Trustee may execute a Supplemental Indenture for any of
the following purposes:

1. to correct or amplify the description of the Collateral, or better
to assure, convey and confirm unto the Trustee the Collateral, or
to subject to the lien of the Indenture additional property;

2. to evidence the succession, in compliance with the applicable
provisions of the Indenture, of another person to the Issuer, and
the assumption by any applicable successor of the covenants of the
Issuer contained in the Indenture and in the Transition Bonds;

3. to add to the covenants of the Issuer, for the benefit of the
Holders of the Transition Bonds, or to surrender any right or power
therein conferred upon the Issuer;

4. to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee;

5. to cure any ambiguity, to correct or supplement any provision of
the Indenture or in any Supplemental Indenture which may be
inconsistent with any other provision of the Indenture or in any
Supplemental Indenture or to make any other provisions with respect
to matters or questions arising under the Indenture or in any
Supplemental Indenture; provided, however, that:

a. this action shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of any
Transition Bondholder; and

b. the Rating Agency Condition shall have been satisfied with
respect thereto;

6. to evidence and provide for the acceptance of the appointment under
the Indenture by a successor Trustee with respect to the Transition
Bonds and to add to or change any of the provisions of the
Indenture as shall be necessary to facilitate the administration of
the trusts under the Indenture by more than one Trustee, pursuant
to the requirements specified in the Indenture;

7. to modify, eliminate or add to the provisions of the Indenture to
the extent necessary to effect the qualification of the Indenture
under the Trust Indenture Act or under any similar federal statute
hereafter enacted and to add to the Indenture any other provisions
as may be expressly required by the Trust Indenture Act; or

8. to set forth the terms of any Series that has not theretofore been
authorized by a Supplemental Indenture, provided that the Rating
Agency Condition has been satisfied.

Additional Modifications to the Indenture that Do Not Require the
Consent of Transition Bondholders. Additionally, without the consent of any
of the Transition Bondholders, the Issuer and Trustee may execute a
Supplemental Indenture. The Supplemental Indenture referred to in this
paragraph may add provisions to, or change in any manner or eliminate any
provisions of, the Indenture, or modify in any manner the rights of the
Transition Bondholders under the Indenture; provided, however, that

1. this action shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of any
Transition Bondholder and

2. the Rating Agency Condition shall have been satisfied with respect
thereto.

Modifications That Require the Approval of the Transition
Bondholders. The Issuer and the Trustee also may, with prior notice to the
Rating Agencies and with the consent of the holders of not less than a
majority of the outstanding amount of the Transition Bonds of each Series
or Class to be affected, execute a Supplemental Indenture. The Supplemental
Indenture referred to in this paragraph may add any provisions to, or
change in any manner or eliminate any of the provisions of, the Indenture
or modify in any manner the rights of the Transition Bondholders under the
Indenture. However, this Supplemental Indenture may not, without the
consent of the holder of each outstanding Transition Bond of each Series or
Class affected thereby:

1. change the date of payment of any installment of principal of or
premium, if any, or interest on any Transition Bond, or reduce the
principal amount thereof, the interest rate specified thereon or
the redemption price or the premium, if any, with respect thereto,
change the provisions of the Indenture and the related applicable
Supplemental Indenture relating to the application of collections
on, or the proceeds of the sale of, the Collateral to payment of
principal of or premium, if any, or interest on the Transition
Bonds, or change any place of payment where, or the coin or
currency in which, any Transition Bond or any interest thereon is
payable;

2. impair the right to institute suit for the enforcement of those
provisions of the Indenture specified therein regarding payment;

3. reduce the percentage of the aggregate amount of the outstanding
Transition Bonds, or of a Series or Class thereof, the consent of
the Transition Bondholders of which is required for any
Supplemental Indenture, or the consent of the Transition
Bondholders of which is required for any waiver of compliance with
those provisions of the Indenture specified therein or of defaults
specified therein and their consequences provided for in the
Indenture;

4. reduce the percentage of the outstanding amount of the Transition
Bonds required to direct the Trustee to direct the Issuer to sell
or liquidate the Collateral;

5. modify any provision of the section of the Indenture relating to
the consent of Transition Bondholders with respect to Supplemental
Indentures, except to increase any percentage specified therein or
to provide that those provisions of the Indenture or the Basic
Documents specified in the Indenture cannot be modified or waived
without the consent of each Outstanding Transition Bondholder
affected thereby;

6. modify any of the provisions of the Indenture in a manner so as to
affect the amount of any payment of interest, principal or premium,
if any, payable on any Transition Bond on any Payment Date or
change the redemption dates, Expected Amortization Schedules or
Series Final Maturity Dates or Class Final Maturity Dates of any
Transition Bonds;

7. decrease the Required Capital Amount with respect to any Series,
the Overcollateralization Amount or the Scheduled
Overcollateralization Level with respect to any Payment Date;

8. modify or alter the provisions of the Indenture regarding the
voting of Transition Bonds held by the Issuer, PP&L, an affiliate
of either of them or any obligor on the Transition Bonds;

9. decrease the percentage of the aggregate principal amount of the
Transition Bonds required to amend the sections of the Indenture
which specify the applicable percentage of the aggregate principal
amount of the Transition Bonds necessary to amend the Indenture or
other related agreements specified therein; or

10. permit the creation of any lien ranking prior to or on a parity
with the lien of the Indenture with respect to any of the
Collateral for the Transition Bonds or, except as otherwise
permitted or contemplated in the Indenture, terminate the lien of
the Indenture on any property at any time subject thereto or
deprive the holder of any Transition Bond of the security provided
by the lien of the Indenture.

Enforcement of the Sale Agreement, the Contribution Agreement and
Servicing Agreement. The Indenture will provide that the Issuer will take
all lawful actions to enforce its rights under the Sale Agreement, the
Contribution Agreement and the Servicing Agreement. The Indenture will also
provide that the Issuer will take all lawful actions to compel or secure
the performance and observance by the Seller, PP&L and the Servicer of each
of their respective obligations to the Issuer under or in connection with
the Sale Agreement, the Contribution Agreement and the Servicing Agreement.
So long as no Event of Default occurs and is continuing, the Issuer may
exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale Agreement, the
Contribution Agreement and the Servicing Agreement. However, if the Issuer
or Servicer proposes to amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the process for adjusting Intangible
Transition Charges, the Issuer must notify the Trustee and the Trustee must
notify Transition Bondholders of this proposal. In addition, the Trustee
may consent to this proposal only with the consent of the holders of a
majority of the principal amount of the Outstanding Transition Bonds of
each Series or Class materially and adversely affected thereby and only if
the Rating Agency Condition is satisfied.

If an Event of Default occurs and is continuing, the Trustee may,
and, at the direction of the holders of a majority of the outstanding
amount of the Transition Bonds of all Series shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller,
PP&L or the Servicer under or in connection with the Sale Agreement, the
Contribution Agreement and the Servicing Agreement, and any right of the
Issuer to take this action shall be suspended. In the event of a
foreclosure, there is likely to be a limited market, if any, for the
Transferred Intangible Transition Property, and, therefore, foreclosure may
not be a realistic or practical remedy.

Modifications to the Sale Agreement, the Contribution Agreement and
the Servicing Agreement. With the consent of the Trustee, the Sale
Agreement, the Contribution Agreement and the Servicing Agreement may be
amended, so long as the Rating Agency Condition is satisfied in connection
therewith, at any time and from time to time, without the consent of the
Transition Bondholders. However, this amendment may not, as evidenced by an
opinion of counsel, adversely affect the interest of any Transition
Bondholder in any material respect. This amendment also may not, as
evidenced by an opinion of counsel, change the adjustment process for the
Intangible Transition Charges in any respect that would materially and
adversely affect any Transition Bondholder.

Notification of the Rating Agencies, the Trustee and the Transition
Bondholders of Any Modification. If the Issuer, the Seller, PP&L or the
Servicer:

1. proposes to amend, modify, waive, supplement, terminate or
surrender, or agree to any other amendment, modification, waiver,
supplement, termination or surrender of, the terms of the Sale
Agreement, the Contribution Agreement or the Servicing Agreement,
or

2. waive timely performance or observance by the Seller, PP&L or the
Servicer under the Sale Agreement, the Contribution Agreement or
Servicing Agreement, respectively,

in each case in a way which would materially and adversely affect the
interests of Transition Bondholders, the Issuer must first notify the
Rating Agencies of the proposed amendment. Upon receiving notification
regarding the Rating Agency Condition, the Issuer must thereafter notify
the Trustee and the Trustee shall notify the Transition Bondholders of the
proposed amendment and whether the Rating Agency Condition has been
satisfied with respect thereto. The Trustee will consent to this proposed
amendment, modification, supplement or waiver only with the consent of the
holders of a majority of the outstanding principal amount of the Transition
Bonds of each Series or Class materially and adversely affected thereby.

WHAT CONSTITUTES AN EVENT OF DEFAULT ON THE TRANSITION BONDS

An Event of Default is defined in the Indenture as being:

1. a default for five Business Days in the payment of any interest on
any Transition Bond;

2. a default in the payment of the then unpaid principal of any
Transition Bond of any Series on the Series Final Maturity Date for
that Series or, if applicable, any Class on the Class Final
Maturity Date for that Class;

3. a default in the payment of the Redemption Price for any Transition
Bond on the redemption date therefor;

4. a default in the observance or performance of any covenant or
agreement of the Issuer made in the Indenture, other than those
specifically dealt with in 1, 2 or 3 above, and the continuation of
that default for a period of 30 days after the earlier of the date
notice thereof is given to the Issuer by the Trustee or to the
Issuer and the Trustee by the holders of at least 25% in principal
amount of the Transition Bonds of any Series or Class or the date
the Issuer has knowledge of the default; and

5. specified events of bankruptcy, insolvency, receivership or
liquidation of the Issuer.

If an Event of Default occurs and is continuing, the Trustee or holders of
a majority in principal amount of the Transition Bonds of all Series then
outstanding may declare the principal of all Series of the Transition Bonds
to be immediately due and payable. This declaration may, under the
circumstances specified therein, be rescinded by the holders of a majority
in principal amount of all Series of the Transition Bonds then outstanding.

When the Trustee Can Sell the Collateral. If the Transition Bonds
of all Series have been declared to be due and payable following an Event
of Default, the Trustee may, in its discretion, either:

1. sell the Collateral or

2. elect to have the Issuer maintain possession of the Collateral and
continue to apply distributions on the Collateral as if there had
been no declaration of acceleration.

The Trustee is prohibited from selling the Collateral following an Event of
Default other than a default in the payment of any principal, a default for
five days or more in the payment of any interest on any Transition Bond of
any Series or a default in the payment of the Redemption Price for any
Transition Bond on the redemption date therefor unless:

1. the holders of 100% of the principal amount of all Series of
Transition Bonds consent to this sale; or

2. the proceeds of this sale or liquidation are sufficient to pay in
full the principal of and premium, if any, and accrued interest on
the outstanding Transition Bonds; or

3. the Trustee determines that funds provided by the Collateral would
not be sufficient on an ongoing basis to make all payments on the
Transition Bonds of all Series as these payments would have become
due if the Transition Bonds had not been declared due and payable,
and the Trustee obtains the consent of the holders of 66 2/3% of
the aggregate principal outstanding amount of the Transition Bonds
of all Series.

Right of Transition Bondholders to Direct Proceedings. Subject to
the provisions for indemnification and the limitations contained in the
Indenture, the holders of a majority in principal amount of the outstanding
Transition Bonds of all Series will have the right to direct the time,
method and place of conducting any proceeding or any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee;
provided that, among other things:

1. this direction shall not conflict with any rule of law or with the
Indenture;

2. subject to the provisions specified in the Indenture, any direction
to the Trustee to sell or liquidate the Collateral shall be by the
holders of 100% of the principal amount of all Series of Transition
Bonds then outstanding; and

3. the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with these direction.

However, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under
the Indenture at the request or direction of any of the holders of
Transition Bonds of any Series. The Trustee may do this if it reasonably
believes it will not be adequately indemnified against the costs, expenses
and liabilities which might be incurred by it in complying with this
request. Also, the Trustee does not need to take any action pursuant to the
direction of the Transition Bondholders if it determines that this action
might materially adversely affect the rights of any Transition Bondholder
not consenting to this action.

Waiver of Default. The holders of a majority in principal amount of
the Transition Bonds of all Series then outstanding may, in those cases
specified in the Indenture, waive any default with respect thereto.
However, they many not waive a default in the payment of principal of or
premium, if any, or interest on any of the Transition Bonds or a default in
respect of a covenant or provision of the Indenture that cannot be modified
without the waiver or consent of all of the holders of the outstanding
Transition Bonds of all affected Series and Classes.

No Transition Bondholder of any Series will have the right to
institute any proceeding, judicial or otherwise, or to avail itself of the
right to foreclose on the Intangible Transition Property or otherwise
enforce the lien in the Intangible Transition Property, pursuant to Section
2812(d)(3)(v) of the Competition Act, with respect to the Indenture,
unless:

1. the holder previously has given to the Trustee written notice of a
continuing Event of Default;

2. the holders of not less than 25% in principal amount of the
outstanding Transition Bonds of all Series have made written
request of the Trustee to institute the proceeding in its own name
as Trustee;

3. the holder or holders have offered the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs,
expenses, and liabilities to be incurred in complying with the
request;

4. the Trustee for 60 days after its receipt of the notice, request
and offer has failed to institute the proceeding; and

5. no direction inconsistent with this written request has been given
to the Trustee during the 60-day period referred to above by the
holders of a majority in principal amount of the outstanding
Transition Bonds of all Series.

COVENANTS OF THE ISSUER

The Issuer will keep in effect its existence, rights and franchises
as a limited liability company under Delaware law, provided that the Issuer
may consolidate with or merge into another entity or sell substantially all
of its assets to another entity and dissolve if:

1. the entity formed by or surviving the consolidation or merger or to
whom substantially all of its assets are sold is organized under
the laws of the United States or any state thereof and expressly
assumes by a Supplemental Indenture the due and punctual payment of
the principal of and premium, if any, and interest on all
Transition Bonds and the performance of the Issuer's obligations
under the Indenture;

2. the entity expressly assumes all obligations and succeeds to all
rights of the Issuer under the Sale Agreement, the Contribution
Agreement and the Servicing Agreement pursuant to an assignment and
assumption agreement executed and delivered to the Trustee;

3. no default or Event of Default will have occurred and be continuing
immediately after giving effect the merger, consolidation or sale;

4. the Rating Agency Condition will have been satisfied with respect
to this consolidation or merger or sale;

5. the Issuer has received an opinion of counsel to the effect that
this consolidation or merger or sale of assets would have no
material adverse tax consequence to the Issuer or any Transition
Bondholder, the consolidation or merger or sale complies with the
Indenture and all conditions precedent therein provided relating to
the consolidation or merger or sale and will result in the Trustee
maintaining a continuing valid first priority security interest in
the Collateral;

6. none of the Intangible Transition Property, the PUC Order or
PP&L's, the Seller's, the Servicer's or the Issuer's rights under
the Competition Act or the PUC Order are impaired thereby; and

7. any action that is necessary to maintain the lien and security
interest created by the Indenture will have been taken.

Additional Covenants of the Issuer. The Issuer will from time to
time execute and deliver all documents, make all filings and take any other
action necessary or advisable to, among other things, maintain and preserve
the lien and security interest, and priority thereof, of the Indenture. The
Issuer will not permit the validity of the Indenture to be impaired, the
lien to be amended, subordinated or terminated or discharged, or any person
to be released from any covenants or obligations except as expressly
permitted by the Indenture. The Issuer will also not permit any lien,
charge, claim, security interest, mortgage or other encumbrance, other than
the lien and security interest created by the Indenture, to be created on
or extend to or otherwise arise upon or burden the Collateral or any part
thereof or any interest therein or the proceeds thereof. Finally, the
Issuer will not permit the lien of the Indenture not to constitute a
continuing valid first priority security interest in the Collateral.

The Issuer may not, among other things:

1. except as expressly permitted by the Indenture, the Sale Agreement
or the Servicing Agreement sell, transfer, exchange or otherwise
dispose of any of the Collateral unless directed to do so by the
Trustee in accordance with the Indenture; or

2. claim any credit on, or make any deduction from the principal or
premium, if any, or interest payable in respect of, the Transition
Bonds, other than amounts properly withheld under the Code, or
assert any claim against any present or former Transition
Bondholder because of the payment of taxes levied or assessed upon
the Issuer.

The Issuer may not engage in any business other than purchasing and
owning the Intangible Transition Property, issuing Transition Bonds from
time to time, pledging its interest in the Collateral to the Trustee under
the Indenture in order to secure the Transition Bonds, and performing
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto.

The Issuer May Not Engage in Any Other Financial Transactions. The
Issuer may not issue, incur, assume or guarantee any indebtedness except
for the Transition Bonds. Also, the Issuer may not guarantee or otherwise
become contingently liable in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire, or agree
contingently to acquire, any stock, obligations, assets or securities of,
or any other interest in, or make any capital contribution to, any other
person, other than the Eligible Investments. The Issuer may not, except as
contemplated by the Indenture, the Sale Agreement, the Servicing Agreement,
the Contribution Agreement and related documents, including the Limited
Liability Company Agreement, make any loan or advance or credit to any
person. The Issuer will not make any expenditure for capital assets or
lease any capital asset other than Intangible Transition Property purchased
from the Seller pursuant to, and in accordance with, the Sale Agreement.
The Issuer may not make any payments, distributions or dividends to any
member of the Issuer in respect of its membership interest in the Issuer,
except in accordance with the Indenture.

The Servicer will deliver to the Trustee the Annual Accountant's
Report, compliance certificates and monthly reports regarding distributions
and other statements required by the Servicing Agreement. See "The
Servicing Agreement" in this Prospectus.

ACCESS TO THE LIST OF HOLDERS OF THE TRANSITION BONDS

Any Transition Bondholder may by written request to the Trustee,
obtain access to the list of all Transition Bondholders maintained by the
Trustee for the purpose of communicating with other Transition Bondholders
with respect to their rights under the Indenture or the Transition Bonds.
In addition, or group of Transition Bondholders each of whom has owned a
Transition Bond for at least six months may also obtain access to the list
of all Transition Bondholders for the same purpose. The Trustee may elect
not to afford the requesting Transition Bondholders access to the list of
Transition Bondholders if it agrees to mail the desired communication or
proxy, on behalf and at the expense of the requesting Transition
Bondholders, to all Transition Bondholders.

THE ISSUER MUST FILE AN ANNUAL COMPLIANCE STATEMENT

The Issuer will be required to file annually with the Trustee a
written statement as to the fulfillment of its obligations under the
Indenture. In addition, the Issuer will furnish to the Trustee an opinion
of counsel concerning filings made by the Issuer on an annual basis and
before the effectiveness of any amendment to the Sale Agreement, the
Contribution Agreement or the Servicing Agreement.

THE TRUSTEE MUST PROVIDE AN ANNUAL REPORT TO ALL TRANSITION BONDHOLDERS

If required by the Trust Indenture Act, the Trustee will be
required to mail each year to all Transition Bondholders a brief report.
This report must state, among other items:

1. the Trustee's eligibility and qualification to continue as the
Trustee under the Indenture,

2. any amounts advanced by it under the Indenture,

3. the amount, interest rate and maturity date of specific
indebtedness owing by the Issuer to the Trustee in the Trustee's
individual capacity,

4. the property and funds physically held by the Trustee,

5. any additional issue of a Series of Transition Bonds not previously
reported and

6. any action taken by it that materially affects the Transition Bonds
of any Series and that has not been previously reported.

WHAT WILL TRIGGER SATISFACTION AND DISCHARGE OF THE INDENTURE

The Indenture will be discharged with respect to the Transition
Bonds of any Series upon the delivery to the Trustee of funds sufficient
for the payment in full of all of the Transition Bonds of that Series with
the Trustee. In addition, the Issuer must deliver to the Trustee the
officer's certificate and opinion of counsel specified in the Indenture.
The deposited funds will be segregated and held apart solely for paying the
Transition Bonds, and the Transition Bonds will not be entitled to any
amounts on deposit in the Collection Account other than amounts on deposit
in the Defeasance Subaccount for the Transition Bonds.

THE ISSUER'S LEGAL DEFEASANCE AND COVENANT DEFEASANCE OPTIONS

The Issuer may, at any time, terminate:

1. all of its obligations under the Indenture with respect to the
Transition Bonds of any Series; or

2. its obligations to comply with some of the covenants in the
Indenture, including all of the covenants described under
"--Covenants of the Issuer" above.

The Legal Defeasance Option is the right of the Issuer to terminate at any
time its obligations under the Indenture with respect to the Transition
Bonds of any Series. The Covenant Defeasance Option is the right of the
Issuer at any time to terminate its obligations to comply with the
covenants in the Indenture. The Issuer may exercise the Legal Defeasance
Option with respect to any Series of Transition Bonds notwithstanding its
prior exercise of the Covenant Defeasance Option with respect to that
Series. If the Issuer exercises the Legal Defeasance Option with respect to
any Series, that Series will be entitled to payment only from the funds or
other obligations set aside under the Indenture for payment thereof on the
Expected Final Payment Date or Redemption Date therefor as described below.
That Series will not be subject to payment through redemption or
acceleration prior to the Expected Final Payment Date or redemption date,
as applicable. If the Issuer exercises the Covenant Defeasance Option with
respect to any Series, the final payment of the Transition Bonds of that
Series may not be accelerated because of an Event of Default relating to a
default in the observance or performance of any covenant or agreement of
the Issuer made in the Indenture.

The Issuer may exercise the Legal Defeasance Option or the Covenant
Defeasance Option with respect to any Series of Transition Bonds only if:

1. the Issuer irrevocably deposits or causes to be deposited in trust
with the Trustee cash or U.S. Government Obligations for the
payment of principal of and premium, if any, and interest on that
Series to the Expected Final Payment Date or redemption date
therefor, as applicable, the deposit to be made in the Defeasance
Subaccount for that Series;

2. the Issuer delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing its opinion
that the payments of principal and interest on the U.S. Government
Obligations when due and without reinvestment plus any cash
deposited in the Defeasance Subaccount will provide cash at times
and in sufficient amounts to pay in respect of the Transition Bonds
of that Series:

a. principal in accordance with the Expected Amortization
Schedule therefor, and/or if that Series is to be redeemed,
the redemption price on the redemption date therefor, and

b. interest when due;

3. in the case of the Legal Defeasance Option, 95 days pass after the
deposit is made and during the 95-day period no default relating to
events of bankruptcy, insolvency, receivership or liquidation of
the Issuer occurs and is continuing at the end of the period;

4. no default has occurred and is continuing on the day of this
deposit and after giving effect thereto;

5. in the case of the Legal Defeasance Option, the Issuer delivers to
the Trustee an opinion of counsel stating that:

a. the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling or

b. since the date of execution of the Indenture, there has been a
change in the applicable federal income tax law and

in either case confirming that the holders of the Transition Bonds
of that Series will not recognize income, gain or loss for federal
income tax purposes as a result of the exercise of the Legal
Defeasance Option and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would
have been the case if the Legal Defeasance had not occurred;

6. in the case of the Covenant Defeasance Option, the Issuer delivers
to the Trustee an opinion of counsel to the effect that the holders
of the Transition Bonds of that Series will not recognize income,
gain or loss for federal income tax purposes as a result of the
exercise of the Covenant Defeasance Option and will be subject to
federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if the Covenant
Defeasance had not occurred; and

7. the Issuer delivers to the Trustee a certificate of an authorized
officer of the Issuer and an opinion of counsel, each stating that
all conditions precedent to the satisfaction and discharge of the
Transition Bonds of that Series have been complied with as required
by the Indenture.

There will be no other conditions to the exercise by the Issuer of
its Legal Defeasance Option or its Covenant Defeasance Option.

THE TRUSTEE

The Bank of New York will be the Trustee under the Indenture. The
Trustee may resign at any time upon 30 days notice by so notifying the
Issuer. The holders of a majority in principal amount of the Transition
Bonds of all Series then outstanding may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee. The Issuer will remove the
Trustee if the Trustee ceases to be eligible to continue in this capacity
under the Indenture, the Trustee becomes insolvent, a receiver or other
public officer takes charge of the Trustee or its property or the Trustee
becomes incapable of acting. If the Trustee resigns or is removed or a
vacancy exists in the office of Trustee for any reason, the Issuer will be
obligated promptly to appoint a successor Trustee eligible under the
Indenture. No resignation or removal of the Trustee will become effective
until acceptance of the appointment by a successor Trustee. The Trustee
shall at all times satisfy the requirements of the Trust Indenture Act, as
amended and have a combined capital and surplus of at least $50 million and
a long term debt rating of "Baa3" or better by Moody's. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business or assets to, another
entity, the resulting, surviving or transferee entity shall without any
further action be the successor Trustee.

HOW A BANKRUPTCY OF PP&L OR THE
SERVICER MAY AFFECT YOUR INVESTMENT

True Sale or Financing. PP&L will represent and warrant in the
Contribution Agreement that the assignment of the Intangible Transition
Property in accordance with that agreement constitutes an absolute transfer
of the Intangible Transition Property by PP&L to the Seller and that the
transfer of the Transferred Intangible Transition Property, in accordance
with the Sale Agreement, constitutes a valid sale and assignment by PP&L to
the Seller of the Intangible Transition Property. It is a condition of
closing for the sale of Intangible Transition Property pursuant to the Sale
Agreement that the Seller will take the appropriate actions under the
Competition Act, including filing an intangible transition property notice,
to perfect this sale. The Competition Act provides that a transfer of
intangible transition property by an electric utility to an assignee which
the parties have in the governing documentation expressly stated to be a
sale or other absolute transfer, in a transaction approved in a qualified
rate order, shall be treated as an absolute transfer of all the
transferor's right, title and interest, as in a true sale, and not as a
pledge or other financing, of the relevant intangible transition property.
PP&L and the Issuer will treat the transactions as a sale under applicable
law, although for financial reporting and federal and Commonwealth income,
gross receipts and franchise tax purposes the Transition Bonds will be
treated as a financing and not a sale. See "The Competition Act--PP&L and
Other Utilities May Securitize Stranded Costs" in this Prospectus. In the
event of a bankruptcy of PP&L or of the Seller, if a party in interest in
the bankruptcy were to take the position that the sale of the Transferred
Intangible Transition Property to the Issuer was a financing transaction
and not a "true sale," there can be no assurance that a court would not
adopt this position. Even if a court did not ultimately recharacterize the
transaction as a financing transaction, the mere commencement of a Seller
or a PP&L bankruptcy and the attendant possible uncertainty surrounding the
treatment of the transaction could result in delays in payments on the
Transition Bonds.

Commonwealth law has attempted to mitigate the impact of a possible
recharacterization of a sale of intangible transition property as a
financing transaction. The Competition Act and the regulations promulgated
thereunder provide that if an intangible transition property notice is
filed and the transfer is thereafter recharacterized by a court as a
financing transaction, and not a true sale, this notice will be deemed to
constitute a filing with respect to a security interest. The Competition
Act further provides that any relevant filing in respect of transition
bonds takes precedence over any other filings. In addition, the Sale
Agreement requires that financing statements under the Uniform Commercial
Code executed by the Issuer be filed in the appropriate offices in
Pennsylvania. As a result of these filings, the Issuer would be a secured
creditor of PP&L and entitled to recover against the security, which is the
Collateral. None of this, however, mitigates the risk of payment delays and
other adverse effects caused by a Seller or a PP&L bankruptcy. Further, if,
for any reason, an intangible transition property notice is not filed under
the Competition Act or the Issuer fails to otherwise perfect its interest
in the Transferred Intangible Transition Property, and the transfer is
thereafter deemed not to constitute a true sale, the Issuer would be an
unsecured creditor of PP&L.

Consolidation of the Issuer and PP&L. If PP&L were to become a
debtor in a bankruptcy case, a party in interest may attempt to
substantively consolidate the assets and liabilities of the Issuer and
PP&L. PP&L and the Issuer have taken steps to attempt to minimize this risk
as discussed in "PP&L Transition Bond Company LLC, the Issuer" in this
Prospectus. However, no assurance can be given that if PP&L or an affiliate
of PP&L, other than the Issuer, were to become a debtor in a bankruptcy
case, a court would not order that the assets and liabilities of the Issuer
be consolidated with those of PP&L or its affiliate.

Estimation of Claims; Challenge to Indemnity Claims. If PP&L were
to become a debtor in a bankruptcy case, claims, including indemnity
claims, by the Issuer against PP&L under the Contribution Agreement and the
other documents executed in connection therewith would be unsecured claims
and would be subject to being discharged in the bankruptcy case. In
addition, a party in interest in the bankruptcy may request that the
Bankruptcy Court estimate any contingent claims of the Issuer against PP&L.
That party may then take the position that these claims should be estimated
at zero or at a low amount because the contingency giving rise to these
claims is unlikely to occur. If PP&L were to become a debtor in a
bankruptcy case and the indemnity provisions of the Contribution Agreement
were triggered, a party in interest in the bankruptcy might challenge the
enforceability of the indemnity provisions. If a court were to hold that
the indemnity provisions were unenforceable, the Issuer would be left with
a claim for actual damages against PP&L based on breach of contract
principles. The actual amount of these damages would be subject to
estimation and/or calculation by the court.

No assurances can be given as to the result of any of the
above-described actions or claims. Furthermore, no assurance can be given
as to what percentage of their claims, if any, unsecured creditors would
receive in any bankruptcy proceeding involving PP&L.

Status of Intangible Transition Property as Current Property. PP&L
has represented in the Contribution Agreement, and the Competition Act
provides, that the Transferred Intangible Transition Property constitutes a
current property right on the date that the PUC Order became effective and
that it thereafter exists continuously for all purposes. Nevertheless, no
assurance can be given that, in the event of a bankruptcy of PP&L or of the
Seller, a party in interest in the bankruptcy would not attempt to take the
position that the Transferred Intangible Transition Property comes into
existence only as Customers use electricity. If a court were to adopt this
position, no assurance can be given that a security interest in favor of
the Transition Bondholders would attach to Intangible Transition Charges in
respect of electricity consumed after the commencement of the bankruptcy
case. If it were determined that the Transferred Intangible Transition
Property had not been sold to the Issuer, and the security interest in
favor of the Transition Bondholders did not attach to Intangible Transition
Charges in respect of electricity consumed after the commencement of the
bankruptcy case, then the Issuer would be an unsecured creditor of PP&L. If
so, there would be delays or reductions in payments on the Transition
Bonds. Whether or not a court determined that the Transferred Intangible
Transition Property had been sold to the Issuer, no assurances can be given
that a court would not rule that any Intangible Transition Charges relating
to electricity consumed after the commencement of the bankruptcy cannot be
transferred to the Issuer or the Trustee.

In addition, in the event of a bankruptcy of PP&L, a party in
interest in the bankruptcy could assert that the Issuer should pay a
portion of PP&L's costs associated with the generation, transmission or
distribution of the electricity, consumption of which gave rise to the ITC
Collections used to make payments on the Transition Bonds.

Regardless of whether PP&L is the debtor in a bankruptcy case, if a
court were to accept the argument that the Transferred Intangible
Transition Property comes into existence only as Customers use electricity,
a tax or government lien or other nonconsensual lien on property of PP&L
arising before the Transferred Intangible Transition Property came into
existence could have priority over the Issuer's interest in the Transferred
Intangible Transition Property. Adjustments to the Intangible Transition
Charges may be available to mitigate this exposure, although there may be
delays in implementing these Adjustments.

Enforcement of Rights by Trustee. Upon an Event of Default under
the Indenture, the Competition Act permits the Trustee to enforce the
security interest in the Transferred Intangible Transition Property in
accordance with the terms of the Indenture. In this capacity, the Trustee
is permitted to request the PUC to order the sequestration and payment to
Transition Bondholders of all revenues arising with respect to the
Transferred Intangible Transition Property. The Competition Act provides
that this order will remain in full force and effect notwithstanding
bankruptcy, reorganization, or other insolvency proceedings with respect to
the utility or its assignee. There can be no assurance, however, that the
PUC would issue this order after a PP&L bankruptcy in light of the
automatic stay provisions of Section 362 of the United States Bankruptcy
Code or, alternatively, that a bankruptcy court would lift the automatic
stay to permit this action by the PUC. In that event, the Trustee may under
the Indenture seek an order from the bankruptcy court lifting the automatic
stay with respect to this action by the PUC, and an order requiring an
accounting and segregation of the revenues arising from the Transferred
Intangible Transition Property. There can be no assurance that a court
would grant either order.

Bankruptcy of Servicer. The Servicer is entitled to commingle ITC
Collections with its own funds until each Remittance Date. The Competition
Act provides that the relative priority of a lien created under the
Competition Act is not defeated or adversely affected by the commingling of
ITC Collections arising with respect to the Intangible Transition Property
with funds of the electric utility. However, in the event of a bankruptcy
of the Servicer, a party in interest in the bankruptcy might assert, and a
court might rule, that ITC Collections commingled by the Servicer with its
own funds and held by the Servicer as of the date of bankruptcy were
property of the Servicer as of that date, and are therefore property of the
Servicer's bankruptcy estate, rather than property of the Issuer. If the
court so rules, then the court would likely rule that the Trustee has only
a general unsecured claim against the Servicer for the amount of commingled
ITC Collections held as of that date and could not recover the commingled
ITC Collections held as of the date of bankruptcy.

However the court rules on the ownership of the commingled ITC
Collections, the automatic stay arising upon the bankruptcy of the Servicer
could delay the Trustee from receiving the commingled ITC Collections held
by the Servicer as of the date of the bankruptcy until the court grants
relief from the stay. A court ruling on any request for relief from the
stay could be delayed pending the court's resolution of whether the
commingled ITC Collections are property of the Issuer or of the Servicer,
including resolution of any tracing of proceeds issues.

The Servicing Agreement provides that the Trustee, as assignee of
the Issuer, together with the other persons specified therein, may vote to
appoint a Successor Servicer that satisfies the Rating Agency Condition.
The Servicing Agreement also provides that the Trustee, together with the
other persons specified therein, may petition the PUC or a court of
competent jurisdiction to appoint a Successor Servicer that meets this
criterion. However, the automatic stay might delay a Successor Servicer's
replacement of the Servicer. Even if a Successor Servicer may be appointed
and may replace the Servicer, a successor may be difficult to obtain and
may not be capable of performing all of the duties that PP&L as Servicer
was capable of performing.

MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BONDS

INCOME TAX STATUS OF THE TRANSITION BONDS

The Issuer and PP&L have received a private letter ruling from the
IRS that the Transition Bonds will be classified as debt obligations of
PP&L.

DEFINITION OF NON-U.S. HOLDER

The following is a summary of the material United States federal
income tax consequences of the purchase, ownership and disposition of the
Transition Bonds applicable to an initial purchaser of Transition Bonds
that, for U.S. federal income tax purposes, is not a Foreign Person as
defined below. This summary has been prepared by Skadden, Arps, Slate,
Meagher & Flom LLP, special federal income tax counsel to PP&L and the
Issuer, which is referred to in this Prospectus as the Special Tax Counsel.
Special Tax Counsel is of the opinion that its summary is correct in all
material respects. Special Tax Counsel will render no other opinions to the
Issuer with respect to the Transition Bonds. This summary does not purport
to furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an
investor's tax adviser. This summary also does not address the consequences
to holders of the Transition Bonds under state, local or foreign tax laws.
This summary is based upon current provisions of the Code, Treasury
Regulations thereunder, current administrative rulings, judicial decisions
and other applicable authorities in effect as of the date hereof, all of
which are subject to change, possibly with retroactive effect. Legislative,
judicial or administrative changes may occur, perhaps with retroactive
effect, which could affect the accuracy of the statements and conclusions
set forth herein as well as the tax consequences to holders of the
Transition Bonds.

Definition of United States Person. For purposes of the discussion
below, United States Person means:

1. an individual, who is a citizen or resident of the United States
for U.S. federal income tax purposes;

2. a corporation, partnership or other entity created or organized in
or under the laws of the United States, or any state, including the
District of Columbia, or any political subdivision thereof;

3. an estate, the net income of which is subject to United States
federal income taxation regardless of its source; or

4. a trust, if a court within the United States is able to exercise
primary supervision over the administration of each trust and one
or more United States Persons have the authority to control all
substantial decisions of such trust.

A Foreign Person means a person other than a United States Person. A
Non-U.S. Holder means a holder of a Transition Bond that is a Foreign
Person. The following summary applies only to a Foreign Person.

IT IS RECOMMENDED THAT ALL PROSPECTIVE INVESTORS CONSULT THEIR TAX ADVISERS
REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF TRANSITION BONDS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES,
AS WELL AS THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER LAWS.

TAXATION OF FOREIGN TRANSITION BONDHOLDERS

Payments of interest income received by a Non-U.S. Holder generally
will not be subject to United States federal withholding tax, provided that
the Non-U.S. Holder complies with the requirements listed below.

Withholding Taxation on Interest Received before 2001. Payments of
interest income on the Transition Bonds received by a Non-U.S. Holder on or
prior to December 31, 2000, will not be subject to United States federal
withholding tax, or to backup withholding and information reporting,
provided that:

1. a Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of PP&L
entitled to vote;

2. a Non-U.S. Holder is not a controlled foreign corporation that is
related to PP&L through stock ownership; and

3. the Issuer or the Trustee receive:

a. from the Non-U.S. Holder, a properly completed Form W-8, or
substitute Form W-8, signed under penalties of perjury, which
provides its name and address and certifies that it is a Foreign
Person or

b. from a security clearing organization, bank or other financial
institution that holds the Transition Bonds in the ordinary
course of its trade or business, which is referred to as a
Financial Institution, on behalf of a Non-U.S. Holder,
certification signed under penalties of perjury, that this Form
W-8, or substitute Form W-8 has been received by it, or by
another Financial Institution, from the Non-U.S. Holder, and a
copy of the Form W-8, or substitute Form W-8, is furnished to
the Issuer or to the Trustee.

Withholding Taxation on Interest Received After December 31, 2000.
Payments of interest income on the Transition Bonds received by a Non-U.S.
Holder after December 31, 2000, will not be subject to United States
federal withholding tax, or to backup withholding and information
reporting, provided that requirements 1 and 2 of the preceding paragraph
are satisfied and, in general, PP&L or its paying agent must receive:

1. from a Non-U.S. Holder appropriate documentation to treat the
payment as made to a foreign beneficial owner under Treasury
regulations issued under Section 1441 of the Code;

2. a withholding certificate from a person claiming to be a foreign
partnership and the foreign partnership has received appropriate
documentation to treat the payment as made to a foreign beneficial
owner in accordance with these Treasury regulations;

3. a withholding certificate from a person representing to be a
"qualified intermediary" that has assumed primary withholding
responsibility under these Treasury regulations and the qualified
intermediary has received appropriate documentation from a foreign
beneficial owner in accordance with its agreement with the IRS; or

4. a statement, under penalties of perjury from an authorized
representative of a Financial Institution, stating that the
Financial Institution has received from the beneficial owner a
withholding certificate described in these Treasury regulations or
that it has received a similar statement from another Financial
Institution acting on behalf of the foreign beneficial owner.

In general, it will not be necessary for a Non-U.S. Holder to obtain or
furnish a United States taxpayer identification number to PP&L or its
paying agent in order to claim any of the foregoing exemptions from United
States withholding tax on payments of interest. Interest paid to a Non-U.S.
Holder will be subject to a United States withholding tax of 30% upon the
actual payment of interest income, except as described above and except
where an applicable tax treaty provides for the reduction or elimination of
this withholding tax. A Non-U.S. Holder generally will be taxable in the
same manner as a United States corporation or resident with respect to
interest income if this income is effectively connected with the conduct of
your trade or business in the United States. This effectively connected
income received by a Non-U.S. Holder that is a corporation may in some
circumstances be subject to an additional "branch profits tax" at a
30% rate, or if applicable, a lower treaty rate.

Capital Gains Tax Issues. A Non-U.S. Holder generally will not be
subject to United States federal income or withholding tax on gain realized
on the sale or exchange of Transition Bonds, unless:

1. the Non-U.S. Holder is an individual who is present in the United
States for 183 days or more during the taxable year and this gain
is from United States sources or

2. the gain is effectively connected with a United States trade or
business and other requirements are satisfied.

Sale of the Transition Bonds to or Through the Office of a Broker.
The payment of the proceeds of the sale of Transition Bonds to or through
the United States office of a broker will be subject to information
reporting and possible backup withholding at a rate of 31%. To avoid these
requirements, a Non-U.S. Holder must certify its non-United States status
under penalties of perjury or otherwise establish an exemption in
accordance with applicable Treasury regulations. The payment of the
proceeds of the sale of Transition Bonds to or through the foreign office
of a broker generally will not be subject to this backup withholding tax.
However, in the case of the payment of proceeds from the disposition of
Transition Bonds through a foreign office of a broker that is a United
States Person or a United States related person, the applicable Treasury
regulations require information reporting on the payment. To avoid this
requirement, the broker must have documentary evidence in its files that a
Non-U.S. Holder is a Foreign Person and the broker cannot have actual
knowledge to the contrary. For this purpose, a United States related person
is:

1. a "controlled foreign corporation" for United States federal income
tax purposes or

2. a Foreign Person 50% or more of whose gross income from all sources
for a specified period is derived from activities that are
effectively connected with the conduct of a United States trade or
business.

Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against its United
States federal income tax, provided that the required information is
furnished to the IRS.

MATERIAL COMMONWEALTH OF PENNSYLVANIA TAX MATTERS

In the opinion of Morgan, Lewis & Bockius LLP, special Pennsylvania
tax counsel to PP&L and the Issuer, interest from Transition Bonds received
by a person who is not otherwise subject to corporate or personal income
tax in the Commonwealth will not be subject to these taxes. Neither the
Commonwealth nor any of its political subdivisions presently impose
intangible personal property taxes and therefore Commonwealth residents
will not be subject to these taxes.

ERISA CONSIDERATIONS

ERISA, and Section 4975 of the Code impose restrictions on:

1. employee benefit plans, as defined in Section 3(3) of ERISA, that
are subject to Title I of ERISA;

2. plans, as defined in Section 4975(e)(1) of the Code, that are
subject to Section 4975 of the Code, including individual
retirement accounts or Keogh plans;

3. any entities whose underlying assets include plan assets by reason
of that plan's investment in these entities, each of the entities
described in 1, 2 and 3 being referred to as a Plan; and

4. persons who have specified relationships to Plans which are
"parties in interest" under ERISA and "disqualified persons" under
the Code, which, collectively are referred to as Parties in
Interest.

Moreover, based on the reasoning of the United States Supreme Court in John
Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86
(1993), an insurance company's general account may be deemed to include
assets of the Plans investing in the general account, such as through the
purchase of an annuity contract. Thus, this insurance company might be
treated as a Party in Interest with respect to a Plan by virtue of this
investment. ERISA also imposes specific duties on persons who are
fiduciaries of Plans subject to ERISA, and ERISA and Section 4975 of the
Code prohibit specified transactions between a Plan and Parties in Interest
with respect to the Plan. Violations of these rules may result in the
imposition of excise taxes and other penalties and liabilities under ERISA
and Section 4975 of the Code.

PLAN ASSET ISSUES FOR AN INVESTMENT IN THE TRANSITION BONDS

Under the Plan Asset Regulation, if a Plan makes an "equity"
investment in a corporation, partnership, trust or other specified
entities, the underlying assets and properties of the entity will be deemed
for purposes of ERISA and Section 4975 of the Code to be assets of the
investing Plan unless those exceptions set forth in the Plan Asset
Regulation apply. The Plan Asset Regulation is a regulation issued by the
United States Department of Labor which states that if a Plan makes an
"equity" investment in a corporation, partnership, trust or other specified
entities, the underlying assets and properties of the entity will be deemed
for purposes of ERISA and Section 4975 of the Code to be assets of the
investing Plan unless those exceptions set forth in the regulation apply.
Although there is little statutory or regulatory guidance on this subject,
and there can be no assurances in this regard, it appears that the
Transition Bonds should not be treated as an equity interest for purposes
of the Plan Asset Regulation. Accordingly, the assets of the Borrower
should not be treated as the assets of Plans investing in the Transition
Bonds.

PROHIBITED TRANSACTION EXEMPTIONS

It should be noted, however, that without regard to the treatment
of the Transition Bonds as equity interests or as indebtedness under the
Plan Asset Regulation, PP&L, the Underwriters and/or their affiliates, as a
provider of services to Plans, may be deemed to be Parties in Interest with
respect to many Plans. The purchase and holding of Transition Bonds by or
on behalf of one or more of these Plans could result in a prohibited
transaction within the meaning of Section 406 or 407 of ERISA or Section
4975 of the Code. However, the purchase and holding of Transition Bonds may
not be result in a prohibited transaction if the transaction were subject
to one or more statutory or administrative exemptions from the prohibited
transaction rules of ERISA and Section 4975 of the Code.

Examples of Prohibited Transaction Class Exemptions. Potentially
applicable prohibited transaction class exemptions, which are referred to
as PTCE's, include the following:

1. PTCE 90-1, which exempts specific transactions involving insurance
company pooled separate accounts;

2. PTCE 95-60, which exempts specific transactions involving insurance
company general accounts;

3. PTCE 91-38, which exempts specific transactions involving bank
collective investment funds;

4. PTCE 84-14, which exempts specific transactions effected on behalf
of a Plan by a "qualified professional asset manager" as that term
is defined in ERISA, and which is referred to as a QPAM; or

5. PTCE 96-23, which exempts specific transactions effected on behalf
of a Plan by specific "in-house" asset managers.

It should be noted, however, that even if the conditions specified in one
or more of these exemptions are met, the scope of relief provided by these
exemptions may not necessarily cover all acts that might be construed as
prohibited transactions.

PRIOR TO MAKING AN INVESTMENT IN THE TRANSITION BONDS OF ANY
SERIES, A PLAN INVESTOR MUST DETERMINE WHETHER, AND EACH FIDUCIARY CAUSING
THE TRANSITION BONDS TO BE PURCHASED BY, ON BEHALF OF OR USING PLAN ASSETS
OF A PLAN THAT IS SUBJECT TO THE PROHIBITED TRANSACTION RULES OF ERISA OR
SECTION 4975 OF THE CODE, INCLUDING WITHOUT LIMITATION AN INSURANCE COMPANY
GENERAL ACCOUNT, SHALL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT, AN
EXEMPTION FROM THE PROHIBITED TRANSACTION RULES APPLIES, SO THAT THE USE OF
PLAN ASSETS OF THE PLAN TO PURCHASE AND HOLD THE TRANSITION BONDS DOES NOT
AND WILL NOT CONSTITUTE OR OTHERWISE RESULT IN A NON-EXEMPT PROHIBITED
TRANSACTION IN VIOLATION OF SECTION 406 OR 407 OF ERISA OR SECTION 4975 OF
THE CODE.

Conditions That Would Allow the QPAM Exemption to Apply. Plan
fiduciaries intending to rely upon the QPAM exemption should consider the
following potential prohibited transactions. As noted above, although the
Issuer believes that the Transition Bonds should not constitute "equity
interests" for purposes of the Plan Asset Regulation, it is nonetheless
possible that any Class or Series of Transition Bonds could be treated as
"equity interests" for purposes of the Plan Asset Regulation. In this case,
the assets of the Issuer would be treated as the plan assets of any Plan
purchasing that Class or Series. In this event, ITC Collections will be
deemed, for purposes of the prohibited transaction rules, to flow
indirectly from Customers to Plans that own that Class or Series of
Transition Bonds. Thus, this transaction, in the absence of an applicable
exemption, could be deemed to constitute a prohibited transfer of property
between a Plan and any Party in Interest with respect to the Plan that is
also a Customer. The QPAM exemption requires, among other things, that at
the time of the proposed transaction, the party in interest, or its
affiliate, does not have the authority to appoint or terminate the QPAM as
a manager of any of the Plan's assets. This means, however, that if the
Plan sponsor, a director of the Plan sponsor or other Party in Interest
with respect to a Plan is also a Customer, and this person has the
authority to appoint or terminate the QPAM as a manager of the Plan's
assets, the holding of that Class or Series of Transition Bonds by the Plan
could be deemed to constitute a prohibited transaction to which the QPAM
exemption does not apply. Accordingly, fiduciaries intending to rely upon
the QPAM exemption should carefully discuss the effectiveness of the QPAM
exemption with their legal advisors before purchasing any Class or Series
of Transition Bonds.

SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS

It should be noted that the Small Business Job Protection Act of
1996 added new Section 401(c) of ERISA relating to the status of the assets
of insurance company general accounts under ERISA and Section 4975 of the
Code. Pursuant to Section 401(c), the Department of Labor is required to
issue the General Account Regulations with respect to insurance policies
issued on or before December 31, 1998 that are supported by an insurer's
general account. The General Account Regulations are to provide guidance on
which assets held by the insurer constitute "plan assets" for purposes of
the fiduciary responsibility provisions of ERISA and Section 4975 of the
Code. Section 401(c) also provides that until the date that is 18 months
after the General Account Regulations become final, no liability under the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 may result on the basis of a claim that the assets of the
general account of an insurance company constitute the plan assets of any
Plan. This provision does not apply in cases of avoidance of the General
Account Regulations or actions brought by the Secretary of Labor relating
to particular breaches of fiduciary duties that also constitute breaches of
state or federal criminal law. The plan asset status of insurance company
separate accounts is unaffected by new Section 401(c) of ERISA, and
separate account assets continue to be treated as the plan assets of any
Plan invested in a separate account.

Department of Labor Proposed Regulations. As of the date hereof,
the Department of Labor has issued proposed regulations under Section
401(c). If the General Account Regulations are adopted substantially in the
form in which proposed, the General Account Regulations may not exempt the
assets of insurance company general accounts from treatment as "plan
assets" after December 31, 1998. The proposed regulations should not,
however, adversely affect the applicability of PTCE 95-60 to purchases of
Transition Bonds by insurance company general accounts.

GENERAL INVESTMENT CONSIDERATIONS FOR PROSPECTIVE PLAN INVESTORS IN
THE TRANSITION BONDS

Prior to making an investment in the Transition Bonds, prospective
Plan investors should consult with their legal advisors concerning the
impact of ERISA and the Code and the potential consequences of this
investment with respect to their specific circumstances. Moreover, each
Plan fiduciary should take into account, among other considerations,

1. whether the fiduciary has the authority to make the investment;

2. whether the investment constitutes a direct or indirect transaction
with a Party in Interest;

3. the composition of the Plan's portfolio with respect to
diversification by type of asset;

4. the Plan's funding objectives;

5. the tax effects of the investment; and

6. whether under the general fiduciary standards of investment
prudence and diversification an investment in the Transition Bonds
is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's
investment portfolio.

Governmental plans and some church plans are generally not subject
to the fiduciary responsibility provisions of ERISA or the provisions of
Section 4975 of the Code. However, these plans may be subject to
substantially similar rules under state or other federal law, and may also
be subject to the prohibited transaction rules of Section 503 of the Code.

The sale of Transition Bonds to a Plan shall not be deemed a
representation by PP&L or the Underwriters that this investment meets all
relevant legal requirements with respect to Plans generally or any
particular Plan.

PLAN OF DISTRIBUTION FOR THE TRANSITION BONDS

The Transition Bonds of each Series may be sold to or through the
Underwriters by a negotiated firm commitment underwriting and public
reoffering by the Underwriters. The Transition Bonds may also be sold to or
through any other underwriting arrangement as may be specified in the
related Prospectus Supplement or may be offered or placed either directly
or through agents. The Issuer and the Trustee intend that Transition Bonds
will be offered through various methods from time to time. The Issuer also
intends that offerings may be made concurrently through more than one of
these methods or that an offering of a particular Series of Transition
Bonds may be made through a combination of these methods.

The distribution of Transition Bonds may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices
related to the prevailing market prices or in negotiated transactions or
otherwise at varying prices to be determined at the time of sale.

The Transition Bonds may be offered through one or more different
methods, including offerings through underwriters. It is not anticipated
that any of the Transition Bonds will be listed on any securities exchange.
There can be no assurance that a secondary market for any Series of
Transition Bonds will develop or, if one does develop, that it will
continue.

Compensation to Underwriters. In connection with the sale of the
Transition Bonds, Underwriters or agents may receive compensation in the
form of discounts, concessions or commissions. Underwriters may sell
Transition Bonds to particular dealers at prices less a concession.
Underwriters may allow, and these dealers may reallow, a concession to
other dealers. Underwriters, dealers and agents that participate in the
distribution of the Transition Bonds of a Series may be deemed to be
underwriters. Any discounts or commissions received by the Underwriters
from the Issuer and any profit on the resale of the Transition Bonds by
them may be deemed to be underwriting discounts and commissions under the
Securities Act. These Underwriters or agents will be identified, and any
compensation received from the Issuer will be described, in the related
Prospectus Supplement.

Other Distribution Issues. Under agreements which may be entered
into by PP&L, the Seller, the Issuer and the Trustee, Underwriters and
agents who participate in the distribution of the Transition Bonds may be
entitled to indemnification by PP&L and the Issuer against liabilities
specified therein, including under the Securities Act. The Underwriters
may, from time to time, buy and sell the Transition Bonds, but there can be
no assurance that an active secondary market will develop and there is no
assurance that this market, if established will continue.

RATINGS FOR THE TRANSITION BONDS

It is a condition of any Underwriter's obligation to purchase the
Transition Bonds that each Series or Class receive the ratings indicated in
the related Prospectus Supplement.

Limitations of Security Ratings. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning Rating Agency. No
person is obligated to maintain the rating on any Transition Bonds, and,
accordingly, there can be no assurance that the ratings assigned to any
Series or Class of Transition Bonds upon initial issuance will not be
lowered or withdrawn by a Rating Agency at any time thereafter. If a rating
of any Series or Class of Transition Bonds is revised or withdrawn, the
liquidity of this Class of Transition Bonds may be adversely affected. In
general, ratings address credit risk and do not represent any assessment of
any particular rate of principal payments on the Transition Bonds other
than the payment in full of each Series or Class of Transition Bonds by
the applicable Series Termination Date or Class Termination Date.

VARIOUS LEGAL MATTERS RELATING TO THE TRANSITION BONDS

Some legal matters relating to the Issuer and the issuance of the
Transition Bonds will be passed upon for the Issuer by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York and for the Underwriters by
Orrick, Herrington & Sutcliffe LLP, San Francisco, California. Some legal
matters relating to PP&L will be passed upon for PP&L by Morgan Lewis &
Bockius LLP, Philadelphia, Pennsylvania. Some legal matters relating to the
federal tax consequences of the issuance of the Transition Bonds will be
passed upon for the Issuer by Skadden, Arps, Slate, Meagher & Flom LLP.
Some legal matters relating to Commonwealth of Pennsylvania tax
consequences of the issuance of the Transition Bonds will be passed upon
for the Issuer by Morgan, Lewis & Bockius LLP.

EXHIBIT A

GLOSSARY OF DEFINED TERMS

The following definitions are used in this Prospectus and in any
accompanying Prospectus Supplement:

ACTUAL ITC COLLECTIONS means actual collections of Intangible
Transition Charges that the Servicer receives for a particular
Billing Month.

ADJUSTMENT DATE means, in relation to each Series of Transition
Bonds, the date on which the adjustments to the Intangible
Transition Charges are to be made.

ADJUSTMENT REQUEST in relation to the Intangible Transition Charges
means a request filed by the Servicer requesting modifications to
the Intangible Transition Charges.

ANNUAL ACCOUNTANTS REPORT means a statement furnished by a firm of
independent public accountants to the Issuer, the Trustee and the
Rating Agencies, as to the compliance by the Servicer during the
preceding calendar year, or the relevant portion thereof, with
standards relating to the servicing of Intangible Transition
Property.

AVERAGE ITC RATE for each Rate Schedule equals the ITC Collections
divided by the amount of electricity used, in kilowatt hours.

BASIC DOCUMENTS means the Contribution Agreement, the Sale
Agreement, the Servicing Agreement, the bills of sale for
Intangible Transition Property pursuant to the Sale Agreement, the
Administration Agreement between the Issuer and PP&L, the
Indenture, and the Limited Liability Company Agreement and the
certificate of formation of the Issuer.

BOND RATE means, with respect to each Series or, if applicable,
each Class of the Transition Bonds, the rate of interest payable on
that Series or Class.

BOOK-ENTRY TRANSITION BONDS means Transition Bonds registered in
the name of Cede & Co., as nominee of DTC, or another securities
depository which will be available to investors only in the form of
book-entries maintained indirectly with DTC through organizations
that are DTC participants.

BUSINESS DAY means any day other than a Saturday or Sunday or a day
on which banking institutions in the City of Allentown,
Pennsylvania, or in the City of New York are required or authorized
by law or executive order to remain closed.

CALCULATION DATE in relation to the Intangible Transition Charges
means the date on which the Servicer is required to file an
Adjustment Request with the PUC.

CAPITAL SUBACCOUNT means a subaccount designated the Capital
Subaccount and held by the Trustee under the Indenture.

CEDE means Cede & Co., the nominee for The Depository Trust
Company.

CEDEL means Cedelbank, societe anonyme.

CEDEL CUSTOMERS means customers of Cedelbank, societe anonyme.

CEP SECURITIES means CEP Securities Co. LLC, a Delaware limited
liability company, an indirect wholly owned subsidiary of PP&L.

CLASS means, with respect to any Series, any one of the classes of
Transition Bonds of that Series.

CLASS FINAL MATURITY DATE in relation to any Class means the Final
Maturity Date of that Class.

CODE means the Internal Revenue Code of 1986.

COLLATERAL means the Intangible Transition Property and all other
property pledged to the Trustee by the Issuer as collateral
security for the Transition Bonds.

COLLECTION ACCOUNT means the segregated trust account designated
the Collection Account and held by the Trustee under the Indenture.

COMMONWEALTH means the Commonwealth of Pennsylvania.

COMPETITION ACT means the Pennsylvania Electricity Generation Customer
Choice and Competition Act.

COMPETITIVE DEFAULT SERVICE means, in relation to the Restructuring
Plan and the Joint Petition, electrical generation service provided
by a provider of last resort other than PP&L.

COMPETITIVE DEFAULT SUPPLIER means, in relation to the Restructuring
Plan and the Joint Petition, a provider of Competitive Default Service.

COMPETITIVE TRANSITION CHARGE means, with respect to PP&L, the
nonbypassable charge applied to the bill of every Customer which
accesses PP&L's transmission or distribution network which charge
is designed to recover PP&L's transition or stranded costs as
determined by the PUC.

CONTRIBUTION AGREEMENT means the Contribution Agreement dated as of
May 13, 1999, among PP&L, CEP Group, Inc., a Pennsylvania
corporation, CEP Reserves, Inc., a Delaware corporation, and CEP
Securities, as amended from time to time.

COOPERATIVE means Euroclear Clearance System S.C., a Belgian
cooperative corporation.

CUSTOMER means, with respect to PP&L, a retail consumer of
electricity within PP&L's service territory who access PP&L's
transmission and distribution system.

CUSTOMER CLASS means one of the three customer classes which make
up PP&L's customer base.

DAILY REMITTANCE DATE means each Business Day of each calendar
month.

DE MINIMUS AMOUNT means an amount that is less than 0.25% of a
Transition Bond's principal amount payable at expected maturity
multiplied by the weighted average number of years to maturity.

DEFEASANCE SUBACCOUNT means a subaccount in the Collection Account
designated the Defeasance Subaccount and held by the Trustee under
the Indenture.

DEPOSITORIES means Citibank, N.A., as depository for CEDEL and
Morgan Guaranty Trust Company of New York as depository for
Euroclear.

DIRECT PARTICIPANTS means direct participants of DTC which include
securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations.

DTC means the Depository Trust Company.

ELECTRIC GENERATION SUPPLIERS means entities, licensed by the PUC,
other than PP&L which provide electricity generation and related
services, including billing and metering of electricity consumption.

ELIGIBLE INSTITUTION in relation to the Collection Account means:

1. the corporate trust department of the Trustee; or

2. a depository institution organized under the laws of the
United States of America or any state (or any domestic
branch of a foreign bank), which:

a. has either:

(1) a long-term unsecured debt rating of "AAA" by S&P
and "A1" by Moody's; or

(2) a certificate of deposit rating of "A-1+" by S&P
and "P-1" by Moody's, or any other long-term,
short-term or certificate of deposit rating
acceptable to the Rating Agencies; and

b. whose deposits are insured by the Federal Deposit Insurance
Corporation.

ELIGIBLE INVESTMENTS means any of the following:

1. direct obligations of, and obligations fully and unconditionally
guaranteed as to the timely payment by, the United States of
America;

2. demand deposits, time deposits, certificates of deposit of
depository institutions or trust companies specified in the
Indenture;

3. commercial paper having, at the time of investment, a rating
in the highest rating category from each Rating Agency;

4. demand deposits, time deposits and certificates of deposit
which are fully insured by the Federal Deposit Insurance
Corporation;

5. money market funds which have the highest rating from each
Rating Agency (including funds for which the Trustee or any
of its affiliates is investment manager or advisor);

6. banker's acceptances issued by any depository institution or
trust company referred to in clause 2 above;

7. repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United
States of America or agencies or instrumentalities thereof,
entered into with depository institutions or trust companies
in each case as specified in the Indenture; or

8. any other investment permitted by each Rating Agency;
provided, however, that:

a. any book-entry security, instrument or security having a
maturity of one month or less that would be an Eligible
Investment but for its failure (or the failure of the
obligor thereon) to have the rating specified above shall
be an Eligible Investment if the book-entry security,
instrument or security (or the obligor thereon) has a
long-term unsecured debt rating of at least "A2" by
Moody's, "AA" by S&P (or the equivalent thereof by the
other Rating Agencies) or a short-term rating of at least
"P-1" by Moody's, "A-1+" (or the equivalent thereof by the
other Rating Agencies); and

b. any book-entry security, instrument or security having a
maturity of greater than one month that would be an
Eligible Investment but for its failure (or the failure
of the obligor thereon) to have the rating specified
above shall be an Eligible Investment if this book-entry
security, instrument or security (or the obligor thereon)
has a long-term unsecured debt rating of at least "A1" by
Moody's or "AA" by S&P (or the equivalent thereof by the
other Rating Agencies) and a short-term rating of at
least "P-1" by Moody's or "A-1+" by S&P (or the
equivalent thereof by the other Rating Agencies).

EQUITY INTEREST means, pursuant to the Plan Asset Regulation, any
interest in an entity other than an instrument that is treated as
indebtedness under applicable law and which has no substantial equity
features.

EUROCLEAR means the Euroclear System.

EUROCLEAR OPERATOR means the Morgan Guaranty Trust Company of New
York in its role as operator of Euroclear, which is based in its
Brussels, Belgium office.

EUROCLEAR PARTICIPANTS means participants of the Euroclear system.

EXCHANGE ACT means the Securities Exchange Act of 1934.

EXPECTED AMORTIZATION SCHEDULE means a schedule of the amounts
necessary to amortize the Transition Bonds of each Series.

EXPECTED FINAL PAYMENT DATE for each Series or Class of Transition
Bonds means the date when all interest and principal is scheduled
to be paid for that Series or Class in accordance with the Expected
Amortization Schedule.

FINANCIAL INSTITUTION means a securities clearing organization,
bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business.

FINAL MATURITY DATE means, for a Series or Class of Transition
Bonds, the date by which all principal and interest on the
Transition Bonds is required to be paid.

FINAL ORDER means the qualified rate order issued by the PUC on
August 27, 1999.

FITCH means Fitch IBCA, Inc.

FOREIGN PERSON means a person other than a United States Person.

GENERAL ACCOUNT REGULATIONS means final regulations, which are
required to be issued by the Department of Labor pursuant to
Section 401(c) of ERISA, with respect to insurance policies issued
on or before December 31, 1998 that are supported by an insurer's
general account.

GENERAL SUBACCOUNT means a subaccount of the Collection Account
designated the General Subaccount and held by the Trustee under the
Indenture.

GENERATION RATE CAP means the sum of the Competitive Transition
Charge, the Intangible Transition Charge and the Shopping Credit.

H.R. 1230 means the Consumers Electric Power Act of 1997.

INDENTURE means the Indenture dated as of ________ , 1999, between
the Issuer and the Trustee, as the same may be amended and
supplemented from time to time by one or more indentures
supplemental thereto.

INDIRECT PARTICIPANTS means securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly.

INITIAL TRANSFER DATE means the Series Issuance Date for the first
Series of Transition Bonds.

INSOLVENCY LAWS means the United States Bankruptcy Code or similar
laws.

INTANGIBLE TRANSITION CHARGES means, with respect to PP&L, the
amounts authorized to be imposed on all Customer bills and
collected, through a non-bypassable mechanism by PP&L or its
successor or by any other entity which provides electric service to
a person that was a customer of PP&L located within PP&L's
certificated territory on January 1, 1997 or that, after January 1,
1997, became a Customer of electric services within PP&L's
certificated territory, to recover Qualified Transition Expenses
pursuant to the PUC Order.

INTANGIBLE TRANSITION PROPERTY means, with respect to PP&L, the
property right created under the Competition Act representing the
irrevocable right of PP&L or its assignee to receive through
Intangible Transition Charges amounts sufficient to recover all of
its Qualified Transition Expenses.

ITC COLLECTIONS means the amount of Intangible Transition Charges
received by the Servicer from Customers.

JOINT PETITION means the Joint Petition for Full Settlement of
PP&L's Restructuring Plan and Related Court Proceedings which was
filed with the PUC on August 12, 1998.

KWH means kilowatt-hour.

LIEN means a security interest, lien, charge, pledge, equity or
encumbrance of any kind.

LIMITED LIABILITY COMPANY AGREEMENT means the Amended and Restated
Limited Liability Company Agreement of the Issuer, dated ______,
1999 and executed by PP&L as sole member.

MONTHLY REMITTANCE DATE means the 20th day of each calendar month,
or if such 20th day is not a Business Day, the next Business Day.

MOODY'S means Moody's Investors Service Inc.

MWH means megawatt-hour.

NON-BYPASSABLE means, with respect to PP&L, a characteristic of the
right of PP&L to collect the Competitive Transition Charge and the
Intangible Transition Charge from retail consumers of electricity
within PP&L's service territory who access PP&L's transmission and
distribution system even if those consumers elect to purchase
electricity from another supplier or choose to operate
self-generation equipment while accessing PP&L's transmission and
distribution system.

ON TRACK is PP&L's special reduced payment program for some low
income Residential Customers who are currently served under or
otherwise qualify for Rate Schedule RS.

OVERCOLLATERALIZATION SUBACCOUNT means a subaccount in the
Collection Account designated the Overcollateralization Subaccount
and held by the Trustee under the Indenture.

PARTICIPANTS means participants of CEDEL, Euroclear or DTC.

PAYMENT DATE means the date or dates on which interest and principal
will be payable on the Transition Bonds.

PECO means PECO Energy Company.

PJM means PJM Interconnection, L.L.C.

PP&L means PP&L, Inc.

PP&L RESOURCES means PP&L Resources, Inc, the parent of PP&L.

PROJECTED TRANSITION BOND BALANCE means, for each Series or Class
of Transition Bonds, the projected aggregate outstanding principal
balance for that Series or Class as specified for each Payment Date
in the Expected Amortization Schedule.

PROVIDER OF LAST RESORT means PP&L as provider of electric
generation service to its Customers within its service territory.

PUC means the Pennsylvania Public Utility Commission.

PUC ORDER means the Final Order, together with the supplemental
order issued by the PUC on May 21, 1999 supplementing the Final
Order.

PUC RESTRUCTURING ORDER means the order issued by the PUC on June
15, 1998 concerning PP&L's Restructuring Plan.

QUALIFIED TRANSITION EXPENSES means the transition or stranded
costs of an electric utility approved by the PUC for recovery
through the issuance of transition bonds; the costs of retiring
existing debt or equity capital of the electric utility or its
holding company parent, including accrued interest and acquisition
or redemption premium, costs of defeasance, and other related fees,
costs and charges relating to, through the issuance of transition
bonds or the assignment, sale or other transfer of intangible
transition property; and the costs incurred to issue, service or
refinance the transition bonds, including accrued interest and
acquisition or redemption premium, and other related fees, costs
and charges, or to assign, sell or otherwise transfer intangible
transition property.

RATE SCHEDULE means one of the rate schedules within a Customer
Class.

RATING AGENCY means any rating agency which has, at the request of
the Issuer, rated the Transition Bonds of any Class or Series at
the time of issuance thereof. If no rating agency remains in
existence, then the term means a nationally recognized statistical
rating organization or other comparable person designated by the
Issuer.

RATING AGENCY CONDITION means the notification in writing by each
Rating Agency to the Trustee and the Issuer that a specified action
will not result in a reduction or withdrawal of its then current
rating of any outstanding Series or Class of Transition Bonds.

RECONCILIATION DATE means, with respect to any Billing Month, the
20th day (or if the 20th day is not a Business Day, the next
Business day) in the eighth month after that Billing Month.

REDEMPTION PRICE means the price specified in a Supplemental
Indenture at which the Issuer may, at its option, redeem the
relevant Class or Series of Transition Bonds.

REMITTANCE DATE means each date on which the Servicer must remit
ITC Collections and pay Collection Curve Payments to the Trustee
for deposit in the Collection Account.

REQUIRED CAPITAL AMOUNT means the capital contribution made by PP&L
upon the issuance of each Series of Transition Bonds equal to the
amount specified in the related Prospectus Supplement, representing
a capital contribution from PP&L to the Issuer.

RESERVE SUBACCOUNT means a subaccount in the Collection Account
designated the Reserve Subaccount and held by the Trustee under the
Indenture.

RESTRUCTURING PLAN means the comprehensive plan filed by PP&L with
the PUC on April 1, 1997 relating to its proposal to implement full
customer choice of electric generation suppliers, in accordance
with the provisions of the Competition Act.

S&P means Standard and Poor's Corporation.

SALE AGREEMENT means the Intangible Transition Property Sale
Agreement dated , 1999, between CEP Securities and the Issuer.

SCHEDULED OVERCOLLATERALIZATION LEVEL means in relation to any
Payment Date the amount of funds required to be on deposit in the
Overcollateralization Subaccount on that Payment Date as specified
in the Expected Amortization Schedule.

SECURITIES ACT means the Securities Act of 1933.

SELLER means CEP Securities as seller under the Sale Agreement.

SERIES means one or more series of Transition Bonds.

SERIES FINAL MATURITY DATE means the Final Maturity Date for a Series.

SERIES ISSUANCE DATE means the initial issuance date for a Series.

SERIES SUBACCOUNT means a subaccount in the Collection Account
designated the Series Subaccount with respect to a Series and held
by the Trustee under the Indenture.

SERVICER means PP&L in its capacity as servicer under the Servicing
Agreement, and any successors in that capacity.

SERVICING AGREEMENT means the Servicing Agreement dated as of ,
1999, between the Issuer and the Servicer, as the same may be
amended and supplemented from time to time.

SERVICING FEE means the fee paid by the Issuer to the Servicer on
each Payment Date with respect to each Series of Transition Bonds
in an amount to be specified in the related Prospectus Supplement.

SHOPPING CREDIT for generation, means the bundled rate for
electricity consumption that PP&L charged its customers prior to
the implementation of the Competition Act minus PP&L's Competitive
Transition Charges and minus PP&L's Transmission and Distribution
Rate. This represents the amount that Customers can apply towards
electricity generation charges they receive from other Electricity
Generation Suppliers, less the 4% system average reduction from the
current total bundled bill of Customers in 1999.

STRANDED COSTS means, in relation to PP&L, the net electric
generation related costs which traditionally would be recoverable
under a regulated environment but which may not be recoverable in a
competitive electric generation market and which the PUC has
determined will remain following mitigation by PP&L.

SUBACCOUNTS means subaccounts of the Collection Account into which
the funds in the Collection Account will be allocated.

SUBSEQUENT SALE means the sale of additional Intangible Transition
Property by the Seller to the Issuer, subject to the satisfaction
of the conditions specified in the Sale Agreement and the Indenture.

SUBSEQUENT TRANSFER DATE means the date that a Subsequent Sale will
be effective, specified in a written notice provided by the Seller
to the Issuer.

SUCCESSOR SERVICER means any successor to the Servicer appointed by
the Trustee pursuant to the Servicing Agreement.

SUPPLEMENTAL INDENTURE means each supplement to the base Indenture.

TRANSFERRED INTANGIBLE TRANSITION PROPERTY means Intangible
Transition Property which has been sold to the Issuer.

TRANSITION BOND BALANCE means the aggregate outstanding principal
balance for each Series or Class of Transition Bonds.

TRANSITION BONDHOLDER means a beneficial owner of Transition Bonds.

TRANSITION BONDS means any of the transition bonds (as defined in
the Competition Act) issued by the Issuer pursuant to the
Indenture.

TREASURY REGULATIONS means existing and proposed treasury
regulations promulgated under the Code.

TRUST INDENTURE ACT means the Trust Indenture Act of 1939.

TRUSTEE means The Bank of New York, a New York banking corporation,
or its successor or any successor Trustee under the Indenture.

U.S. GOVERNMENT OBLIGATIONS means direct obligations, or
certificates representing an ownership interest in those
obligations, of the United States of America, including any agency
or instrumentality thereof, for the payment of which the full faith
and credit of the United States of America is pledged and which are
not callable at the Issuer's option.

UNDERWRITING AGREEMENT means an underwriting agreement among the
Issuer, PP&L and the underwriters named in the Prospectus
Supplement for whom Morgan Stanley Dean Witter is acting as the
representative.

UNITED STATES PERSON means:

1. a citizen or resident of the United States,

2. a corporation, partnership or other specified entity created
or organized in or under the laws of the United States, or
any state (including the District of Columbia) or any
political subdivision thereof,

3. an estate the net income of which is subject to United
States federal income taxation regardless of its source or

4. a trust:

a. over the administration of which a court within the United
States is able to exercise primary supervision and

b. all substantial decisions of which one or more United
States Persons have the authority to control.

UNITED STATES RELATED PERSON means:

1. a "controlled foreign corporation" for United States federal
income tax purposes or

2. a Foreign Person 50% or more of whose gross income from all
sources for a specified period is derived from activities
that are effectively connected with the conduct of a United
States trade or business.

INDEX TO FINANCIAL STATEMENTS OF PP&L TRANSITION BOND COMPANY LLC

Page

Report of Independent Accountants....................................F-2
Statement of Net Assets Available for Issuer Activities.......F-3
Statement of Changes in Net Assets Available for Issuer
Activities..................................................F-4
Notes to Financial Statements........................................F-5
Report of Independent Accountants....................................F-6

REPORT OF INDEPENDENT ACCOUNTANTS

To the Owners
of PP&L Transition Bond Company LLC

In our opinion, the accompanying statement of net assets available
for Issuer activities of PP&L Transition Bond Company LLC and related
statements of changes in net assets available for Issuer activities
present, in all material respects, net asset available for Issuer activity
of PP&L Transition Bond Company LLC at , 1999 and the changes in its net
assets available for Issuer activities for the period from (date of
inception) through (date) in conformity with generally accepted accounting
principles. These financial statements are the responsibility of PP&L
Transition Bond Company LLC's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted
our audit of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP

_________________, 1999

________________________________

______, 1999

PP&L Transition Bond Company LLC
Statement of Net Assets Available for Issuer Activities as of _______, 1999

ASSETS

Cash $
Unamortized debt issuance costs $____________

Total Assets $

Due to related party (Note ____) $____________

Net Assets available for Issuer activities $============

See accompanying notes to financial statements.

PP&L Transition Bond Company LLC

Statement of Changes in net assets available for Issuer activities for the
period from _____, 1999 (date of inception) to _______, 1999

Additions:
Contribution by Grantor $
Deductions:

Changes in Net Assets Available for Activities $
Net Assets Available for Activities at
Inception ______, 1999 $_________
________

Net Assets Available for Activities at _______, 1999 $==========

See accompanying notes to financial statements.

PP&L Transition Bond Company LLC
Notes to Financial Statements

1. Nature of Operations

PP&L Transition Bond Company LLC ("The Company"), a limited
liability company established by PP&L, Inc. ("PP&L") under the laws of the
State of Delaware, was formed on March 25, 1999 pursuant to a limited
liability company agreement of PP&L, as sole member of the Company. PP&L
is an operating electric utility and is a wholly owned subsidiary of PP&L
Resources, Inc.

The Company was organized for the sole purpose of purchasing and
owning the Intangible Transition Property (ITP), issuing Transition Bonds
(Bonds), pledging its interest in ITP and other collateral to the Trustee
to collateralize the Bonds, and performing activities that are necessary,
suitable or convenient to accomplish these purposes. ITP represents the
irrevocable right of PP&L, or its successor or assignee, to collect a
non-bypassable Intangible Transition Charge (ITC) from customers pursuant
to a Qualified Rate Order (PUC Order) issued August 27, 1998 by the
Pennsylvania Public Utility Commission (PUC) in accordance with the
Pennsylvania Electricity Generation Customer Choice and Competition Act
("applicable law") enacted in Pennsylvania in December 1996. The PUC Order
authorizes the ITC to be sufficient to recover $2.85 billion aggregate
principal amount of Bonds, plus an amount sufficient to provide for any
credit enhancement, to fund any reserves and to pay interest, redemption
premiums, if any, servicing fees and other expenses relating to the Bonds.
The Company's organizational documents require it to operate in a manner
so that it should not be consolidated in the bankruptcy estate of PP&L in
the event PP&L becomes subject to a bankruptcy proceeding. Both PP&L and
the Company will treat the transfer of ITP to the Company as a sale under
applicable law. The Bonds will be treated as debt obligations of the
Company.

For financial reporting and federal and Commonwealth of
Pennsylvania income and franchise tax purposes, the issuance of the
Transition Bonds will be treated as a financing arrangement and not as a
sale. Furthermore, the results of operations of the Company will be
consolidated with PP&L for financial and income tax reporting purposes.

2. Significant Accounting Policies

BASIS OF PRESENTATION

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amount of revenues, expenses, assets, and liabilities and
disclosure of contingencies. Actual results could differ from these
estimates.

Notes to Financial Statements, Continued

CASH AND CASH EQUIVALENTS

The Company considers all liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.

UNAMORTIZED DEBT ISSUANCE COSTS

The costs associated with the anticipated issuance of the Bonds
have been capitalized and will be amortized over the life of the Bonds
utilizing the effective interest method.

INCOME TAXES

The Company is a wholly owned subsidiary of CEP Group, Inc. which
has elected not to be taxed as a corporation for federal income tax
purposes. The Company will be treated as a division of PP&L and will not
be treated as a separate taxable entity.

3. The Bonds

The purpose of the Company is to issue Bonds pursuant to authority
granted by the PUC in the PUC Order. The Company intends to issue Bonds in
series (Series) from time to time, the maturities and interest rates of
which will depend upon market conditions at the time of issuance. The
proceeds will be used to fund the purchase of ITP from PP&L. The Bonds
will be collateralized by the ITP and other assets of the Company. Under
applicable law, the Bonds will not be an obligation of PP&L or secured by
the assets of PP&L. Also under applicable law, the Bonds will be recourse
to the Company and will be collateralized on a pro rata basis by the ITP
and the equity and assets of the Company. The source of repayment will be
the ITC authorized pursuant to a PUC Order, which charges will be
collected from PP&L customers by PP&L, as servicer.

ITC collections will be deposited quarterly by PP&L with the
Company and used to pay the expenses of the Company, to pay debt service
on the Bonds and to fund credit enhancement for the Bonds. The Company
will also pledge the capital contributed by PP&L to secure the debt
service requirements of the Bonds. The debt service requirements will
include an Overcollateralization Account, a Capital Account and a Reserve
Account which will be available to bond holders. Any amounts
collateralizing the Bonds will be returned to the Company upon payment of
the Bonds.

4. Significant Agreements and Related Party Transactions

Under the Servicing Agreement to be entered into by the
Company and PP&L concurrently with the issuance of the first Series of
Bonds, PP&L, as servicer, will be required to manage and administer the
ITP of the Company and to collect the ITC on behalf of the Company. The
Company will pay an annual servicing fee equal to [$ ], which will be
determined when the Bonds are issued.

All debt issuance costs incurred to date have been or will
be paid by PP&L and reimbursed by the Company upon issuance of the Bonds.

TABLE OF CONTENTS

Prospectus Supplement

WHERE TO FIND INFORMATION IN THESE DOCUMENTS.............................S-5
SUMMARY OF TERMS - PROSPECTUS SUPPLEMENT.................................S-6
THE SERIES 1999- __ BONDS................................................S-9
DESCRIPTION OF INTANGIBLE TRANSITION PROPERTY...........................S-13
DESCRIPTION OF PP&L'S BUSINESS..........................................S-17
UNDERWRITING THE SERIES 1999- __ BONDS..................................S-19
RATINGS FOR THE SERIES 1999- __ BONDS...................................S-20

Prospectus

IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS............6
SUMMARY OF TERMS - PROSPECTUS..............................................7
RISK FACTORS..............................................................13
FORWARD LOOKING INFORMATION...............................................26
PP&L......................................................................29
THE COMPETITION ACT.......................................................30
PP&L'S RESTRUCTURING PLAN.................................................34
THE PUC ORDER AND THE INTANGIBLE TRANSITION CHARGES.......................39
PRIOR LEGAL CHALLENGES TO THE COMPETITION ACT OR THE PUC ORDER............47
THE SERVICER OF THE INTANGIBLE TRANSITION PROPERTY........................51
PP&L TRANSITION BOND COMPANY LLC, THE ISSUER..............................76
HOW THE ISSUER WILL USE THE PROCEEDS OF THE TRANSITION BONDS..............79
INCORPORATION OF DOCUMENTS BY REFERENCE...................................79
THE TRANSITION BONDS......................................................80
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE TRANSITION BONDS................................................90
THE CONTRIBUTION AGREEMENT................................................91
THE SALE AGREEMENT.......................................................102
THE SERVICING AGREEMENT..................................................104
THE INDENTURE............................................................116
HOW A BANKRUPTCY OF PP&L OR THE
SERVICER MAY AFFECT YOUR INVESTMENT....................................138
MATERIAL INCOME TAX MATTERS FOR THE TRANSITION BONDS.....................141
ERISA CONSIDERATIONS.....................................................145
PLAN OF DISTRIBUTION FOR THE TRANSITION BONDS............................149
RATINGS FOR THE TRANSITION BONDS.........................................150
VARIOUS LEGAL MATTERS RELATING TO THE TRANSITION BONDS...................150

The Requirement to Deliver a Copy of the Prospectus. Until 90 days
after the date of this Prospectus Supplement, all dealers effecting
transactions in the related Series of Transition Bonds, whether or not
participating in the distribution of the related Series of Transition
Bonds, may be required to deliver a Prospectus and a Prospectus Supplement.
This delivery requirement is in addition to the obligation of dealers to
deliver a Prospectus Supplement and Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.

PP&L Transition Bond Company LLC

Transition Bonds
Series 1999- __

--- %

--------------------

PROSPECTUS SUPPLEMENT

__________, 1999

--------------------

[Underwriters]

PART II

Item 14. Other Expenses of Issuance and Distribution

The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and
commissions.

Registration Fee.............................................$ 278
----------
Printing and Engraving Expenses..............................$ *
------------
Trustee's Fees and Expenses..................................$ *
------------
Legal Fees and Expenses......................................$ *
------------
Blue Sky Fees and Expenses...................................$ *
------------
Accountants' Fees and Expenses...............................$ *
------------
Rating Agency Fees...........................................$ *
------------
Miscellaneous Fees and Expenses..............................$ *
------------

-------------
Total........................................................$ *
============

* To be provided by amendment.

Item 15. Indemnification of Members and Mangers.

Section 18-108 of the Delaware Limited Liability Company Act
provides that, subject to specified standards and restrictions, if any, as
are set forth in the limited liability company agreement, a limited
liability company shall have the power to indemnify and hold harmless any
member or manager or other person from and against any and all claims and
demands whatsoever.

The Amended and Restated Limited Liability Company Agreement (the
"LLC Agreement") of PP&L LLC (the "Issuer") provides that, to the fullest
extent permitted by law, the Issuer shall indemnify its members and
managers against any liability incurred in connection with any proceeding
in which any member or manager may be involved as a party or otherwise by
reason of the fact that the member or manager is or was serving in its
capacity as a member or manager, unless this liability is based on or
arises in connection with the member's or manager's own willful misconduct
or gross negligence, the failure to perform the obligations set forth in
the LLC Agreement, or taxes, fees or other charges on, based on or
measured by any fees, commissions or compensation received by the managers
in connection with any of the transactions contemplated by the LLC
Agreement and related agreements.

Item 16. Exhibits

Exhibit No. Description

1.1 Form of Underwriting Agreement.*
4.1.1 Limited Liability Company Agreement of PP&L Transition Bond Company
LLC.**
4.1.2 Form of Amended and Restated Limited Liability Company Agreement for
PP&L Transition Bond Company LLC*
4.2 Certificate of Formation of PP&L Transition Bond Company LLC.**
4.3 Form of Indenture.*
4.4 Form of Transition Bonds.*
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, relating to
legality of the Transition Bonds.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to
material federal tax matters.
8.2 Opinion of Morgan, Lewis & Bockius LLP with respect to material
Commonwealth of Pennsylvania tax matters.*
10.1 Form of Sale Agreement.*
10.2 Form of Contribution Agreement*
10.3 Form of Servicing Agreement.*
10.4 Joint Petition for Full Settlement of PP&L's Restructuring Plan and
Related Appeals and Application for a Qualified Rate Order and
Application for Transfer of Generation Assets dated August 12, 1998.
23.1.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in its opinion filed as Exhibits 5.1 and 8.1).
23.1.2 Consent of Morgan, Lewis & Bockius LLP (included in its
opinion filed as Exhibit 8.2).*
23.2 Consent of PricewaterhouseCoopers LLP.*
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of the Bank of New York, as Trustee under the Indenture.*
27.1 Financial Data Schedule.*
99.1.1 Qualified Rate Order issued August 27, 1998.
99.1.2 Supplemental Order issued on May 21, 1999
99.2 Internal Revenue Service Private Letter Ruling pertaining to
Transition Bonds.*

*To be filed by amendment
**Previously filed

Item 17. Undertakings

The undersigned Registrant on behalf of PP&L Transition Bond
Company, LLC (the "Issuer") hereby undertakes as follows:

(a) (1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement: (i)
to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended; (ii) to reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) of the Securities Act of 1933, as
amended, if, in the aggregate, the changes in volume and price represent
no more than a twenty percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement; and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in this
information in the Registration Statement; provided, however, that
(a)(1)(i) and (a)(i)(ii) will not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this Registration Statement.

(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, each relevant post-effective
amendment shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of these securities at
that time shall be deemed to be the initial bona fide offering hereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.

(b) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934, as amended) with respect to the Issuer that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of these securities at that time shall be deemed
to be the initial bona fide offering thereof.

(c) That insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
provisions described under Item 15 above, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
this indemnification is against public policy as expressed in the Act and
is, theretofore, unenforceable. In the event that a claim for
indemnification against these liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer of
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by the director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether this indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of this issue.

(d) That, for purposes of determining any liability under
the Securities Act of 1933, as amended, the information omitted from the
form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(i) or (4) or 497(h) under the
Securities Act of 1933, as amended, shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(e) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of these securities at that time shall be deemed to be the
initial bona fide offering thereof.

(f) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the Trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act of
1939, as amended, in accordance with the rules and regulations prescribed
by the Commission under Section 305(b)(2) of the Trust Indenture Act of
1939, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and
that the security rating requirement of Form S-3 will be met by the time
of sale, and has duly caused this Amendment Number 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Allentown, Commonwealth of Pennsylvania, on
June 7, 1999.

PP&L Transition Bond Company LLC

By: /s/ John R. Biggar
------------------------------------
Name: John R. Biggar
Title: Manager

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

June 7, 1999 /s/ John R. Biggar
------------------ ----------------------------
Date Name: John. R. Biggar
Title: Manager

June 7, 1999 /s/ James E. Abel
------------------ ----------------------------
Date Name: James E. Abel
Title: Manager

June 7, 1999 /s/ James S. Pennington
------------------ ----------------------------
Date Name: James S. Pennington
Title: Manager

INDEX TO EXHIBITS

Exhibit No. Description

1.1 Form of Underwriting Agreement.*
4.1.1 Limited Liability Company Agreement of PP&L Transition Bond Company
LLC.**
4.1.2 Form of Amended and Restated Limited Liability Company Agreement for
PP&L Transition Bond Company LLC*
4.2 Certificate of Formation of PP&L Transition Bond Company LLC.**
4.3 Form of Indenture.*
4.4 Form of Transition Bonds.*
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, relating to
legality of the Transition Bonds.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to
material federal tax matters.
8.2 Opinion of Morgan, Lewis & Bockius LLP with respect to material
Commonwealth of Pennsylvania tax matters.*
10.1 Form of Sale Agreement.*
10.2 Form of Contribution Agreement.*
10.3 Form of Servicing Agreement.*
10.4 Joint Petition for Full Settlement of PP&L's Restructuring Plan
and Related Appeals and Application for a Qualified Rate Order
and Application for Transfer of Generation Assets dated August 12,
1998.
23.1.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in its
opinion filed as Exhibits 5.1 and 8.1).
23.1.2 Consent of Morgan, Lewis & Bockius LLP (included in its opinion
filed as Exhibit 8.2).*
23.2 Consent of PricewaterhouseCoopers LLP.*
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture.*
27.1 Financial Data Schedule.*
99.1.1 Qualified Rate Order issued August 27, 1998.
99.1.2 Supplemental Order issued on May 21, 1999
99.2 Internal Revenue Service Private Letter Ruling pertaining to
Transition Bonds.*

*To be filed by amendment
**Previously filed

EXHIBIT 5.1

OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
RELATING TO THE LEGALITY OF THE TRANSITION BONDS

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK 10022-3897
(212) 735-3000

June 7, 1999

PP&L Transition Bond Company LLC
Two North Ninth Street
Allentown, Pennsylvania 18101-1179

Re: PP&L Transition Bond Company LLC

Ladies and Gentlemen:

We have acted as special counsel to PP&L Transition Bond Company LLC,
a Delaware limited liability company (the "Company"), in connection with
the preparation of the Registration Statement, as amended to the date
hereof, filed on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") in connection with
the registration under the Securities Act of 1933, as amended, of
transition bonds (the "Transition Bonds") of the Company to be offered from
time to time as described in the form of the prospectus (the "Prospectus")
included as part of the Registration Statement. Capitalized terms used in
this letter and not defined herein have the meanings given to such terms in
the Prospectus.

We are familiar with the proceedings taken and proposed to be taken
by the Company in connection with the proposed authorization, issuance and
sale of the Transition Bonds. In this connection, we have examined
originals or copies, certified or otherwise identified to our satisfaction,
of such records of the Company and such agreements, certificates of public
officials, certificates of officers or other representatives of the Company
and others and such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinion set forth
herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of documents, we have assumed that the
parties thereto, other than the Company, had or will have the power,
corporate or other, to enter into and perform all obligations thereunder
and have also assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such parties of such
documents and the validity and binding effect thereof on such parties. As
to any facts material to the opinions expressed herein which we have not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company, PP&L,
Inc. and others.

The opinion expressed below is based on the following assumptions:

(a) the Registration Statement will become effective;

(b) the proposed transactions are consummated as contemplated in
the Registration Statement;

(i) all necessary orders, approvals and authorizations for the
Company's purchase from time to time of Intangible Transition
Property from PP&L Securities Co., LLC, a Delaware limited
liability company ("Securities Co."), in exchange for the net
proceeds of Transition Bonds will have been obtained by the
Company;

(ii) the Amended and Restated Limited Liability Company Agreement of
the Company will have been executed and delivered by an
authorized representative of PP&L as sole member of the Company;

(iii the Indenture will have been executed and delivered by the
Company's authorized representative and The Bank of New York, as
trustee;

(iv) the maturity dates, the bond rates, the redemption provisions
and the other terms of the Transition Bonds being offered will
be fixed in accordance with the terms of the
Indenture;

(v) the Sale Agreement between the Company and Securities Co., as
Seller, will have been executed and delivered;

(vi) the Servicing Agreement between the Company and PP&L, Inc., as
Servicer, will have been executed and delivered; and

(vi) the Underwriting Agreement among the Company, PP&L, Inc. and
the underwriters of the Transition Bonds (the "Underwriting
Agreement") will have been executed and delivered; and

(d) the Indenture will be qualified in accordance with the provisions
of the Trust Indenture Act of 1939, as amended.

Members of our firm are admitted to practice in the States of New
York and Delaware, and we do not express any opinion as to the laws of any
other jurisdiction other than the federal laws of the United States.

In rendering the opinion set forth herein, we have assumed that the
execution and delivery by the Company of the Indenture and the Transition
Bonds and the performance by the Company of its obligations thereunder do
not violate, conflict with or constitute a default under (i) any agreement
or instrument to which the Company or its properties is subject, except for
those agreements and instruments which have been identified to us by the
Company as being material to it, (ii) any law, rule or regulation to which
the Issuer is subject, except for those laws, rules and regulations of the
State of New York and the United States of America which, in our
experience, are normally applicable to transactions of the type
contemplated by the Indenture and the Transition Bonds ("Applicable Laws"),
but without our having made any special investigation concerning any other
laws, rules or regulations, and (iii) any judicial or regulatory order or
decree of any governmental authority other than orders or decrees which has
been identified to us by the Company as being material to it of any New
York, Delaware or federal executive, legislative, judicial, administrative
or regulatory body established under Applicable Laws.

Based on and subject to the foregoing, we are of the opinion that,
when properly executed and authenticated in accordance with the Indenture
and delivered against payment of the purchase price provided for in the
Underwriting Agreement, and upon satisfaction of all other conditions
contained on the Indenture and the Underwriting Agreement, the Transition
Bonds will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to
the extent that enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditor's rights
generally and (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).

We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to this firm under the heading
"Various Legal Matters Relating to the Transition Bonds" in the Prospectus
included in the Registration Statement. In giving this consent, we do not
thereby admit that we are included in the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission.

Very truly yours,

/s/ Skadden, Arps, Slate,
Meagher & Flom LLP

EXHIBIT 8.1

OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
WITH RESPECT TO MATERIAL FEDERAL TAX MATTERS

Exhibit 8.1

June 7, 1999

PP&L, Inc.
Two North Ninth Street
Allentown, PA 18101-1179

Re: PP&L Transition Bond Company LLC

Ladies and Gentlemen:

In connection with the filing of Registration Statement No.
333-75369 on Form S-3 relating to PP&L Transition Bond Company LLC (the
"Issuer"), as amended from time to time, (the "Registration Statement")
with the Securities and Exchange Commission, you have requested our opinion
regarding certain descriptions of tax consequences contained in the form of
prospectus (the "Prospectus") included in the Registration Statement.

We have acted as special federal income tax counsel to the
Issuer, in connection with (a) the assignment and sale to the Issuer of
PP&L's Intangible Transition Property, which is the property right created
by the Commonwealth of Pennsylvania representing the irrevocable right of
PP&L, Inc. ("PP&L") or its assignee to receive through Intangible
Transition Charges amounts sufficient to recover all of its Qualified
Transition Expenses and (b) the Issuer's issuance of Transition Bonds which
are supported by the Intangible Transition Property and which are offered
and sold pursuant to Registration Statement No. 333-75369 on Form S-3, as
amended from time to time (the "Registration Statement" and such offered
Transition Bonds (the "Offered Bonds").

In connection with our engagement, we have examined and relied
upon the forms of the Certificate of Formation of PP&L Transition Bond
Company and the Amended and Restated Limited Liability Company Agreement
for PP&L Transition Bond Company included as exhibits to the Registration
Statement. In addition, the opinion expressed below is based on the
following assumptions:

(a) the Registration Statement will become effective;

(b) the proposed transactions are consummated as contemplated
in the Registration Statement;

(i) all necessary orders, approvals and authorizations for the
Company's purchase from time to time of Intangible
Transition Property from PP&L Securities Co., LLC, a
Delaware limited liability company ("Securities Co."), in
exchange for the net proceeds of Transition Bonds will
have been obtained by the Company;

(ii) the Amended and Restated Limited Liability Company
Agreement of the Company will have been executed and
delivered by an authorized representative of PP&L as sole
member of the Company;

(iii) the Indenture will have been executed and delivered by
the Company's authorized representative and The Bank of
New York, as trustee;

(iv) the maturity dates, the bond rates, the redemption
provisions and the other terms of the Transition Bonds
being offered will be fixed in accordance with the terms
of the Indenture;

(v) the Sale Agreement between the Company and Securities
Co., as Seller, will have been executed and delivered;

(vi) the Servicing Agreement between the Company and PP&L,
Inc., as Servicer, will have been executed and delivered;
and

(vi) the Underwriting Agreement among the Company, PP&L, Inc.
and the underwriters of the Transition Bonds (the
"Underwriting Agreement") will have been executed and
delivered; and

(d) the Indenture will be qualified in accordance with the provisions
of the Trust Indenture Act of 1939, as amended.

Furthermore, we have, or will have, examined and considered
executed originals or counterparts, or certified or other copies identified
to our satisfaction as being true copies of such certificates, instruments,
documents and other corporate records of each of the Issuer and PP&L and
matters of fact and law as we deem necessary for the purposes of the
opinion expressed below, and we have assumed (i) that such documents will
in all material respects conform to the descriptions provided therefor in
the Registration Statement, (ii) that such documents will not be amended
and (iii) that the parties to such documents will comply with the terms
thereof. Capitalized terms not otherwise defined herein have the respective
meanings assigned to such terms in the Registration Statement.

In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of
such latter documents. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied
upon statements, representations, and certifications of officers and other
representatives of the Issuer, PP&L, the Underwriters, and others.

In rendering our opinion, we have also considered and relied upon
the Internal Revenue Code of 1986, as amended, and administrative rulings,
judicial decisions, Treasury regulations, and such other authorities as we
have deemed appropriate, all as in effect as of the date hereof. The
statutory provisions, regulations and interpretations upon which our
opinion is based are subject to changes, and such changes could apply
retroactively. In addition, there can be no assurance that positions
contrary to those stated in our opinion may not be taken by the Internal
Revenue Service.

We also note that the Prospectus and the Agreement do not relate
to a specific transaction. Accordingly, the above-referenced description of
Federal income tax consequences may, under certain circumstances, require
modification in the context of an actual transaction.

We express no opinions as to the laws of any jurisdiction other
than the federal laws of the United States of America to the extent
specifically referred to herein.

Based upon and subject to the foregoing, we are of the opinion
that the statements in the Prospectus under the heading "Summary of Terms
Prospectus" and under the heading "Material Income Tax Matters for the
Transition Bonds" subject to the qualifications set forth therein,
accurately describe the material federal income tax consequences to holders
of the Offered Bonds that are not U.S. persons (within the meaning of the
Code), under existing law and the assumptions stated therein. Furthermore,
we hereby adopt and confirm to you our opinion as set forth under heading
"Material Income Tax Matters for the Transition Bonds" in the Prospectus.

We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate,
Meagher & Flom LLP under the captions "Various Legal Matters Relating to
the Transition Bonds" in the Prospectus and "Material Income Tax Matters
for the Transition Bonds" in the Prospectus.

Very truly yours,

/s/ Skadden, Arps, Slate,
Meagher & Flom LLP

EXHIBIT 10.4

JOINT PETITION FOR FULL SETTLEMENT OF PP&L, INC'S
RESTRUCTURING PLAN AND RELATED COURT PROCEEDINGS

BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION

Application of Pennsylvania Power & :
Light Company for Approval of its :
Restructuring Plan Under Section 2806 : Docket No. R-00973954
of the Public Utility Code, et al. :

JOINT PETITION FOR FULL SETTLEMENT OF
PP&L, INC'S RESTRUCTURING PLAN AND
RELATED COURT PROCEEDINGS

August 12, 1998

TABLE OF CONTENTS

I. SUMMARY OF SETTLEMENT...........................................4

II. BACKGROUND.....................................................6

III. TERMS AND CONDITIONS..........................................9
A. Stranded Costs..........................................9
B. Collection and Rates...................................12
C. Provider of Last Resort................................15
D. Nuclear Decommissioning................................20
E. Environmental Issues...................................21
F. Universal Service and Energy Conservation..............24
G. Industrial Tariffs.....................................24
H. Billing and Metering...................................29
I. Phase-In...............................................35
J. Non-utility Generators.................................37
K. EGS Affiliate..........................................37
L. Code of Conduct........................................40
M. Community Responsibility...............................43
N. Resolution of Other Issues.............................43
O. Withdrawal of Pending State And Federal Court Cases....43
P. Effectiveness, Duration And Enforcement Of
Settlement.............................................46
Q. Complete Agreement; No Alterations Or Modifications....47

IV. PUBLIC INTEREST CONSIDERATIONS..............................48

V. CONCLUSION...................................................51

APPENDICES TO JOINT PETITION FOR SETTLEMENT

A. Summary of PP&L, Inc. System Average Unbundled Rates and CTC Revenues

B. PP&L, Inc. General Tariffs
- Supplement No. 76 to Electric Pa.P.U.C. No. 200
- Supplement No. 2 to Electric Pa.P.U.C. No. 201

C. PECO Energy Company Rules for Competitive Metering Billing

D. PP&L, Inc. Rate Credits for Competitive Metering and Billing

E. Application of PP&L, Inc. for Issuance of a Qualified Rate Order

F. PP&L, Inc. Electric Generation Supplier Coordination Tariff

G. PP&L, Inc. Generation Company Code of Conduct

H. PP&L, Inc. Interim Code of Conduct

I. PP&L, Inc. Interim EGS License

J. PP&L, Inc. Generation Assets and Liability Accounts for Transfer

K. PP&L, Inc. Proof of Revenues (1999-2009)

BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION

Application of Pennsylvania Power & :
Light Company for Approval of its :
Restructuring Plan Under Section 2806 : Docket No. R-00973954
of the Public Utility Code, et al. :

JOINT PETITION FOR FULL SETTLEMENT OF
PP&L, INC'S RESTRUCTURING PLAN AND
RELATED COURT PROCEEDINGS

PP&L, Inc. ("PP&L"' or the "Company"); the Office of Consumer
Advocate ("OCA"); the Office of Small Business Advocate ("OSBA"); the
Office of Trial Staff ("OTS"); the PP&L Industrial Customer Alliance
("PPLICA"); Eric Epstein; Conectiv Energy ("Conectiv"); West Penn Power
Company t/a Allegheny Power ("APS"); Mid-Atlantic Power Supply Association
("MAPSA") PECO Energy Company ("PECO"); Local 1600 of the International
Brotherhood of Electrical Workers ("IBEW"); New Energy Ventures ("NEV");
Enron Power Marketing, Inc. ("Enron"); Gilberton Power Company
("Gilberton"); the Anthracite Region Independent Power Producers
Association ("ARIPPA"); Schuylkill Energy Resources ("SER"); Pennsylvania
Rural Electric Association ("PREA"); Allegheny Electric Cooperative, Inc.
("AEC"); Metropolitan Edison Company and Pennsylvania Electric Company,
collectively doing business as GPU Energy ("GPU"); the Pennsylvania
Petroleum Association ("PPA"); Environmentalists;(1) and other parties
designated on the signature pages (all such parties collectively referred
to as the "Joint Petitioners"), by their counsel, respectfully submit this
Joint Petition for Full Settlement of PP&L's Proposed Restructuring Plan
and Related Appeals ("Joint Petition").

- -------------------------
1 The following Environmentalists member organizations do not
participate in this Settlement Agreement but agree to abide by the
terms and conditions contained herein: Sierra Club, Penn PIRG, and
Lehigh Greens.

The terms and conditions of the Joint Petition represent a
comprehensive settlement which resolves all issues before the Commonwealth
Court and all issues before the U.S. District Court arising from challenges
by the Joint Petitioners to the Commission's final order, reconsideration
order and any related appeals regarding PP&L's Application for Approval of
its Restructuring Plan Under Section 2806 of the Public Utility Code. The
Joint Petitioners aver that this comprehensive settlement is in the public
interest and, therefore, request that the Commission: (1) approve without
modification the proposed settlement as set forth in the Joint Petition;
(2) amend the Commission's final order and reconsideration order as
necessary to implement the full settlement; (3) approve the tariff
supplements necessary to implement the proposed settlement as appended
hereto; (4) issue a Qualified Rate Order authorizing PP&L to securitize up
to $2.97 billion of stranded assets and costs as agreed to herein; and
(5) approve PP&L's transfer of generation assets as set forth herein.(2)

- --------------------
2 The Joint Petitioners recognize that pursuant to the Public Utility
Code, the Commission is obligated to provide notice and an
opportunity to be heard before it may amend a prior order. The Joint
Petitioners agree: (1) that PP&L will provide written notice by
letter to its customers; (2) that PP&L will post notice in its office
and on its Internet web page; and (3) that PP&L will provide notice
by news release.

In support of their request, the Joint Petitioners state as
follows:

I. SUMMARY OF SETTLEMENT

The Joint Petitioners have agreed to the proposed settlement
terms and conditions set forth in this document as a means to resolve,
finally and equitably, all issues arising from PP&L's proposed
restructuring plan, in lieu of further protracted and expensive litigation
in state and federal courts.

In particular, the Joint Petitioners have agreed to terms and
conditions that fairly balance the interests of all parties affected by
PP&L's restructuring plan and that foster the creation of a vibrant
competitive market. All PP&L customers will receive a guaranteed 4% rate
reduction effective January 1, 1999, the start date for retail electric
generation competition in PP&L's service territory, through December 31,
1999, independent of securitization. In addition to the guaranteed rate
decrease of 4%, customers shall receive system-average shopping credits of
3.81 cents per KWH on January 1, 1999, and 4.13 cents per KWH on January 1,
2000, with a steady escalation of the shopping credit throughout the entire
recovery period of the Competitive Transition Charges ("CTCs"). Customers
that elect to shop for generation shall receive total rate reductions in
1999 equal to a 4% rate decrease, plus savings produced by the difference
between their generation purchase price and their shopping credit.
Moreover, given the escalating system average shopping credits of 3.81
cents per KWH in 1999 to 5.02 cents per KWH in 2009, included in the
proposed Settlement, as well as other specific components agreed to herein,
the Joint Petitioners expect the development of a vibrant competitive
market with many alternative electric generation suppliers.

In addition, PP&L shall (1) recover a substantially smaller
amount of stranded cost recovery than it claimed before the Commission; (2)
be subject to competitive safeguards to ensure fair dealing; (3) expand its
current universal service programs; (4) accelerate the phase-in for
customer choice for all customer classes; (5) educate consumers about
restructuring; (6) facilitate funding of sustainable energy; (7) encourage
small renewable energy technologies; and (8) withdraw all of its
proceedings before Commonwealth Court and its civil complaint before the
U.S. District Court challenging the Commission's Restructuring Order and
Reconsideration Order at Docket No. R-00973954.

The other Joint Petitioners, in turn, agree to resolve all
objections to PP&L's Restructuring Plan, as set forth herein, and to
withdraw (1) all cases pending before the Commonwealth Court which
challenge the constitutionality of the Electric Competition Act except as
specifically provided in Paragraph O.5. and (2) all proceedings pending
before Commonwealth Court which challenge the Commission's Restructuring
Order and Reconsideration Order at Docket No. R- 00973954, as set forth in
Part O herein.

II. BACKGROUND

1. On December 3, 1996, Governor Ridge signed into law the
Electricity Generation Customer Choice and Competition Act (66 Pa. C.S.
ss.ss. 2801 et seq.) (the "Electric Competition Act"). The Electric
Competition Act fundamentally restructures the provision of retail electric
service in Pennsylvania by mandating the introduction of customer choice of
generation supplier commencing January 1, 1999.

2. On April 1, 1997, PP&L submitted a comprehensive Restructuring
Plan in which it requested the Commission to approve (1) the imposition of
unbundled rates, CTCs and specific tariff provisions to ensure customers
direct access to all electric generation suppliers licensed under Chapter
28 of the Public Utility Code to offer services authorized under the
licenses within the Commonwealth of Pennsylvania ("EGSs"); (2) the
calculation of $4.5 billion of stranded costs net of mitigation; (3) the
implementation of a plan to meet its universal service obligations,
including a mechanism to recover the costs of those obligations; (4) the
implementation of a proposed Consumer Education Program; and (5)
implementation of procedures to establish PP&L as a provider of last
resort.

3. PP&L provided notice of its Restructuring Plan filing to all
customers by bill insert. In addition, notice of the filing was published
in newspapers of general circulation in PP&L's service territory. PP&L also
provided a summary of the filing to all individuals on the Commission's
Executive Director's Stakeholders list. Copies of the filing were served on
all parties to PP&L's last general base rate investigation at Docket No.
R-00943271.

4. PP&L's filing was assigned to Administrative Law Judge George M.
Kashi (the "ALJ"). Thereafter, thirty-six parties intervened in the
proceeding, nineteen of whom were active participants. In addition to the
extensive testimony addressing almost every aspect of PP&L's Restructuring
Plan filed by PP&L and the other active parties, the proceeding included a
technical conference where PP&L was able to further explain its submitted
testimony. In addition, thirteen public input hearings were held at which a
total of seventy-five individuals testified. Evidentiary hearings were held
on August 18-22, 1997, August 25-29, 1997, and September 9, 1997. During
the hearings, 284 exhibits and the testimony of fifty-seven witnesses were
admitted into evidence.

5. On April 7, 1998, ALJ Kashi issued his Recommended Decision. The
ALJ, in substantial part, found PP&L's restructuring proposals to be
consistent with the Electric Competition Act and he recommended their
adoption. The ALJ recommended that PP&L recover, through the CTC,
approximately $4 billion in stranded costs.

6. At its public meeting on June 4, 1998, the Commission adopted a
169-page Opinion and Order which substantially modified the ALJ's
Recommended Decision and PP&L"s proposed Restructuring Plan. The Opinion
and Order, which issued on June 15, 1998, determined, inter alia, that
PP&L's proven net stranded costs were $2.86 billion and that unbundling of
PP&L's rates resulted in a customer shopping credit of 3.73 cents per KWH
in the first year.

7. On June 26, 1998 and July 1, 1998, PP&L and ARIPPA, respectively,
filed petitions requesting that the Commission rehear, reconsider, clarify
and amend certain aspects of its Restructuring Order. By Opinion and Order
entered July 9, 1998, the Commission denied the petitions with one limited
exception; the Commission granted PP&L's request to correct a typographical
error which incorrectly identified the 10.86% CTC amortization rate as
10.68%. This change resulted in a shopping credit of 3.72 cents per KWH in
1999.

8. In response to the Restructuring Order entered June 15, 1998, and
the Reconsideration Order entered July 9, 1998, PP&L has filed appeals to
Commonwealth Court, an action for Declaratory Judgment to the Commonwealth
Court, and a civil complaint action in the U.S. District Court. In
addition, appeals to Commonwealth Court challenging various aspects of the
Commission's orders have been filed by ARIPPA and SER. Cross appeals have
been filed by PPLICA, OCA, MAPSA Enron and the Commission on Economic
Opportunity.

9. On and after July 16, 1998, the Joint Petitioners signed a
"PreSettlement Agreement" designed to set forth the procedural ground rules
for participation in settlement negotiations aimed at resolving the matter
in lieu of further litigation in state and federal courts. This Joint
Petition is the product of these negotiations.

III. TERMS AND CONDITIONS

1. The Joint Petitioners, intending to be legally bound and
for consideration given, agree as follows:

A. Stranded Costs

A.1. PP&L shall be permitted to recover from its retail electric
customers $2.97 billion of stranded assets and costs through either a CTC
(to remain in effect from January 1, 1999 to December 31, 2009) and/or an
Intangible Transition Charge ("ITC") to be put in place any time after the
effective date of this Settlement and the issuance of transition bonds and
to remain in effect up to December 31, 2009.

A.2. PP&L requests the Commission to declare that good cause has been
shown under Section 2808 of the Electric Competition Act to permit PP&L to
recover the stranded assets and costs set forth below through a CTC or ITC
extending to December 3.1, 2009. PP&L also requests that the Commission
expressly find that the transition and stranded cost recovery and level of
CTC/ITC charges provided herein is just and reasonable and that
securitization of up to $2.97 billion of stranded costs is just and
reasonable and in the public interest.

A.3. The other Joint Petitioners do not object to these findings. The
total authorized recovery of $2.97 billion includes all amounts previously
approved for recovery by the Commission in its June 15, 1998 Restructuring
Order and its July 9, 1998 Reconsideration Order at Docket No. R-00973954.

A.4. Under the terms of this Settlement, PP&L shall be permitted to
recover $2.97 billion for transition and stranded costs through a CTC
and/or an ITC as set forth in Appendices A, B and K and Paragraphs A.5,
B.1., B.2., B.3., and G.7. This total authorized recovery of $2.97 billion
constitutes full and final satisfaction of all transition and stranded
costs that PP&L has claimed or could have claimed before the Commission
pursuant to Section 2808 of the Electric Competition Act.

A.5. PP&L will seek to securitize an amount not exceeding $2.97
billion in stranded costs, subject to the requirements of the Electric
Competition Act and the terms and conditions set forth below. The Joint
Petitioners agree that 75% of the annual net savings of PP&L's
securitization of stranded costs will be applied to reduce the CTC/ITC as
those savings are realized as set forth in a securitization compliance
filing and the remaining 25% of the net savings of securitization will be
retained by PP&L. The savings from securitization and issuance of
transition bonds are provided for in the rates and rate reductions set
forth in Paragraph B.1 and Appendix A and the further reductions in the
CTC/ITC set forth in this Part. The aforesaid rate and CTC/ITC reductions
constitute full compliance with Sections 2808(e) and 2812(b)(2) of the
Electric Competition Act and no further rate adjustment is required. 66 Pa.
C.S. ss.ss.2808(e) and 2812(b)(2). PP&L is required to seek securitization
of its stranded assets and costs under reasonable terms and conditions,
absent a legal impediment as reasonably determined by PP&L's General
Counsel. The effectiveness of this Settlement is contingent upon the
issuance by the Commission simultaneous with approval of this Settlement of
an irrevocable Qualified Rate Order as set forth in Appendix E under
Section 2812 of the Electric Competition Act (66 Pa. C.S. ss.2812)
authorizing the issuance of up to $2.97 billion of Transition Bonds at any
time after the issuance of such Qualified Rate Order, provided that the ITC
charges to customers terminate no later than December 31, 2009. PP&L hereby
applies for the issuance of a Qualified Rate Order as set forth in Appendix
E which is incorporated as a part of this Settlement. The Joint Petitioners
agree not to oppose PP&L's application for a Qualified Rate Order and
PP&L's securitization of its stranded assets and costs in accordance with
this agreement. The Joint Petitioners agree that to the extent necessary,
the testimony, exhibits, applications and other documents submitted by the
parties and the record from the hearings in this proceeding form the basis
for this Settlement and PP&L's Application for a Qualified Rate Order.

B. COLLECTION AND RATES

B.1. On January 1, 1999, PP&L will reduce its retail electric rates
by 4% from the levels that existed as of December 31, 1996. That 4% rate
decrease will continue in effect until December 31, 1999. The January 1,
1999 rate decrease will apply to all retail rate classifications and all
customers within those rate classifications as set forth on a
system-average basis in Appendices A, B and K.

B.2. On January 1, 1999, PP&L will unbundle its retail electric rates
into the following components: (1) distribution charges, (2) transmission
charges, (3) a CTC and, if applicable, an ITC and (4) a generation shopping
credit. The system-wide average values for these components for the years
indicated are set forth in the following Appendix A. The proposed tariffs
set forth in Appendix B are the tariffs that implement this Settlement.

B.3. The Joint Petitioners agree that the rate cap exceptions set
forth in Section 2804(4) of the Electric Competition Act shall apply to the
rates set forth in this Settlement, except as otherwise specifically set
forth herein. If at any time during the CTC Recovery Period, PP&L requests
and is granted a rate increase pursuant to Section 2804(4) of the Electric
Competition Act (Rate Cap Exceptions) such increase shall not reduce the
shopping credits listed in Appendices A and B and such increase shall be
allocated to the appropriate unbundled rate category in accordance with
determinations of the Commission. As set forth in Appendices A and B, the
generation rate cap is extended from the end of 2005 to the end of 2009,
four years beyond the statutory rate cap period provided in the Electric
Competition Act, and is increased by five percent (5%) throughout this
four-year period. Customer savings may be greater if, for example,
customers obtain lower prices from a competitive supplier or if PP&L's
provider of last resort residential generation rates, as provided in Part
C, result in a lower rate.

B.4. The cap on PP&L's transmission and distribution charges, which
otherwise would expire on June 30, 2001 under Section 2804(4) of the
Electric Competition Act (66 Pa. C.S. ss.2804(4)), will be extended until
December 31, 2004, provided, however, that PP&L may, if necessary, request
recovery of additional nuclear decommissioning expense and such expense
recovery will not be subject to any rate cap and will be treated as an
exception to the rate cap under Section 2804(4)(iii)(F) of the Public
Utility Code and such increases shall not reduce the shopping credits
listed in Appendices A and B and such increases shall be allocated to the
appropriate unbundled rate category in accordance with determinations of
the Commission. 66 Pa. C.S. ss.2804(4)(iii)(F).

B.5. The Joint Petitioners shall not file a complaint with the
Commission or otherwise challenge PP&L's transmission or distribution rate
structure, or the level of transmission charges or the level of PP&L's
distribution rates as set forth in Appendices A and B hereto until the
expiration of the transmission and distribution cap on December 31, 2004.
Any Joint Petitioner, however, may participate as a complainant or
otherwise in any future transmission rate proceeding in which an increase
in PP&L's transmission rates or change in rate structure is proposed and,
further, may file a complaint or otherwise participate in any proceeding
before the Commission to adjust PP&L's distribution rates as a result of
any increase in PP&L's transmission rates or change in rate structure in
effect as of August 1, 1998.

B.6. The transmission and distribution rate cap of 1.74 cents per KWH
includes 1.73 cents per KWH for all existing costs and services and .01
cents per KWH for the sustainable energy fund during the transmission and
distribution rate cap period. No new fees shall be proposed or charged
during the transmission and distribution rate cap period for a cost or
service that is included in the bundled transmission and distribution rate.

B.7. Pursuant to this Settlement, PP&L agrees to cap the sum of its
transmission and distribution charges, as described above. If, during the
period that this rate cap is in effect PP&L's transmission charges or rates
(including but not limited to ancillary charges) are increased, then PP&L's
distribution rates will be reduced in a non-discriminatory manner
sufficient to avoid exceeding the transmission and distribution rate cap.
Within sixty days after issuance of a Federal Energy Regulatory Commission
("FERC") Order modifying PP&L's transmission revenue requirement or rate
structure, or PJM's transmission rate structure, to the extent that such
change or modification affects PP&L's transmission charges, PP&L shall
submit a tariff supplement with supporting data to the Pennsylvania Public
Utility Commission which makes any necessary changes to PP&L's distribution
rates to ensure that the sum of the distribution rates and the transmission
rates and charges to each class of customers do not exceed the transmission
and distribution rate cap.

B.8. The Joint Petitioners agree to meet on or before October 2,
1998, to discuss the elimination of the multiple block rate structure in
the residential and commercial rates set forth in Appendices A and B.
Nothing in this Joint Petition constitutes an agreement by any Joint
Petitioner to any modification to the structure of PP&L's rates as set
forth in Appendices A and B.

C. PROVIDER OF LAST RESORT

C.1. PP&L agrees that, for the duration of the CTC/ITC recovery
period, it will serve as the provider of last resort for all retail
electric customers in its service territory that do not choose or cannot
choose to purchase power from alternative suppliers, subject to the
following terms, conditions and qualifications:

C.1.a. On January 1, 2002, 20% of all of PP&L's residential
customers -- determined by random selection, including low-income and
inability-to- pay customers, and without regard to whether such customers
are obtaining generation service from an EGS -- shall be assigned to a
provider of last resort- default supplier other than PP&L that will be
selected on the basis of a Commission- approved energy and capacity market
price bidding process. This service shall be referred to as Competitive
Default Service ("CDS").

C.1.b. For purposes of this bidding process, all of the
customers selected shall constitute a single bidding block. To qualify for
the CDS bidding process an EGS must, among other Commission-approved
requirements, agree to provide in 2002 at least 2.0% of its offered energy
supply for CDS service from solar, wind, sustainable biomass (including
landfill gas but excluding incineration of Municipal Solid Waste),
geothermal or ocean power. This increment shall increase by annual
increments of 0.5% thereafter. The requirement to include these levels of
sources in the resource mix may be lowered by the Commission if the cost of
the power from these sources increases the cost of the entire block by more
than 2% over what the cost would be without these sources.

C.1.c. Terms and conditions of CDS shall be established,
maintained, and modified by the Commission. Competitive Default Service
bids will require a term that will be established by the Commission. Bids
will provide a fixed rate for the term, unless an alternative rate
structure is approved by the Commission. Any bid that exceeds the
generation rate cap will be rejected. PP&L's EDC or PP&L's divisional or
affiliated EGSs may not bid (either directly or as a partner or participant
in any business combination with a bidder) on CDS service. Any
nonaffiliated EGS or consortium of EGSs that are licensed by the Commission
and that meet applicable terms and conditions and standards for CDS service
could bid to provide CDS service. Chapter 56 billing and collection costs,
uncollectible expense, and universal service costs shall be unbundled by
PP&L. Revenues equal to the amount of these unbundled costs shall be
portable with customers randomly assigned to the CDS and shall be provided
to the CDS provider to the extent it is providing services funded by these
unbundled costs.

C.1.d. A customer assigned to CDS retains the right to elect a
competitive EGS or return to PP&L default provider of last resort service
at any time at no charge. If a consumer returns to CDS for any reason, the
consumer will receive service from its CDS on the same terms and conditions
and at the same rate available to other CDS customers. The CDS provider
will, at the customer's option, provide a single bill, subject to the same
standards for EGS consolidated billing as provided in Appendix C and as
established by the Commission. The CDS will include all customer care
functions, including processing customer accounts in accordance with all
applicable regulations, including but not limited to Chapter 56. The CDS
will be rebid annually, unless an alternative bidding term is approved by
the Commission. If, 30 days prior to the annual bid the number of
residential customers served by the CDS has fallen below 17%, a further
random selection of customers shall be assigned to CDS service to restore
the number of customers for the 20% level. The further random selection
shall be chosen in a manner to be determined by the Commission. The
Commission will develop qualifications for an EGS to bid on CDS, including
credit worthiness and increased bond amount.

C.1.e. The EGS selected as the CDS provider will assume all
responsibilities and obligations associated with provider of last resort
service that are specified by the Commission. By January 1, 2001, the
Commission will issue final standards for PP&L governing the
responsibilities and obligations of the competitively determined provider
of last resort in PP&L service territory. Provided, however, that nothing
in the Commission's final standards shall permit a CDS to install,
initially test or maintain a residential meter prior to January 1, 2003.

C.1.f. PP&L's distribution company shall satisfy its obligation
as provider of last resort by maintaining or purchasing, at wholesale,
required amounts of energy and capacity from other generation suppliers
including, in its sole discretion, any generation affiliates, and reselling
that energy and capacity. Until January 1, 2002, PP&L will charge customers
its tariff rates as set forth in Appendices A and B.

C.1.g. On and after January 1, 2002 PP&L as provider of last
resortdefault supplier will price its generation service to residential
customers at its sole discretion with the following limitations. PP&L will
establish a rate for each residential rate schedule. The rate will be:

C.1.g.(i) no less than (1) the price charged by the CDS selected to
be the alternative provider of last resort-default
supplier in the 20% bid; and

C.1.g.(ii) no higher than (2) 111% of the market price of energy and
capacity (determined by rate class) calculated as
follows: energy will be at the average PP&L-PJM market
clearing price as posted on the PJM website for the prior
12 months (adjusted for line losses, on/off peak usage
and GRT); capacity shall be at the average PJM penalty
price for capacity for the prior 12 months (adjusted for
line losses, reserve margin, load factor and GRT). Such
rates will be computed annually.

C.1.h. If C.1.g.(i) is higher than C.I.g.(ii) above, PP&L will
price its generation service at C.1.g.(i) above (the competitive PLR
winning bid). In no event will the price exceed the shopping credit.
Residential customers that remain with or return to PP&L provider of last
resort-default service will pay the rate as set by PP&L during January of
each year. Returning residential customers shall also have the option of
receiving service on a monthly published generation market rate basis
without the benefit of the generation rate cap, but such rate may not be
less than the prices charged by the CDS.

C.1.i. PP&L, as provider of last resort-default supplier, will
price its service to industrial and commercial customers at tarriffed rates
or at special contract rates under the Competitive Rate Rider and
Interruptible Service by Agreement ("IS- A" or "IS-M") as set forth in
Appendix B.

C.1.j. The Joint Petitioners agree that through December 31,
2009, customers may choose to purchase power from alternative suppliers and
later return to take generation service from PP&L's EDC distribution
company, or to their assigned provider of last resort-default supplier.

C.2. This Settlement does not address, and the Joint Petitioners make
no commitment regarding, PP&L's obligation to serve after December 31,
2009, or the continuance or discontinuance of the right to choose an
alternative supplier and later return after December 31, 2009.

D. NUCLEAR DECOMMISSIONING

D.1. PP&L will recover its nuclear plant decommissioning costs
through the CTC as an element of stranded cost recovery. The recovery will
be calculated at the figure approved in the Commission's Order entered June
15, 1998, of $128.989 million on a net present value basis. Nothing herein
shall be deemed to limit PP&L's ability to seek an exception to the rate
cap for recovery of nuclear decommissioning expense pursuant to Section
2804(4)(iii)(F) of the Public Utility Code, 66 Pa. C.S. ss.2804(4)(iii)(F).

D.2. In the event that PP&L seeks recovery of additional nuclear
decommissioning costs under the rate cap exception of Section
2804(4)(iii)(F) of the Public Utility Code, PP&L agrees that it will
recover no more than 96% of the amount approved in any such proceeding. 66
Pa.C.S. ss.2804(4)(iii)(F).

E. ENVIRONMENTAL ISSUES

E.1. Renewable Energy Development. PP&L hereby files for Commission
approval Renewable Energy Development Rider ("RED Rider") Tariff sheet
attached in Appendix B to allow all customers to install and operate
renewable energy generation, including appropriate provisions for
self-generation and net metering. Renewable energy installations include
solar, wind, biomass, methane field and fuel cell generation.

E.2. The interconnection requirements for the inverter portion of
photovoltaic systems, as presently set forth in the document entitled
"Requirements for Parallel Operation of Non-Utility Generation" (the "Grey
Book"), shall be expanded to incorporate, as appropriate, IEEE, Standard
929-1988 and UL Publication 1741 ("Power Conditioning Units for Use in
Residential Photovoltaic Power Systems"). PP&L further agrees to initiate
good faith technical discussions with the Environmentalists' members to
determine what changes, if any, should be made to the interconnection
requirements and processes under RED Rider and to promptly seek Commission
approval to implement any changes mutually agreed upon.

E.3. The Joint Petitioners also agree that the "engineering review"
of the inverters in new photovoltaic systems will be designed to confirm
that the systems meet IEEE and UL standards. PP&L will review the other
auxiliary equipment associated with photovoltaic installations to ensure
compliance with the Grey Book requirements.

E.4. PP&L will charge a processing fee for RED Rider applications of
$300 for non-photovoltaic installations and a fee of $100 for photovoltaic
installations. PP&L agrees that it will not charge for the additional
distribution expenses incurred, up to a maximum of $1,000, to accept a new
RED Rider installation. Customers will bear the responsibility of any cost
in excess of $1,000.

E.5. Sustainable Energy Fund. PP&L will establish a sustainable
energy fund which shall be funded from the 1.74 cents per KWH transmission
and distribution rate at .01 cents per KWH (less applicable gross receipts
tax) on all power sold for all customers beginning on January 1, 1999 and
ending on December 31, 2004, or until the Commission establishes new
distribution rates, whichever is longer. The .01 cent per KWH shall not
automatically be considered a cost of service element upon expiration of
the transmission and distribution rate cap on December 31, 2004. The
Sustainable Energy Fund shall be managed by an administrator designated by
a seven-member Board of Directors to be nominated by the Joint Petitioners
and approved by the Commission. The fund shall operate according to the
procedures set forth in its by-laws, which are to be reviewed and approved
by the Commission. The fund is to have an annual audit and is to make
semi-annual reports to the Commission and to the parties. The purpose of
the fund is to promote the development and use of renewable energy and
clean energy technologies, energy conservation and efficiency which promote
clean energy.

E.6. Renewable Energy Pilot Program. PP&L agrees to implement a
lowincome renewable energy pilot program which will consist of a solar hot
water heater program in 1999 and 2000, a photovoltaic program involving 35
installations in 1999 and 75 installations in 2000. The renewable energy
pilot program will be operated by a Community-Based Organization with
relevant experience and a history of working with the Company. The budget
for the solar hot water heater program will be $150,000 for each year. The
1999 budget for photovoltaic installations will be $175,000 and the 2000
budget would be $375,000. There will be a 5% administration factor for the
entire budget. Funding of the renewable energy pilot program will be
provided in the Universal Service and Energy Conservation budget other than
the mandated $4.7 million LIURP budget.

F. UNIVERSAL SERVICE AND ENERGY CONSERVATION

F. 1. PP&L shall implement a Universal Service and Energy
Conservation Program, including CAP and LIURP programs, in the manner and
at the funding levels approved in the Commission's order of June 15, 1998,
at pages 148-157. For purposes of this Settlement, however, the maximum
level of funding set forth at page 156 of the Order -- $11.7 million per
year for CAP and $4.7 million per year for LIURP -- shall be deemed to be
reflected in the residential distribution rates set forth in the PP&L
tariff at Appendix A. To the extent PP&L's funding of these programs
exceeds the amounts set forth in this paragraph prior to the end of the
distribution and transmission rate cap, the company may defer and seek
recovery of such costs (net of any cost savings attributable to the
programs) after the expiration of that rate cap. The allocation of any
universal service and energy conservation program costs among customer
classes after the end of the distribution and transmission rate cap shall
be determined by the Commission at that time.

G. INDUSTRIAL TARIFFS

G.1. Price Response Service. Rate Schedule PR-1-Price Response
Service (Experimental) Firm Power and Rate Schedule PR-2-Price Response
Service (Experimental) Interruptible Power will continue to be available to
customers taking service under these rate schedules as of August 1, 1998,
for the duration of the generation rate cap period contained in this Joint
Petition for Settlement. After December 31, 2009, the Company may request
elimination of, or modifications and limitations to Rate Schedules PR-1 and
PR-2 with the Commission.

G.2. The Definitions, Program Charge, and Net Monthly Rate
calculation formula contained in Rate Schedules PR-1 and PR-2 shall remain
intact as found in Rate Schedules PR-1 and PR-2 as of December 31, 1996,
for the duration of the generation rate cap period contained in the Joint
Petition for Settlement. PP&L shall unbundle the rate components of rates
PR-I and PR-2 in a fashion that will allow a customer to obtain generation
supply from a competitive supplier without penalty and in a
nondiscriminatory fashion. Any discount or credit applied to the delivery
service component of the rates will be portable and shall apply on a
comparable basis whether or not a customer chooses to obtain generation
supply from a competitive supplier.

G.3. Economic Development Initiatives Rider and Industrial
Development Initiatives Rider. For eligible customers currently receiving
credits under these Riders, the Billing Adjustments contained in the
Economic Development Initiatives Rider ("'EDI") and the Industrial
Development Initiatives Rider ("IDI") win continue through December 31,
2009. The applicable Billing Adjustments contained in EDI and IDI applied
to each kilowatt of billing kilowatt hours and each kilowatt of energy
billed in excess of the billing kilowatt hours for the corresponding
billing month of the base period for service supplied to a customer's
Qualifying Service Location will continue to apply to the portion of the
customer's load which continues to be purchased from the Company. Base
period usage shall include, on a pro rata basis, kW and KWH purchased from
the Company and from an EGS in order to ensure that the customer continues
to receive the Billing Adjustments on the kW and KWH purchased from the
Company. PP&L shall unbundle the rate components of the EDI/IDI riders in a
fashion that will allow a customer to obtain generation supply from a
competitive supplier without penalty and in a nondiscriminatory fashion.
Any discount or credit applied to the delivery service component of the
rates will be portable and shall apply on a comparable basis whether or not
a customer chooses to obtain generation supply from a competitive supplier.

G.4. Rate Schedule IS-P - Interruptible Large Service at 12,470 Volts
or Higher and Rate Schedule IS-T - Interruptible Large General Service at
69,000 Volts or Higher. The frequency of load interruptions on Rate
Schedules IS-P and IS-T shall be no more than fifteen (15) per calendar
year with such interruptions being no more than ten (10) hours in any one
day; or more often than five (5) days in any single month; or more than 150
hours in a calendar year. No more than 5 of these load interruptions and 50
hours of interruptions may be for economic load control.

G.5. The charge for continued use (KWH) of interruptible load (kW)
during a period of economic load control shall be the sum of the tariff
charges under the applicable interruptible rate plus the actual replacement
capacity and energy costs applied to all KWH used during the interruption
period. The actual replacement energy cost shall be the Locational Marginal
Price ("LMP"), as defined in Section 1.19 of the Operating Agreement of the
PJM Interconnection, L.L.C., for the load bus to which the energy is
delivered. PP&L shall, upon request of the customer, identify the load bus
to which energy used by that customer is delivered.

G.5.a. Upon request of any customer subject to economic load
control, the Company, in conjunction and cooperation with the Joint
Petitioners, will develop terms and conditions consistent with applicable
PJM, operational, legal and regulatory requirements under which such
customer may arrange in advance for a supplier, other than the Company, to
provide to the Company the actual replacement capacity and energy used
during the economic load control period, in lieu of the Company's charges
for actual replacement capacity and energy costs.

G.5.b. PP&L shall unbundle the rate components of rate
schedules IS-P and IS-T in a fashion that will allow a customer to obtain
generation supply from a competitive supplier without penalty and in a
nondiscriminatory fashion. Any discount or credit applied to the delivery
service component of the rates will be portable and shall apply on a
comparable basis whether or not a customer chooses to obtain generation
supply from a competitive supplier.

G.6. Customer Self-Generation. Existing industrial and commercial
customers who can document that they had concluded a written economic
feasibility study of self-generation as of December 31, 1996 or earlier
will pay CTC/ITC charges following full start-up of such self-generation
facility with an installed capacity of 4 MW or larger, installed before
December 31, 2009, as follows:

G.6.a. PP&L will calculate the customer's average billing
demand and energy usage for calendar year 1996;

G.6.b. Using those billing determinants, PP&L will determine
the dollar amount that would be charged if the customer were billed for
CTC/ITC using the prevailing CTC/ITC charges in the rate schedule
applicable to that customer;

G.6.c. Using the customer's actual billing determinants with
the self- generation facility in operation, PP&L will determine the dollar
amount that would be charged if the customer were billed for CTC/lTC using
the prevailing CTC/ITC charges in the rate schedule applicable to that
customer;

G.6.d. PP&L will bill the customer the dollar amount determined
in accordance with Paragraph G.6.c, plus one-third (1/3) of the difference
between the dollar amount determined in accordance with Paragraph G.6.b.
and the dollar amount determined in accordance with Paragraph G.6.c.

G.7. CTC/lTC Allocation Methodology. The Company will assign CTC/ITC
cost responsibility on a rate schedule basis utilizing the production
capacity revenue requirements for each rate schedule as produced in the
Company's Restructuring Plan unbundling analysis derived from its 1995
compliance cost allocation study.

G.8. Competitive Rate Rider. Customers taking service under the
Competitive Rate Rider will have the opportunity to obtain the generation
from a competitive supplier without penalty if their contracts are silent
as to the unbundling of rates or access rights. For those customers PP&L
shall unbundle the rates and apply discounts, credits, or calculated rates
in a non-discriminatory fashion, without regard to a customer's choice of
generation supply. For customers whose contract contain language regarding
access rights and unbundling, the customer's contract shall be governed by
the terms of the contract.

G.9. Unbundled Distribution Charges. The Company shall utilize the
distribution function revenue requirements contained in its Restructuring
Plan unbundling analysis derived from its 1995 compliance cost allocation
study, when developing the unbundled distribution charge component for each
rate schedule. The Company shall calculate 1999 distribution revenues
utilizing the distribution function revenue requirements contained in its
Restructuring Plan unbundling analysis.

H. BILLING AND METERING

H.1. Commercial and Industrial Metering. Subject to review as
described in Paragraph H.7., in consultation with the Joint Petitioners
regarding operational constraints, effective January 1, 1999, a
Commission-licensed EGS may provide, finance, install, own, maintain,
calibrate and remotely read advanced meters for service to commercial and
industrial customers located in PP&L's service territory subject to the
ability of the EGS to comply with Appendix C.(3)

- ---------------------
3 Appendix C contains: (1) the original Appendix C to the PECO
Settlement; (2) the compre hensive PECO Energy Company Competitive
Metering Specifications; (3) the comprehen sive PECO Energy Company
Competitive Billing Specifications as approved by the Commission in
PECO's restructuring docket; and (4) the Commission's Order of July
1, 1998 implementing competitive billing and metering standards
(Commission Docket No. R- 00973953 and P-00971265).

H.1.a. Starting October 2, 1998, PP&L shall maintain cost-based
rates in its tariff, to be approved by the Commission, to be offered to
EGSs and customers for installation, initial testing and maintenance
services for commercial and industrial customer advanced meters.

H.2. Commercial and Industrial Billing. Subject to review as
described in Paragraph H.7., in consultation with the Joint Petitioners
regarding operational constraints, effective January 1, 1999, a
Commission-licensed EGS may (in addition to any other rights to act as
agent for the customer set forth in PP&L's tariffs) act as agent to provide
a single bill and provide associated billing and collection services to
commercial and industrial customers located in PP&L's service territory,
subject to the ability of the EGS to comply with Appendix C.

H.3. Residential Metering. Subject to review as described in
Paragraph H.7., in consultation with the Joint Petitioners regarding
operational constraints, effective January 1, 1999, a Commission-licensed
EGS may provide, finance, own, calibrate and remotely read advanced meters
for service to residential customers located in PP&L's service territory
subject to the ability of the EGS to comply with Appendix C. An EGS shall
not install, initially test or maintain advanced meters for service to
residential customers located in PP&L's service territory prior to January
1, 2003. Prior to January 1, 2003, all advanced meters for residential
consumers shall be installed, initially tested and maintained by PP&L's
employees.

H.3.a. For the period between January 1, 1999 and December 31,
2002, PP&L employees will install and initially test one EGS-provided
advanced meter per year for each residential account and will maintain such
meter, without assessing any fees or charges on the customer or the EGS.
Starting October 2, 1998, PP&L shall maintain cost-based rates in its
tariff for installation, initial testing and maintenance of additional
advanced residential meters. Neither PP&L nor any EGS shall assess any fees
or charges to residential customers for meter testing or maintenance,
except as permitted by 52 Pa. Code Chapters 56 and 57.

H.3.b. Starting October 1, 2002, PP&L shall include cost-based
rates in its tariff, to be approved by the Commission, to be charged to
EGSs and customers for installation, initial testing and maintenance
services for residential advanced meters.

H.4. Residential Billing. Effective January 1, 2000, a
Commission-licensed EGS may (in addition to any other rights to act as
agent for the customer set forth in PP&L's tariffs) act as agent to provide
a single bill and provide associated billing and collection services to its
residential customers located in PP&L's service territory, subject to the
ability of the EGS to comply with Appendix C.

H.5. Manual Meters. PP&L, as the EDC, shall provide, finance,
install, own, maintain, calibrate and read all manual meters that are used
to provide service to retail electric customers located in PP&L's service
territory.

H.6. Billing and Metering Credits. PP&L will unbundle its retail
electric rates for metering, metering services, meter reading, and billing
and collection services to provide credits for those customers that have
the right and elect to have an EGS perform these services. The unbundled
rates for each customer class are set forth in Appendices B and D.

H.7. Determination of potential implementation impediments for
Competitive Metering and/or Billing on January 1, 1999. The Bureau of
Audits, working with a third party consultant, shall conduct a review of
any constraints raised by PP&L that may prevent implementation of
competitive metering and/or billing on January 1, 1999. The third party
consultant who shall possess expertise in the area of utility billing and
metering systems will be selected by the Commission, in consultation with
the Joint Petitioners. The review will examine those constraints which
cannot reasonably be overcome in time to implement competitive metering
and/or billing by January 1, 1999 and, if constraints are identified, will
provide a recommendation as to when those constraints can be eliminated.
The cost of the third party consultant shall be borne by PP&L at a cost not
to exceed $100,000. The review shall be completed no later than October 31,
1998, and a report shall be submitted to the Commission and provided to the
Joint Petitioners.

H.8. Development of Standards. By October 2, 1998, the Joint
Petitioners agree to modify Appendix C only as necessary to assure the
standards are consistent with PP&L's systems and the provisions set forth
in this Part.

H.9. Commission Standards. Regardless of whether the Joint
Petitioners reach agreement on the development of standards, by October 16,
1998, the Commission shall establish metering and billing standards for the
PP&L service territory which adopt Appendix C and include only such
modification to Appendix C necessary to make the standards consistent with
PP&L operational systems, including the specific applicability of
provisions contained within 52 Pa. Code Chapters 56 and 57 to EGSs
performing consolidated billing. Upon the entry of a final Commission
order, these standards will be applicable to those services being offered
by the EDC or the EGS. These Commission standards shall also include, at a
minimum, data exchange and billing format standards to facilitate the
efficient, speedy and non-discriminatory exchange of information between
PP&L and EGSs necessary to a properly functioning competitive market for
retail electric generation services. An EGS that bills EDC charges must
comply with all billing and disclosure requirements for EDC charges
applicable to an EDC, absent waiver by the Commission, including the
unbundling of transmission and distribution rates.

H.10. Physical Disconnection. Only PP&L's EDC employees can
physically disconnect or reconnect a customer's distribution service.
Physical termination of service for nonpayment may only be permitted for
failure to pay for EDC or PLR service.

I. PHASE-IN

I.1. Direct access to electric generation suppliers will be phased in
for all customers located in PP&L's service territory in accordance with
the PP&L Restructuring Order, in three steps -- one-third of the
non-coincident peak load of each customer class of service will have access
on January 1, 1999, two-thirds of the non-coincident peak load of each
customer class on January 2, 1999, and the remainder on January 2, 2000.
With respect to Rate Schedules LP4, LP-5, IS-T, IS-P and LPEP (and
applicable riders) and Rider IS-A customers, if the individual customer
peak load subscriptions exceed the class peak load limitation (adjusted to
reflect the grandfathered load of retail access pilot participants) for one
or more of these first two steps, then each customer's subscription will be
reduced pro rata to meet the class peak load limitation, provided that
customers with multiple locations in the PP&L service territory shall be
permitted to allocate their allotted share of their load to their multiple
locations on the same Rate Schedules at their discretion. Notwithstanding
Section 5.2.4.1 of the Supplier Tariff, the previous sentence shall also
apply to Rate Schedule GS-3 customers over 40kW if Rate Schedule GS-3 is
over-subscribed as of the enrollment deadline. If over-subscription occurs,
the Rate Schedule GS-3 will be divided into two classes of service for load
enrollment purposes only -- a large customer class and a small customer
class. All Rate Schedule GS-3 customers with an average monthly demand for
1996 of 40 kW or less will be in the small customer class and all others
will be in the large customer class. If, as a result of division of the
Rate Schedule GS-3 customer class into large and small classes, unused
enrollment load is then available in either the large or small class, then
that load shall be applied to the other Rate Schedule GS-3 customer class
(large or small) to the extent necessary to mitigate any
over-subscriptions. If no over-subscription of Rate Schedule GS-3 occurs,
then no pro-ration of load or class division shall occur and enrollment
will continue on a first-come, first-served basis. The potential Rate
Schedule GS-3 class division described in this Paragraph shall not be
construed to afford additional customer rights to any member of the Rate
Schedule GS-3 classes, large or small, above and beyond those available if
no class division had occurred. For purposes of this Part, a customer shall
be defined to include those customers which are affiliated with each other
including, but not limited to, divisions, separate business units, etc. The
entity which nominates for customers as defined herein with multiple
locations shall designate the load for each multiple location. This
designation shall not change during calendar year 1999.

I.2. In the event the Commission determines that an additional
six-month transition period is necessary prior to implementation of retail
access on a statewide basis, pursuant to Section 2806(c)(1) and/or (c)(2)
of the Public Utility Code, PP&L's service territory will be subject to a
similar six-month extension. 66 Pa. C.S. ss.2806(c)(1) and (c)(2).

J. NON-UTILITY GENERATORS

J.1. PP&L agrees that it will not contend that this Settlement or the
Commission's Orders in its restructuring proceeding provide for inadequate
recovery of NUG-related stranded costs as the basis for unilaterally
reducing the contract rates paid to FERC qualifying facilities selling
power to PP&L under PUC-approved contracts. This settlement is not intended
to limit and does not limit, in any way, any other argument or claim PP&L
may make regarding the rates paid to FERC qualifying facilities selling
power to PP&L under PUC-approved contracts. This settlement also is not
intended to preclude and does not preclude mutually agreed upon buy down or
buy out agreements or any other voluntary contract renegotiations.

K. EGS AFFILIATE

K.1. PP&L shall transfer PP&L's Energy Plus EGS to an affiliated
corporation that is separate from its Pennsylvania retail EDC function no
later than September 15, 1998. All future EGS functions provided by PP&L
shall be provided by a corporation that is legally separate from the EDC.

K.1.a. The Commission will issue to the affiliated corporation
to which PP&L has transferred its EGS function ("PP&L EGS affiliate") a
separate interim license authorizing PP&L EGS affiliate to begin to offer,
render, furnish or supply electric generation supplier services to the
public within the Commonwealth of Pennsylvania, effective September 15,
1998, in the form attached as Appendix I to the Joint Petition. Such
license shall become permanent on a date no later than the date that any
other interim license issued by the Commission under Chapter 28 of the
Public Utility Code becomes permanent. The continuance or issuance of such
license is conditioned upon the posting of the bond required to be posted
by EGSs and the filing of the applicable application under the Commission's
regulations.

K.1.b. The interim license granted to Pennsylvania Power &
Light Company (now PP&L, Inc.) on June 12, 1997 shall remain in effect and
PP&L will be permitted to provide generation supplier services under such
license to customers to which it was providing service on the date this
settlement is approved by the Commission through the end of the last
billing month of any retail access pilot program conducted by a
Pennsylvania utility in which service is being provided to customers under
such license. Upon application, compliance with all applicable Commission
regulations and notice to all Joint Petitioners, PP&L may, pursuant to this
Part K, transfer such license to an affiliated corporation, even if PP&L
may no longer provide service under such license.

K.2. PP&L hereby requests, and the effectiveness of this Settlement
is conditioned upon, the Commission's approval of PP&L's transfer of its
EGS function to PP&L EGS affiliate under this Settlement and the
Commission's issuance of such orders as are necessary to implement this
transfer. The transfer will be subject to Commission review and audit prior
to Commission approval to assure consistency with the spirit of this
Settlement, including the Codes of Conduct adopted herein. The Commission
approval includes, but is not limited to, approvals, to the extent
applicable under Chapters 5, 11, 19, 21 and 28 of the Public Utility Code
(66 Pa. C.S.).

K.3. The Joint Petitioners expressly acknowledge that such transfers
may require various regulatory approvals or waivers, including, without
limitation, the FERC, and perhaps other agencies and third parties not
subject to PP&L's control, and therefore the Joint Petitioners will neither
oppose, nor support any opposition to, PP&L's requests to obtain such
approvals. PP&L shall file for all necessary approvals within five (5) days
after the Commission has entered an order approving this settlement and
simultaneously will serve copies of all such filings on all parties to this
settlement; further, PP&L will use its best good faith efforts to secure
all necessary approvals.

K.4. The Commission will develop Codes of Conduct, separate and
distinct from Codes of Conduct established in this proceeding, which will
apply to EDC activities in the marketplace and which will clarify the PLR
function. By September 15, 1998, the Commission will establish a set of
binding Interim Guidelines regarding EDC activities in the marketplace.

L. CODE OF CONDUCT

L.1. PP&L further agrees that it will be subject to and governed by
the Code of Conduct set forth in Appendix H to this Joint Petition upon
final Commission approval of this Settlement. The Code of Conduct set forth
in Appendix H shall remain applicable to PP&L until the later of January 1,
2001, or the date when the statewide generic code of conduct established by
the Commission in its rulemaking becomes effective.

L.2. PP&L and its subsidiaries are permitted, but not required, to
transfer or assign all of their generating assets and liabilities, as those
assets and liabilities are delineated in its Restructuring Plan filing and
included at the date of transfer in the accounts set forth in Appendix J
hereto, and any other assets necessary for the operation of the generating
plants, and their wholesale power contracts (other than PUC-approved
contracts with qualifying facilities selling power to PP&L) to a separate
corporate entity or entities. The entity or entities may, at PP&L's
discretion, be an affiliate or subsidiary of PP&L or a non-affiliate.

L.3. The wholesale power contracts transferred will exclude those
wholesale power contracts that PP&L utilizes to satisfy its provider of
last resort obligations and those wholesale power contracts that
PP&L-affiliated EGSs enter into; provided, however, that if the generation
sold under such contracts is provided by PP&L's generating assets, then the
sales obligations under those contracts will be transferred or assigned and
the purchase obligations will remain with PP&L or its affiliated EGSs. The
generating assets and liabilities shall be transferred at their net book
value at the date of transfer. Once the transfer is completed, the
generation entity, if an affiliate of PP&L, will be regulated by the
Commission only if it makes retail sales, and then only as an EGS.

L.4. PP&L hereby requests, and the effectiveness of this Settlement
is conditioned upon, the Commission's approval, without addition, condition
or modification, of all aspects of PP&L's transfer of its generation assets
and liabilities and wholesale power contracts under this Settlement and the
Commission's issuance of such orders and certificates of public convenience
as are necessary to implement those transfers. The Commission approval
includes, but is not limited to, approval under Chapters 5, 11, 19, 21, and
28 of the Public Utility Code (66 Pa.C.S.).

L.5. The Joint Petitioners expressly acknowledge that such transfers
may require various regulatory approvals or waivers, including, without
limitation, the FERC, the Nuclear Regulatory Commission ("NRC") and perhaps
other agencies and third parties not subject to PP&L's control, and
therefore the Joint Petitioners will neither oppose, nor support any
opposition to, PP&L's requests to obtain such approvals. If such
authorizations or waivers (other than approval by this Commission) are not
obtained in a manner acceptable to PP&L, then PP&L will not transfer the
generation assets or liabilities or contracts affected, provided, however
that if a generating asset, liability or contract is not transferred, PP&L
will continue to separate that asset, liability or contract and its
operation from its regulated transmission and distribution functions by
organizing generation assets, liabilities or contracts into a functionally
separate business unit or units. Failure to obtain such authorization or
waiver will not affect any other aspects of this Settlement.

L.6. Notwithstanding any other provision of this Joint Petition,
Paragraphs L.2 through L.5 shall not apply to PREA/AEC with respect to any
asset, property or contract right, in which PREA/AEC has an ownership or
contractual interest. This exclusion is not intended to expand in any way
PREA/AEC's existing rights nor shall this Joint Petition in any way change
or limit PREA/AEC's existing rights.

L.7. PP&L and its affiliates and subsidiaries agree to be bound by
the competitive safeguard provisions set forth in Appendix G. Upon request
of a Joint Petitioner the information referenced in paragraph 6 of Appendix
G shall be provided directly to the Joint Petitioner, who shall not
disclose or use the information in a manner that violates the Commission's
standard rules governing proprietary information. Complaints under these
provisions shall be filed with the Commission and finally adjudicated by
the Commission within sixty days of filing.

M. COMMUNITY RESPONSIBILITY

M.1. The Company commits to continue its history of cooperation with
community organizations and the Commission, including the Bureau of
Consumer Services.

M.2. All parties will commit to work with all other parties to
support and successfully implement all aspects of the Settlement Agreement.

M.3. Not later than September 15, 1998, the Company shall file with
the FERC, with service on the Joint Petitioners, such provisions of the
Settlement Agreement (including appendices thereof) that the Company
believes require FERC approval in order to effectuate the Settlement
Agreement. The filing shall include only such provisions as have been
agreed to by the Joint Petitioners. The Joint Petitioners agree to support
or not to oppose such filing.

N. RESOLUTION OF OTHER ISSUES

N.1. Any issue not specifically addressed in this Settlement shall be
treated and resolved in accordance with the resolution of that issue
adopted by the Commission at this docket in the Restructuring Order entered
June 15, 1998 and the Reconsideration Order entered July 9, 1998.

O. WITHDRAWAL OF PENDING STATE AND FEDERAL COURT CASES

O.1. Within ten days of the execution of this Joint Petition by all
of the Joint Petitioners, the Petitioners in the following cases with the
concurrence and support of the Commission and other parties and intervenors
that are Joint Petitioners hereto, shall petition the Commonwealth Court to
continue generally further consideration of their respective actions (all
such actions collectively referred to as the "Commonwealth Court Actions"):

No. 638 M.D. 1998 PP&L Original Jurisdiction Action

No. 1878 C.D. 1998 SER Restructuring Order and
Reconsideration Order Appeal

No. 1879 C.D. 1998 ARIPPA Restructuring Order and
Reconsideration Order Appeal

No. 1880 C.D. 1998 PP&L Restructuring Order and
Reconsideration Order Appeal

No. 2004 C.D. 1998 OCA Cross Appeal

No. 2030 C.D. 1998 Enron Cross Appeal

No. 2032 C.D. 1998 PPLICA Cross Appeal

No. 2041 C.D. 1998 MAPSA Cross Appeal

O.2. Within ten days of the execution of this Joint Petition by all
of the Joint Petitioners, all Petitioners who have filed appeals or cross
appeals of the Commission's July 9, 1998 Reconsideration Order, with the
concurrence and support of the Commission and other parties and intervenors
that are Joint Petitioners hereto, shall petition the Commonwealth Court to
continue general1y further consideration of their respective actions (all
such actions collectively referred to as the "Commonwealth Court
Reconsideration Actions").

O.3. Within ten days of the execution of this Joint Petition by all
of the Joint Petitioners, PP&L shall petition the United States District
Court to continue generally its action filed at Civil Docket No.
98-CV-3659.

O.4. Within ten days after the Commission's approval of this Joint
Petition becomes final and no longer subject to administrative or judicial
challenge, PP&L shall (a) withdraw with prejudice all of its pending
Commonwealth Court Actions, (b) withdraw with prejudice all of its pending
Commonwealth Court Reconsideration Actions and (c) dismiss with prejudice,
pursuant to Rule 41(a)(1), its pending civil action before the U.S.
District Court, and the other Joint Petitioners shall similarly withdraw
with prejudice all of their Commonwealth Court Actions and Commonwealth
Court Reconsideration Actions, except as specifically provided in Paragraph
O.5.

O.5. The Joint Petitioners agree that they shall not initiate or join
in any court challenge, arising out of the issues resolved by this
Settlement, to the constitutionality or legality of the Electric
Competition Act such that would prevent or preclude implementation of this
Settlement or any of its terms, this Joint Petition for Settlement or any
order approving this Joint Petition, except as provided in Paragraph Q. 1.,
and provided that, notwithstanding any other provision of this Joint
Petition, nothing in this Joint Petition shall prevent any Joint Petitioner
that is a party to the restructuring proceedings of another utility from
initiating or continuing any court challenge, including a challenge to the
constitutionality or legality of the Electric Competition Act arising from
such proceedings.

P. EFFECTIVENESS, DURATION AND ENFORCEMENT OF SETTLEMENT

P.1. The settlement proposed herein will go into effect upon the
Commission's issuance of a final order approving this Joint Petition and
all the settlement terms and conditions without modification. The terms of
this Settlement shall be implemented and enforceable notwithstanding the
pendency of a legal challenge to the Commission's approval of this Joint
Petition or to actions taken by another regulatory agency or Court, unless
such implementation and enforcement is stayed or enjoined by the
Commission, another regulatory agency, or a Court having jurisdiction over
the matter.

P.2. The obligations under this Settlement that apply for a specific
term set forth herein shall expire automatically in accordance with the
term specified, and shall require no further action for their expiration.
This Settlement, including all of the terms and conditions set forth above,
shall expire on December 31, 2009 except with respect to those aspects of
this Settlement, orders of the Commission implementing this Settlement or
PP&L's tariff approved as part of this Settlement, implementation of which
necessarily must be completed beyond that date.

P.3. The Joint Petitioners may enforce this Joint Petition through
any appropriate action before the Commission or through any other available
remedy. Joint Petitioners shall consider any final Commission order related
to the enforcement or interpretation of this Joint Petition as an
appealable order to Commonwealth Court. This shall be in addition to any
other available remedy at law and equity.

P.4. If a court grants a legal challenge to the Commission's approval
of this Joint Petition and issues a final non-appealable order which
prevents or precludes implementation of any material term of the
Settlement, or if some other legal bar has the same effect, then this
Settlement is voidable, upon written notice by any Joint Petitioner.

Q. COMPLETE AGREEMENT; NO ALTERATIONS OR MODIFICATIONS

Q.1. This Settlement resolves, with prejudice, all of the issues
specifically addressed herein and precludes the Joint Petitioners from
asserting contrary positions with respect to any such issue during
subsequent litigation, provided, however, that this Settlement is made
without admission against or prejudice to any factual or legal positions
which any of the Joint Petitioners may assert: (i) in the event that the
Commission does not issue a final, non-appealable Order approving this
Settlement without modification; or (ii) in other Pennsylvania utilities'
Restructuring proceedings before the Commission under Section 2806(D) of
the Electric Competition Act and related appeals; or (iii) other
proceedings before the Commission or other fora as long as such positions
are not in derogation of this Settlement. The Joint Petitioners agree that
this Settlement shall not constitute or be cited as controlling precedent
in any other proceedings, including Pennsylvania utilities' restructuring
proceedings before the Commission under Section 2806(D). This Settlement is
determinative and conclusive of all of the issues addressed herein and
constitutes a final adjudication as to the Joint Petitioners of the matters
thereof.

Q.2. This Settlement is expressly conditioned upon the Commission's
approval of all of the specific terms and conditions contained herein
without modification. If the Commission should fail to grant such approval,
or should modify any of the terms and conditions herein, this Settlement
will terminate and be of no force and effect. The Joint Petitioners will
make best efforts to support this Settlement and to secure its approval by
the Commission.

Q.3. It is expressly understood and agreed that this Settlement
constitutes a negotiated resolution solely of PP&L's restructuring
proceedings at Docket No. R-00973954 and the related court appeals and
other actions listed in Part O herein.

IV. PUBLIC INTEREST CONSIDERATIONS

The Joint Petitioners submit that this Settlement is in
the public interest and should be approved in full for the following reasons:

1. Customers Will Receive Rate Reductions. The Settlement enables
all customers to receive significant guaranteed rate reductions.

2. Competition will be promoted. Customers will receive
substantial shopping credits that will allow shopping customers to achieve
significant bill savings in addition to the guaranteed rate cut and that
will promote competition. Moreover, the provisions of this Settlement will
insure that a competitive market for electricity will be created and
functioning by January 1, 1999.

3. Transmission And Distribution Charges Will Be Capped For An
Additional Three And One-Half Years. The Settlement provides that the cap
on PP&L's transmission and distribution charges, which otherwise would
expire on June 30, 2001, will be extended through 2004.

4. Generation Rates Will Be Capped For An Additional Four Years.
The Settlement provides that a cap on PP&L's generation rates, which
otherwise would expire December 31, 2005, will be in place as provided in
the Electric Competition Act (66 Pa. C.S. ss.2804(4)), until December 31,
2009 and is increased by five percent (5%) throughout this four-year
period. In addition tor the guaranteed rate cuts, non-shopping customers
shall be served by providers of last resort or default service that will
offer electric service at market-determined prices on January 1, 2002.

5. Universal Service Coverage Will Be Expanded. The Settlement
provides for expansion of funding levels for PP&L's ONTrack and LIURP
programs.

6. Economic Development and the Environment Will Benefit. Vigorous
competition unleashed by the shopping credits and the guaranteed rate
reductions will be of benefit to business and industry as well as to
residential consumers. The Settlement promotes renewable energy development
and provides for a renewable energy pilot program. The Settlement also
provides for a sustainable energy fund designed to promote the development
and use of renewable energy and clean energy technologies, energy
conservation and efficiency which promote clean energy.

7. The Securitization of Stranded Assets Will Be Facilitated. The
Settlement provides for the Commission to issue a Qualified Rate Order
authorizing PP&L to securitize up to $2.97 billion of its recoverable
stranded assets and costs.

8. Substantial Litigation And Associated Costs Will Be Avoided.
The Settlement amicably resolves a number of important and contentious
issues raised in the proceeding and, at the same time, provides for the
withdrawal of various actions currently pending before state and federal
courts. The administrative and appellate burden and costs to litigate these
matters, including likely future appeals, to conclusion would be
substantial.

9. The Settlement Is Consistent With Commission Policies Promoting
Negotiated Settlements. The Joint Petitioners arrived at the settlement
terms after conducting extensive discovery, submitting comprehensive
testimony and engaging in in-depth discussions. The settlement terms and
conditions constitute a carefully crafted package representing reasonable
negotiated compromises on the issues addressed herein. Thus, this
Settlement is consistent with the Commission's rules and practices
encouraging negotiated settlements (see 52 Pa. Code ss.ss.5.231, 69.391,
69.401).

V. CONCLUSION

WHEREFORE, the Joint Petitioners, intending to be legally
bound, respectfully request that the Commission: (1) approve the settlement
terms and conditions set forth in the Joint Petition without modification;
(2) amend the Commission's Restructuring Order and Reconsideration Order as
necessary to implement the proposed Settlement; (3) approve the Tariff
Supplements attached as Appendix B to become effective pursuant to the
terms set forth therein; (4) issue the Qualified Rate Order set forth in
Appendix E hereto; and (5) approve PP&L's transfer of generating assets as
set forth herein.

The undersigned counsel or representatives certify that they
have full authority to enter into this settlement and to act on behalf of
their respective parties, and each is executing this agreement as a duly
authorized representative of such party.

/s/ Robert J. Grey August 11, 1998
- ------------------------------------ -----------------------
Robert J. Grey, Esquire Date
Paul E. Russell, Esquire
For PP&L, Inc.

/s/ Irwin A. Popowsky August 12, 1998
- ------------------------------------ -----------------------
Irwin A. Popowsky, Esquire Date
Craig R. Burgraff, Esquire
For Office of Consumer Advocate

/s/ Bernard A. Ryan, Jr. August 12, 1998
- ------------------------------------ -----------------------
Bernard A. Ryan, Jr., Esquire Date
For Office of Small Business Advocate

Charles F. Hoffman August 11, 1998
- ------------------------------------- ----------------------
Charles F. Hoffman, Esquire Date
Johnnie E. Simms, Esquire
For Office of Trial Staff

/s/ David M. Kleppinger August 11, 1998
- -------------------------------------- ----------------------
David M. Kleppinger, Esquire Date
For PP&L Industrial Customer Alliance

/s/ Eric J. Epstein, Pro Se August 11, 1998
- -------------------------------------- ----------------------
Eric J. Epstein, Pro Se Date

/s/ Craig A. Doll August 12, 1998
- -------------------------------------- ----------------------
Craig A. Doll, Esquire Date
For Conectiv Energy

/s/ Deborah A. Swanstrom August 11, 1998
- -------------------------------------- ----------------------
Deborah A. Swanstrom, Esquire Date
For Allegheny Power

/s/ Todd S. Stewart August 12, 1998
- -------------------------------------- ----------------------
William T. Hawke, Esquire Date
Todd S. Stewart
For Mid-Atlantic Power Supply Association

/s/ Mary McFall Hopper August 11, 1998
- -------------------------------------- -----------------------
Mary McFall Hopper, Esquire Date
For PECO Energy

/s/ Scott J. Rubin August 12, 1998
- -------------------------------------- -----------------------
Scott J. Rubin, Esquire Date
For Local 1600, IBEW

/s/ Barbara Kates-Garnick August 12, 1998
- -------------------------------------- -----------------------
Barbara Kates-Garnick Date
Jeff Bladen
For New Energy Ventures

/s/ Alan Kohler August 12, 1998
- -------------------------------------- -----------------------
Alan Kohler, Esquire Date
For Enron Power Marketing, Inc.

/s/ Billie Ramsey August 12, 1998
- -------------------------------------- -----------------------
Billie Ramsey, Esquire Date
For ARIPPA

/s/ Martin J. Cerullo August 11, 1998
- -------------------------------------- -----------------------
Richard Letarte Date
Martin J. Cerullo
For Schuylkill Energy Resources

/s/ Otto Hofmann August 12, 1998
- -------------------------------------- -----------------------
Otto Hofmann, Esquire Date
For Pa. Rural Electric Association

/s/ Patricia Armstrong August 11, 1998
- -------------------------------------- -----------------------
Patricia Armstrong, Esquire Date
For Allegheny Electric Cooperative, Inc.

/s/ Terrence J. Fitzpatrick August 12, 1998
- -------------------------------------- -----------------------
Terrence Fitzpatrick, Esquire Date
David M. DeSalle
For GPU Energy

/s/ Usher Fogel August 11, 1998
- -------------------------------------- -----------------------
Usher Fogel, Esquire Date
For Pa. Petroleum Assoc. and Pa. Plumbing,
Heating, Cooling Contractors, Inc.

/s/ Roger E. Clark August 11, 1998
- --------------------------------------- -----------------------
Fred Zalcman, Esquire Date
Roger Clark, Esquire
For Environmentalists

The undersigned counsel certify that they have full authority
to act on behalf of their respective parties in this proceeding and they do
not object to, and will abide by, the terms of this settlement of the PP&L
restructuring proceedings and related court proceedings.

/s/ Terrence J. Fitzpatrick August 12, 1998
- ----------------------------- ------------------
Terrence Fitzpatrick, Esquire Date
David M. DeSalle, Esquire
For GPU Energy

/s/ Deborah A. Swanstrom August 12, 1998
- ------------------------------ ------------------
Thomas K. Henderson, Esquire Date
Deborah A. Swanstrom, Esquire
For Allegheny Power

/s/ Mary McFall Hopper August 12, 1998
- ------------------------------ ------------------
Mary McFall Hopper, Esquire Date
For PECO Energy

EXHIBIT 99.1.1

QUALIFIED RATE ORDER ISSUED AUGUST 27, 1998

PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105-3265

Public Meeting held August 27, 1998
Commissioners Present:

John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
David W. Rolka
Nora Mead Brownell
Aaron Wilson, Jr.

Application of Pennsylvania Power & Light :
Company for Approval of its Restructring : Docket No. R-00973954
Plan Under Section 2806 of the Public :
Utility Code, et al. :

F I N A L O R D E R

BY THE COMMISSION:

On August 12, 1998 PP&L, Inc. ("PP&L" or the "Company"); the Office
of Consumer Advocate ("OCA"); the Office of Small Business Advocate
("OSBA"); the Office of Trial Staff ("OTS"); the PP&L Industrial Customer
Alliance ("PPLICA"); Eric Epstein; Conectiv Energy ("Conectiv"); West Penn
Power Company t/a Allegheny Power ("APS"); Mid-Atlantic Power Supply
Association ("MAPSA"); PECO Energy Company ("PECO"); Local 1600 of the
International Brotherhood of Electrical Workers ("IBEW");New Energy
Ventures ("NEV"); Enron Power Marketing, Inc. ("Enron"); Gilberton Power
Company ("Gilberton"); the Anthracite Region Independent Power Producers
Association ("ARIPPA"); Schuylkill Energy Resources ("SER"); Pennsylvania
Rural Electric Association ("PREA"); Allegheny Electric Cooperative, Inc.
("AEC"); Metropolitan Edison Company and Pennsylvania Electric Company,
collectively doing business as GPU Energy ("GPU"); the Pennsylvania
Petroleum Association ("PPA"); Environmentalists(1); and other parties as
designated on the signature pages (all such parties collectively referred
to as the "Joint Petitioners") submitted a Joint Petition for Full
Settlement of PP&L's Proposed Restructuring Plan and Application for a
Qualified Rate Order ("Joint Petition"). On August 13, 1998, the Joint
Petitioners filed an Addendum which modified the Joint Petition slightly.

The proposed terms and conditions of the Joint Petition represent a
comprehensive settlement which resolves all issues on appeal before
Commonwealth Court and all issues before the U.S. District Court arising
from challenges by the Joint Petitioners to the Commission's final order
and reconsideration order regarding PP&L's Application for Approval of its
Restructuring Plan Under Section 2806 of the Public Utility Code(2).

- ---------------------
1 The following Environmentalists Member Organizations did not
participate in the Joint Petition but agree to abide by the terms and
conditions contained therein: Sierra Club, Penn PIRG, and Lehigh Greens.

2 As noted in the certificate of service, copies of the Joint Petition
and appendi ces have been served by PP&L on all parties to the proceeding
by overnight mail or hand delivery. In addition, the Joint Petition
provides that PP&L will provide written notice of the proposed settlement
by letter to its customers, will post notice in its office and on its
Internet web page, and will provide notice by news release.

The Joint Petitioners aver that this comprehensive settlement is in
the public interest and, therefore, request that this Commission: (1)
approve without modification the proposed settlement as set forth in the
Joint Petition and the Addendum; (2) amend our final order, and
reconsideration order as necessary to implement the full settlement; (3)
approve the tariff supplements necessary to implement the proposed
settlement; (4) issue a Qualified Rate Order authorizing PP&L to securitize
up to $2.85 billion of stranded assets and costs as proposed in the full
settlement(3); and (5) approve PP&L's transfer of generation assets. The
Joint Petitioners recognize, however, that pursuant to the provisions of
Section 703(g) of the Public Utility Code, the Commission is obligated to
provide notice of and opportunity to be heard before it may amend a prior
order. In our tentative order approving the proposed settlement issued
August 13, 1998, we provided for a comment period which closed on August
24, 1998.

- --------------------
3 The Joint Petition originally provided for the securitization of up to
$2.97 billion. In the Addendum filed with the Commission this morning, the
Joint Petition ers requested the amount to be securitized be reduced by
$120 million.

In the proposed settlement, all PP&L customers will receive a
guaranteed 4% rate reduction effective January 1, 1999, the start date for
retail electric generation competition in PP&L's service territory through
December 31, 1999, independent of securitization. In addition to the
guaranteed rate decreases of 4%, customers shall receive a system-average
shopping credit of 3.81 cents per KWH on January 1, 1999, and 4.13 cents
per KWH on January 1, 2000, with a steady escalation of the shopping credit
throughout the entire recovery period of the Competitive Transition Charges
("CTCs"). Customers that elect to shop for generation shall receive total
rate reductions in 1999 equal to the 4% decrease referenced above plus
savings produced by the difference between their generation purchase price
and their shopping credit. Moreover, given the escalating system average
shopping credits of 3.81 cents per KWH in 1999 to 5.02 cents per KWH in
2009 included in the proposed settlement, as well as other specific
components of the proposed settlement, the Joint Petitioners expect the
development of a competitive market with many alternative electric
generation suppliers.

In addition, the settlement terms and conditions provide that PP&L
will (1) recover a substantially smaller amount of stranded cost recovery
than it claimed before the Commission; (2) transfer its EGS function to a
separate corporate affiliate subject to competitive safeguards to insure
fair dealing; (3) expand its current universal service programs; (4)
accelerate the phase-in to customer choice for all customer classes; (5)
educate consumers about restructuring; (6) facilitate funding of
sustainable energy and economic development; (7) encourage small renewable
energy technologies; and (8) withdraw its actions before Commonwealth Court
and its civil complaint before the U.S. District Court challenging the
Commission's restructuring orders at Docket No. R00973954.

The Joint Petitioners, in turn, agree to resolve all objections to
PP&L's Restructuring Plan and to withdraw (1) all cases pending before the
Commonwealth Court which challenge the constitutionality of the Electric
Competition Act and the Commission's Restructuring Order and
Reconsideration Order at Docket No. R00973954, provided that the Joint
Petitioners are not barred from raising any factual, legal or contrary
positions in other proceedings as long as such positions are not in
derogation of this settlement.

The terms of the Joint Settlement include PP&L's application for the
issuance of a Qualified Rate Order and the effectiveness of the Joint
Settlement is contingent upon issuance of the Qualified Rate Order at the
same time the Joint Settlement is approved. Accordingly, we have included,
in this order, ordering paragraphs addressing PP&L's request for a
Qualified Rate Order.

COMMENTS

We received a number of timely comments as discussed below.

The United States Department of Defense and Federal Executive
Agencies ("USDOD"), a party to the restructuring proceeding but not a
participant in settlement negotiations and not a signatory to this
settlement, filed comments to the settlement, commending the signatories
for their efforts and recommending approval of the settlement.

We received many comments the following individual PP&L customers:
Joseph A. Quigley; Patricia A. Cecere; Samuel Warner; Ronald W.
Fenstermaker; Ronald F. Richards; Orrien O. Griesemer; John Gesiskie;
Curtis L. Rohm; Eva H. Garman; Sadie K. Dupler; J. Vincent; Kevin P.
McGinnis for Charles P. McGinnis; J. Michael Pressimone; Charles Malseed;
Howard L. Snoke; Edward C. Fritchman; John P. Stevens; June V. Boyle; Manus
and Hilda Mulherin; Magdalene Kovaschetz; William G. Miller; Man-Fong Cheng
and Wing-Chuen Wong; Gloria M. Murray; June and Willard Sites; Thomas W.
Parson; Joseph and Betty Scopelliti; Helen I. Grove; Martin E. Trokan;
Wayne B. Jackson; Russ Bubemak; Ron Zeshonski; R.S. Heckman, Jr.; Harold G.
Wertman; Martha A. West; June and Richard Leitner; and Marc C. deVillers.
In addition, we received one anonymous letter and one telephone call
without a follow- up letter.

The individual consumer comments expressed a wide variety of opinion
and concern. Many individuals commended PP&L for its presence in the
community and its excellent service throughout the years and urged the
Commission to increase the amount the Company may recover. Others
maintained that PP&L should recover far less than authorized under the
settlement, arguing that a four percent (4%) rate reduction was not enough.

Based on the record before us, we believe that the amount reached in
settlement is reasonable. PP&L is permitted to recover a slightly greater
amount of stranded costs than authorized in the Commission's Restructuring
Order of June 15, 1998, while consumers will obtain a 4% guaranteed rate
decrease during 1999 and have the protection of a rate cap for an extended
period of time. These and other provisions in the settlement package, taken
as a whole, represent a fair and reasonable balance of the competing
interests involved in this matter.

Several commenters questioned the public policy issues of a set aside
for clean energy technology and low-income energy assistance. To the extent
the comments recommended eliminating funding for these purposes, they are
denied. Encouraging the development of clean energy technology and
providing energy assistance to Pennsylvania's low-income consumers benefits
our society as a whole and adheres to the letter and spirit of the Electric
Competition Act.

Some commenters requested additional basic information regarding
shopping for electric generation service or technical and detailed
information regarding what is included in Transition Costs. For those with
basic questions regarding how electric competition will be implemented or
when you may be eligible to shop, the Commission has established an
Electric Competition Hotline at 1-800-782-3228. The people answering this
hotline are knowledgeable of the general workings of electric competition.
Those with more detailed questions should review the Commission's PP&L
Restructuring Order of June 15, 1998 at this docket. The Restructuring
Order contains far more detail and explanation of what PP&L may and may not
recover than was included in the Joint Settlement or in the orders
addressing the settlement.

CONCLUSION

The proposed settlement set forth in the Joint Petition, the Addendum
and its appendices constitutes a comprehensive resolution of the broad
array of issues raised by PP&L's restructuring plan under the Electric
Competition Act. Consistent with the fundamental goals of that historic
legislation, the settlement provides for an orderly transition from the
current regulated electric utility structure for generation to a structure
under which retail customers will have direct access to a competitive
market for the generation of electricity; moreover, and also consistent
with the legislation, the settlement provides for a fair and reasonable
recovery of PP&L's transition and stranded costs created by this transition
to a competitive market. Despite several comments questioning the wisdom of
departing from a regulated environment, we have an obligation to implement
electric generation competition in Pennsylvania by year's end. We firmly
believe that this area of the industry is ripe for competition and believe
that Pennsylvania has created a system which will maximize the benefits
associated with competition. Indeed, this settlement contains the following
benefits:

* customers will receive a guaranteed rate decrease of 4%
during 1999;

* customers will receive a shopping credit that will allow
shopping customers to achieve bill savings in addition to the
guaranteed rate cuts;

* the size of the shopping credit and other provisions of the
settlement will insure that a competitive market for
electricity will be created and functioning by January 1, 1999.

* transmission and distribution rates will be capped for
an additional three and one-half years (to December 31, 2004);

* the generation rate cap will be extended for an additional
four years (to December 31, 2009);

* universal service programs will be expanded, and a sustainable
energy fund will promote the development and use of renewable
energy and clean energy technologies, energy conservation and
efficiency which will benefit the environment;

* substantial litigation and its associated costs and
uncertainties will be avoided (the settlement lists eight
Commonwealth Court actions and one Federal Court action to be
withdrawn as a part of this proposed settlement)

Upon our review of the Joint Petition, the Addendum and the
appendices, and the comments thereto, we find that the proposal is in the
public interest and therefore should be approved. We note that the Joint
Petition has been signed by all of the active parties of record to PP&L's
restructuring proceedings. We recognize and appreciate the uncounted hours
spent by the participants in preparing this Joint Petition, which presents
a negotiated resolution of important and conflicting interests in a
practical and enforceable manner. We believe that this settlement
represents a difficult, but important step in the advancement of the
economies of the area served by PP&L and the Commonwealth, and an historic
breakthrough in the creation of retail electric competition in the
Commonwealth. At the same time, the Joint Petition continues necessary and
important safeguards for utility customers which must be preserved in the
public interest.

Upon consideration of the proposed settlement, appendices and
addendum, and the comments thereto, we find that the proposed settlement is
the public interest; THEREFORE,

IT IS ORDERED:

1. That in consideration of and reliance upon the representations,
mutual promises and undertakings of the parties to this proposed
settlement, including the express agreement. of each signatory to be
legally bound by its terms and the certification of each signatory that he
or she has full authority to enter into the settlement and to act on behalf
of their respective parties, the terms of the proposed full settlement set
forth in the Joint Petition, the Addendum and the appendices shall be and
are hereby approved as to each and every one of its terms and conditions
and we hereby reconsider and amend our prior orders in these proceedings as
necessary to implement the terms of the full settlement. Any issue not
specifically addressed in the settlement shall be treated and resolved in
accordance with the resolution of that issue adopted by the Commission at
this docket in the Restructuring Order entered June 15, 1998, and the
Reconsideration Order entered July 9, 1998.

2. That the Commission hereby approves, consistent with the
conditions enumerated in the Joint Petition at Paragraph K.2, PP&L's
transfer of its EGS function to a separate corporation no later than
September 15, 1998. The transfer or assignment may be, in PP&L's
discretion, to an entity that is an affiliate or non-affiliate of PP&L.
Subject to review and audit of the assets to be transferred, consistent
with the spirit of the settlement and the Codes of Conduct, we tentatively
grant the approvals, licenses and certificates of public convenience
required under the Public Utility Code regarding the transfer or assignment
of PP&L's generating assets and liabilities under the settlement, including
but not limited to approvals under Chapters 5, 11, 19, 21 and 28 of the
Public Utility Code.

3. That all aspects of PP&L's transfer of its generation assets and
liabilities and wholesale contracts under the settlement are approved. In
addition, we grant the approvals, licenses and certificates of public
convenience required under the Public Utility Code regarding the transfer
or assignment of PP&L's generating assets and liabilities under the
settlement, including but not limited to approvals under Chapters 5, 11,
19, 21 and 28 of the Public Utility Code.

4. That PP&L's recovery of the transition and stranded costs as set
forth in the settlement is just and reasonable and in the public interest
and that securitization of up to $2.85 billion of stranded costs as set
forth in the settlement is just and reasonable and in the public interest.

5. That the Application of PP&L, Inc. ("PP&L") for the Issuance of a
Qualified Rate Order under Sections 2808 and 2812 of the Electricity
Generation Customer Choice and Competition Act ("Act"), 66 Pa. C.S.
ss.ss.2808 and 2812 ("QRO Application") contained in the Joint Petition for
Settlement of PP&L Inc.'s Proposed Restructuring Plan, filed on August 12,
1998 (the "Joint Petition"), be, and hereby is, granted, consistent with
this Qualified Rate Order.

6. That, to the extent specified this Qualified Rate Order, PP&L's
filings, testimony and exhibits submitted to the Commission in conjunction
with PP&L's Proposed Restructuring Plan on April 1, 1997, at Docket No.
R-00973954 (the "Restructuring Filing"), are hereby incorporated herein by
reference.

7. That it is just and reasonable and in the public interest for PP&L
to recover from its customers, through Intangible Transition Charges as and
to the extent authorized in paragraph 9 of this Qualified Rate Order, up to
$2.85 billion of the $2.97 billion of the Company's Transition or Stranded
Costs approved by the Commission for recovery from customers and other
Qualified Transition Expenses, as defined in paragraph no. 9, below. The
savings from securitization and issuance of transition bonds are provided
for in the rates and rate reductions set forth in Section B.1 and Appendix
A of the Joint Petition for Full Settlement of PP&L Inc.'s Restructuring
Plan and Related Court Proceedings at Docket No. R-00973954 ("Joint
Petition") and the further reductions in the CTC/ITC set forth in Section
A.5 of the Joint Petition. The aforesaid rates and CTC/ITC reductions
constitute full compliance with Sections 2808(e) and 2812(b)(2) of the
Electricity Generation Customer Choice and Competition Act ("Electric
Competition") and no further rate adjustment is required.

8. That this Commission authorizes the issuance of Transition Bonds
in an aggregate principal amount not to exceed $2.85 billion and finds that
the issuance of such amount of Transition Bonds is in the public interest.
Provided that the rate reductions specified in the Joint Petition are
implemented as provided in paragraph 10 of this Qualified Rate Order, this
Commission hereby determines that 75% of all savings that may be
accomplished through securitization will be passed on to customers through
the rate reductions in paragraph 10, and PP&L is not required to pass on
additional savings, and no further rate adjustment is required because the
Commission hereby finds that such additional savings have been reflected in
the Joint Petition.

9. That this Commission authorizes PP&L to impose on, and collect
from its customers, either directly or through bills rendered by electric
generation suppliers or any subsequently selected providers of last resort,
through non-bypassable charges applied to the bill of every customer of
electric services within the geographic area that comprises PP&L's
certificated service territory on the effective date of the Act, whether
such customer was a customer on the effective date of the Act or became a
customer after that effective date, (i) Competitive Transition Charges
("CTCs") as provided in the Joint Petition in an amount sufficient to
permit PP&L to recover the full amount of its Transition or Stranded Costs
as authorized for recovery by the Commission's approval of the Settlement
Petition, and (ii) Intangible Transition Charges in an amount sufficient to
recover the aggregate principal amount of Transition Bonds plus an amount
sufficient to provide for any credit enhancement, to fund any reserves, and
to pay interest, redemption premiums, if any, servicing fees and other
fees, and other expenses relating to the Transition Bonds (the Transition
or Stranded Costs, which includes principal of and interest on Transition
Bonds, costs for credit enhancement, the costs of retiring existing debt
and equity, costs of defeasance, servicing fees and other related fees,
taxes, costs, charges and expenses permitted to be recovered through the
intangible Transition Charges, collectively, the "Qualified Transition
Expenses"). The Commission finds that such recovery and the imposition of
such CTCs and Intangible Transition Charges are in the public interest and
are just and reasonable. The Commission finds that good cause has been
shown to extend the payment period for imposing the CTCs and the Intangible
Transition Charges to December 31, 2009. The Intangible Transition Charges
shall be collected over periods of time and in such amounts as are
necessary to amortize each series and class of Transition Bonds in
accordance with the terms thereof, but in no event shall be charged to
customers after December 31, 2009. Notwithstanding anything else in the
Qualified Rate Order, but subject to the terms of the Joint Petition, the
Intangible Transition Charges shall be collected from customers in an
amount sufficient to discharge the Transition Bonds in accordance with
their terms.

10. Upon the successful issuance of Transition Bonds authorized by
this Qualified Rate Order and the imposition of Intangible Transition
Charges related thereto, PP&L is directed to implement the following
adjustments to its rates: PP&L shall reduce the CTCs imposed on its
customers by an amount equal to the Intangible Transition Charges
associated with such Transition Bond issuance and PP&L shall reduce the
CTCs imposed on its customers by an additional amount necessary to flow
through to customers 75% of the net savings achieved as a result of
securitization of its Transition or Stranded costs and issuance of
Transition Bonds. The reductions specified above shall be implemented on
the following terms: (a) upon the issuance of any series of Transition
Bonds, a corresponding reduction shall be calculated and implemented
corresponding to each such series; (b) the rate reduction shall be applied
to bills using the method and allocation set forth in the Joint Petition;
and (c) the Intangible Transition Charges associated with the Transition
Bonds issued on that date shall be applied to bills simultaneously with the
reduction of the CTCs.

11. That the CTCs and the Intangible Transition Charges shall be
applied to customer bills using the methodology and allocation set forth in
PP&L's QRO Application and its Restructuring Filing, as adjusted by the
Joint Petition. Pursuant to Section 2812(b)(4) of the Act, the Commission
authorizes PP&L to make annual adjustments (each, an "Annual Adjustment")
to the Intangible Transition Charges if collections of such Intangible
Transition Charges fall below the amount necessary to ensure the receipt by
the assignee of the Intangible Transition Property and the Financing Party
of revenues sufficient to recover fully the Qualified Transition Expenses
consistent with this Commission's Order; provided, however, that
adjustments during the final calendar year & Intangible Transition Charge
collection for any series of Transition Bonds shall be done quarterly or
monthly, if necessary, in order to ensure full recovery of Intangible
Transition Charges. The revenues received by the assignee of the Intangible
Transition Property and the Financing Party through the Intangible
Transition Charges shall be determined to be sufficient for this purpose if
and only if the revenues so received through the Intangible Transition
Charges are sufficient to provide for the payment of principal, interest,
and acquisition or redemption premiums on the Transition Bonds, to fund any
reserves and to pay related credit enhancement, servicing fees and other
related fees, costs and charges in accordance with the terms thereof and as
consistent with the terms of this Qualified Rate Order and the Joint
Petition. For each Annual Adjustment, PP&L shall file with this Commission:
(a) an accounting of Intangible Transition Charges received by the assignee
of the Intangible Transition Property and the Financing Party for the
previous annual period; (b) a statement of any over-or under-receipts; (c)
the charge or credit to be added to Intangible Transition Charges to ensure
that the Intangible Transition Charges revenue received by the assignee of
the Intangible Transition Property and the Financing Party will be
sufficient to amortize the Qualified Transition Expenses in accordance with
the amortization schedule for Transition Bonds to be determined at the time
of issuance of each series of Transition Bonds, and the corresponding
reduction or increase in the CTCs or, if CTCs have not been imposed, PP&L's
distribution rates; and (d) any proposal by PP&L to modify the
reconciliation methodology. Pursuant to 66 Pa. C.S. ss.2812(b)(4), this
Commission shall finally adjudicate all Annual Adjustments within 90 days
of PP&L's Annual Adjustment filing.

12. That this Commission determines that the methodology under which
PP&L will recover the Intangible Transition Charges authorized by this
Qualified Rate Order satisfies the provisions of 66 Pa. C.S. ss.2812(g),
which require that the methodology not shift inter-class or intra-class and
that the methodology maintains consistency with the allocation methodology
for utility production plant used by the Commission in PP&L's most recently
concluded base-rate proceeding.

13. That this Commission concludes that it is in the public interest
to, and authorizes PP&L and any Assignee to, (a) assign, sell, transfer or
pledge Intangible Transition Property (such term includes all right, title
and interest of PP&L or any Assignee in this Qualified Rate Order and in
all revenues, collections, claims, payments, money or proceeds arising from
Intangible Transition Charges pursuant to this Qualified Rate Order to the
extent this Qualified Rate Order and the rates and other charges authorized
hereunder are declared irrevocable) in an amount sufficient to recover all
its Qualified Transition Expenses and (b) issue, sell and refinance, in
reliance on this Qualified Rate Order, one or more series of Transition
Bonds, each series in one or more classes, secured by the Intangible
Transition Property created by this Qualified Rate Order; provided that the
final maturity of any services of Transition Bonds shall not exceed 10
years from the date of issuance and in no event shall any Transition Bond
have a final maturity after December 31, 2009. Notwithstanding the
foregoing, PP&L retains sole discretion regarding whether to assign, sell
or otherwise transfer Intangible Transition Property created hereby or to
issue or cause the Transition Bonds to be issued or refinanced.

14. That PP&L or any Assignee may refinance the Transition Bonds in a
face amount not to exceed the unamortized principal thereof. That, if PP&I,
or any Assignee refinances the Transition Bonds, the Intangible Transition
Charges authorized in this Qualified Rate Order shall be adjusted in
accordance with the true-up mechanism described in paragraph 11 of this
Qualified Rate Order to ensure the receipt by the Transition Bond Assignee
of revenues sufficient to pay all Transition or Stranded costs of PP&L
approved by the Commission for recovery under Sections 2804 (relating to
standards for restructuring of electric industry) and 2808 (relating to
competitive transition charge), through the issuance of Transition Bonds;
the reasonable costs of retiring existing debt or equity capital of the
electric utility or its holding company parent, including accrued interest
and premiums upon acquisition or redemption of equity or debt, costs of
defeasance, and other related fees, costs and charges relating to, through
the issuance of Transition Bonds or the assignment, sale or other transfer
of Intangible Transition Property; and the costs incurred to issue, service
or refinance the Transition Bonds, including accrued interest and
acquisition or redemption premium, and other related fees, taxes, costs and
charges, or to assign, sell or otherwise transfer Intangible Transition
Property. This amount will not exceed the $2.85 billion permitted to be
securitized under the Joint Settlement. The revenues received by the
Transition Bond Assignee through the Intangible Transition Charges shall be
determined to be sufficient for this purpose if and only if the revenues so
received through the Intangible Transition Charges provide for the
amortization of Transition Bonds in accordance with the amortization
schedule set forth in any prospectus or other offering document provided to
the holders of the refinanced bonds after payment of interest, reserves,
all Transition or Stranded costs of PP&L approved by the Commission for
recovery under Sections 2804 (relating to standards for restructuring of
electric industry) and 2808 (relating to competitive transition charge),
through the issuance of Transition Bonds; the costs of retiring existing
debt or equity capital of the electric utility or its holding company
parent, including accrued interest and premiums upon acquisition or
redemption of equity or debt, costs of defeasance, and other related fees,
costs and charges relating to, through the issuance of Transition Bonds or
the assignment, sale or other transfer of Intangible Transition Property;
and the costs incurred to issue, service or refinance the Transition Bonds,
including accrued interest and premiums upon acquisition or redemption of
equity or debt, and other related fees, costs and charges, or to assign,
sell or otherwise transfer Intangible Transition Property.

15. That this Commission directs that PP&L use the proceeds from the
assignment, sale, transfer or pledge of Intangible Transition Property and
the issuance and sale of Transition Bonds principally to reduce PP&L's
Transition or Stranded costs as set forth in the Settlement Petition and to
reduce related capitalization. The Commission authorizes PP&L to reduce
PP&L's existing capitalization through retirement of outstanding debt and
preferred stock and through stock buy backs, dividends and market purchases
of common stock in such proportions as PP&L determines.

16. That PP&L shall file with this Commission, no later than 120 days
after the issuance of refinancing of Transition Bonds, a description of the
final structure of each issuance or refinancing of such Transition Bonds,
including the principal amount, the price at which each such series and/or
class of Transition Bonds was sold, payment schedules, the interest rate
and other financing costs, and the final plans for PP&L's use of the
proceeds of such offering. Notwithstanding such filing, the final structure
of each such issuance of refinancing shall not be subject to change or
revision by this Commission after the date of such issuance or refinancing.

17. That, to the extent that PP&L, or any Assignee, assigns, sells,
transfers, or pledges any interest in the Intangible Transition Property
created hereby, this Commission authorizes PP&L to contract, for a
specified fee, with such Assignee for PP&L, its successors or assigns to
continue to operate the system to provide electric services to PP&L's
customers, to impose and collect the applicable Intangible Transition
Charges for the benefit and account of the Assignee, to make periodic
adjustment of Intangible Transition Charges contemplated under paragraph 11
of this Qualified Rate Order, and to account for and remit the applicable
Intangible Transition Charges to or for the account of the Assignee free of
any charge, deduction or surcharge of any kind (other than the specified
contractual fee referred to above). This Commission also authorizes PP&L to
contract with the Assignee and an alternative party, which may be a
trustee, that the alternative party will replace PP&L under its contract
with the Assignee and perform the obligations of PP&L contemplated in this
Qualified Rate Order. The obligations of PP&L (a) shall be binding upon
PP&L, its successors and assigns and (b) shall be required by this
Commission to be undertaken and performed by PP&L and any other entity
which provides transmission and distribution services to a person that was
a customer of PP&L located within PP&L's certificated territory on January
1, 1997, or that became a customer of electric services within such
territory after January 1, 1997, and is still located within such
territory, as a condition to providing service to such customer or
municipal entity providing such services in place of PP&L by PP&L or other
entity.

18. That this Commission hereby declares that paragraphs 5 through 21
this Qualified Rate Order shall be irrevocable for purposes of Section 2812
of the Public Utility Code, 66 Pa. C.S. ss.2812, and accordingly agrees
that it will not directly or indirectly, by any subsequent action, reduce,
postpone, impair or terminate this Qualified Rate Order or the Intangible
Transition Charges authorized to be imposed or collected under this
Qualified Rate Order. This Commission further declares that the right,
title and interest of PP&L and any Assignee in this Qualified Rate Order
and the Intangible Transition Charges, the rates and other charges
authorized hereby and all revenues, collections, claims, payments, money or
proceeds of or arising from the same constitutes Intangible Transition
Property. PP&L shall have the irrevocable right to issue Transition Bonds
in accordance with this Qualified Rate Order until December 31, 2009.

19. That PP&L may apply to the Commission for supplements to this
Qualified Rate Order, not inconsistent with the terms and provisions hereof
and the Settlement Petition, as PP&L deems necessary to enable the issuance
of Transition Bonds authorized hereunder.

20. That during some or all of the period during which the Intangible
Transition Charges and the CTCs approved by this Qualified Rate Order are
being collected, the generation component of PP&L's charges to customers
will be limited by the provisions of 66 Pa. C.S. ss.2804(4) (pertaining to
rate caps) and the provisions of the Joint Petition. For purposes of 66 Pa.
C.S. ss.2804(4)(ii), the generation component of PP&L's charges includes
CTCs, Intangible Transition Charges, and other generation charges. If the
combined total of these elements would cause the generation component of
PP&L's charges to exceed the rate cap specified in 66 Pa. C.S. ss.2804(4)
and the Joint Petition, PP&L shall retain whatever right it may have under
the existing provisions of the statute as limited by the Joint Petition to
request relief from the rate cap, but if it does not seek such relief, or
that relief is denied, PP&L shall adjust the non-securitized elements of
its generation charges, rather than the Intangible Transition Charges
approved by this Qualified Rate Order, to bring the charges into compliance
with the rate cap provisions of 66 Pa. C.S. ss.2804(4) and the Joint
Petition.

21. That all regulatory approvals within the jurisdiction of the
Commission that are necessary for the securitization of Qualified
Transition Expenses and all related transactions contemplated in PP&L's
Application for a Qualified Rate Order, including but not limited to any
approvals under Chapters 11 and 19 of the Public Utility Code, are hereby
granted.

22. That the tariff supplements appended to the Joint Petition and
all other appendices are hereby approved, being necessary to implement the
full settlement, and shall become effective pursuant to the terms set forth
in the Joint Petition and the Addendum.

23. That pursuant to 52 Pa. Code ss. 1.2(c), the Commission hereby
waives the requirements of its regulations at 52 Pa. Code as necessary and
appropriate to implement the joint petition and this final order.

24. That a copy of this final order shall be served upon all parties
to PP&L's restructuring proceeding at Docket No. R-00973954 and upon those
who provided comments to our Tentative Order.

BY THE COMMISSION

James J. McNulty
Secretary

(SEAL)

ORDER ADOPTED: August 27, 1998

ORDER ENTERED: August 27, 1998

EXHIBIT 99.1.2

SUPPLEMENTAL ORDER ISSUED ON MAY 21, 1999

PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA. 17105-3265

Public Meeting held May 21, 1999

Commissioners Present:

John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
David W. Rolka
Nora Mead Brownell
Aaron Wilson, Jr.

Petition of PP&L, Inc. for Issuance of a Supplemental
Qualified Rate Order Under Sections 2808 and 2812 of
the Public Utility Code.

Docket Number:
R-00994637

ORDER

BY THE COMMISSION:

On April 1, 1999, PP&L, Inc. (PP&L) filed the above-docketed
petition (Petition) for the issuance of a supplemental Qualified Rate Order
(QRO) under Sections 2808 and 2812 of the Public Utility Code. Pertinent
portions of the Petition are attached as Exhibit A. A copy of the Petition
was served upon the Office of Consumer Advocate, the Office of Small
Business Advocate, the Office of Trial Staff, and all active parties in
PP&L's restructuring proceeding at Docket No. R-00973954.

On August 27, 1998, we entered a Final Order at Docket No. R-
00973954 (Final Order), approving the settlement of PP&L's Restructuring
Proceeding under the Electricity Generation Customer Choice and Competition
Act of December 3, 1996 (Competition Act). As part of the Final Order, we
issued a QRO (Initial QRO) authorizing PP&L to issue, through December 31,
2009, Transition Bonds in an aggregate principal amount not to exceed $2.85
billion. The Final Order provided that PP&L may apply to the Commission
for supplements to the initial QRO, not inconsistent with the terms and
provisions approved in the Final Order, as PP&L deemed necessary to enable
the issuance of Transition Bonds.

Through the instant Petition, PP&L is seeking to supplement and
clarify certain provisions of the Initial QRO which relate primarily to the
computation, design, and reconciliation of Intangible Transition Charges
(ITCs) that are intended to provide for collection of amounts needed to pay
Qualified Transition Expenses (QTEs) incurred in connection with the
issuance of Transition Bonds. PP&L is also seeking Commission approval for
a financing structure for the Transition Bonds that it believes will be
adequate to achieve a AAA-rating, with reasonable credit enhancements.

On April 21, 1999, the Office of Consumer Advocate (OCA) filed an
answer to PP&L's Petition and the Mid-Atlantic Power Supply Association
(MAPSA) filed a Petition to Intervene in the proceeding. On April 22,
1999, the Commission on Economic Opportunity (CEO) filed comments to PP&L's
Petition and on April 3 0, 1999, PP&L Industrial Customer Alliance (PPLICA)
filed a Petition to Intervene in the proceeding. Also, several PP&L
customers wrote letters commenting on certain provisions of the Petition.

The OCA contends in its answer to the Petition, that PP&L's
proposal regarding reconciliation and adjustment may result in a double
count of both uncollectible and payment lags and submits that PP&L's
proposal to address the rate cap requires further clarification to ensure
consistency with the Settlement and the Act. The OCA also argues that
PP&L's request to service its bonds for a $2 million per year fee is
unsupported in the filing, and that certain aspects of PP&L's General
Account should be clarified to ensure that interest earned on this
ratepayer-funded account is used to the benefit of the ratepayer. The CEO
maintains that PP&L should receive a reasonable fee for servicing the
Transition Bonds only if PP&L commits to managing the assets of the
Sustainable Energy Fund at no additional cost. The specific issues of the
OCA and the CEO are incorporated in the discussion below.

On several occasions, PP&L, OCA, MAPSA, the CEO, and the PPLICA
met to discuss possible-settlement of this proceeding. As a result of
these discussions, the above-parties reached a settlement of all issues and
entered into a Settlement Agreement that was received by this Commission on
May 10, 1999 (Settlement Agreement) (See Exhibit B).

Proposed Transition Bonds

PP&L has designed a financing structure whereby PP&L's Intangible
Transition Property (ITP) is being transferred to a special purpose limited
liability company (SPC) established or acquired by PP&L. The SPC will then
issue the Transition Bonds in one or more series at different times in
response to market conditions and other business circumstances. The
proceeds for the Transition Bonds will be transferred to PP&L and will be
used by PP&L principally to reduce stranded costs and related
capitalization.

To meet the funding requirements imposed pursuant to the periodic
adjustment mechanism in Section 2812(b)(4) of the Competition Act which
ensures that the recovery of revenues is sufficient to provide for the
payments of principal, interest, acquisition, or redemption premiums and
for other fees, costs and charges in respect of the Transition Bonds, PP&L
is proposing to act as servicer of the bonds by billing and collecting the
ITCs for the account of the SPC. Because ITC collections will be the
property of the SPC, PP&L will receive these funds solely as agent for the
SPC. For each billing period, PP&L initially will remit payments of the
ITCs to the SPC on account, based on a collections curve which PP&L has
developed.

The collections curve, which is factored into PP&L's ITC rate
calculation, is based on PP&L's actual recent collection experience for
retail accounts and reflects the timing of the amounts PP&L would expect to
receive after bills are sent to customers. PP&L will subsequently
reconcile the initial payments to the SPC to the actual ITC collections it
has received from its customers. If the actual ITC collections are found
to be more than the payments on account, PP&L will pay the balance to a
bond trustee (Trustee) for the account of the SPC. If actual ITC
collections are found to be less than the payments on account, PP&L will
reduce its remittances by the amount of the shortfall or require the SPC to
pay back the excess remittances.

The SPC will establish a Collection Account, comprised of several
subaccounts, as a trust account to be held by the Trustee as collateral to
ensure the payment of principal and interest on the Transition Bonds and
other Reconciliation Funding Requirements (QTEs including amounts to
replenish the subaccounts) in full and on a timely basis. These
subaccounts will be funded by the ongoing process of the ITC and by a
capital contribution from PP&L. If the ITC remittances to the Trustee are
insufficient to make all scheduled payments of Reconciliation Funding
Requirements, these subaccounts will be drawn down to make up the
difference.

The Trustee will deposit the ITC remittances from PP&L into the
General Subaccount. Monies in this subaccount, including interest earned
from the monies being invested in interest bearing securities by the
Trustee, will be applied by the Trustee on a periodic basis to pay expenses
of the SPC, to pay principal and interest on the Transition Bonds, and to
meet the funding requirements of the other subaccounts. When the
Transition Bonds and related expenses have been paid in full, the balance
remaining in this subaccount, including interest earned, will be released
to the SPC, and PP&L's customers will receive a credit equal to that amount
through an adjustment to the Competitive Transition Charge (CTC) or through
a temporary reduction in distribution rates.

The Overcollateralization Subaccount will be established to serve
as collateral to ensure timely payment of principal and interest on the
Transition Bonds and other Reconciliation Funding Requirements. To the
extent it becomes necessary to draw on this subaccount to pay those amounts
due to a shortfall in the ITC remittances, it will be replenished through
future ITC remittances to its required level, not expected to exceed two
percent of the original principal amount of the Transition Bonds, through
the periodic reconciliation process. Monies in this subaccount will be
invested in interest bearing securities and will be used to pay principal
and interest on the Transition Bonds and other Reconciliation Funding
Requirements. When the Transition Bonds and related expenses have been
paid in full, the balance remaining in this subaccount, including interest
earned, will be released to the SPC and PP&L's customers will receive a
credit equal to that amount through an adjustment to the CTC or through a
temporary reduction in distribution rates.

The Capital Subaccount will be funded by a capital contribution
from PP&L expected to equal 0.5 percent of the original principal amount of
the bond issuance. This subaccount will also serve as collateral to ensure
timely payment of principal and interest on the Transition Bonds and other
Reconciliation Funding Requirements. To the extent it becomes necessary to
draw on this subaccount to pay those amounts due to a shortfall in the ITC
remittances, it will be replenished to its original level through future
ITC remittances determined in the periodic reconciliation process. The
monies in this subaccount will be invested in interest bearing securities,
and amounts equal to the interest earnings will be periodically released by
the Trustee to the SPC if not needed during the current period to pay
principal and interest on the bonds or to meet other obligations. Because
the Capital Subaccount will be funded by a PP&L capital contribution, any
balance remaining in this s5baccount, including any interest, will revert
back to PP&L when the Transition Bonds and related expenses have been paid
in full.

The Reserve Subaccount will hold any ITC remittances and interest
earnings on the Overcollateralization Subaccount and any earned interest on
the balance within the Reserve Subaccount in excess of the amounts needed
to pay current principal and interest requirements on the Transition Bonds
and to pay other Reconciliation Funding Requirements. The payments from
this subaccount include, but are not limited to, funding or replenishing
the Overcollateralization and Capital Subaccounts. Any balance in this
subaccount will be treated as an overcollection for reconciliation purposes
and be reflected as a credit for the periodic ITC adjustments. Like the
other subaccounts, monies in this subaccount will be invested in interest
bearing securities, and will be used to pay principal and interest on the
Transition Bonds and other Reconciliation Funding Requirements. When the
Transition Bonds and related expenses have been paid in full, the balance
remaining in this subaccount, including interest earned, will be released
to the SPC, and PP&L's customers will receive a credit equal to that amount
through an adjustment to the CTC or through a temporary reduction in
distribution rates.

As mentioned, if the ITC remittances to the Trustee are
insufficient to make all scheduled payments of Reconciliation Funding
Requirements, the Reserve Subaccount, the Overcollateralization Subaccount,
and the Capital Subaccount will be drawn down to make those payments.
These subaccounts will be drawn down without regard to the level of
contributions made by each customer class and each rate schedule. However,
the Overcollateralization and the Capital Subaccounts must be replenished
on a periodic basis through the reconciliation process and that process
will reflect draw-downs on a customer class basis as an undercollection.

Calculation and Flow-Through of Savings.

PP&L supplied supporting documentation with estimates that set
forth the method for the calculation of savings from the issuance of
Transition Bonds and the manner in which 75 percent of savings, as provided
for in the Final Order, will be flowed through to customers. Savings arise
from the difference between the weighted average interest rate on the
Transition Bonds, and the 10.86 percent weighted average return on the
unamortized CTC balances, which was authorized by the Commission in the
Final Order. If the market conditions seem favorable and if the Transition
Bonds have not yet been issued, PP&L may enter into one or more contracts
(hedges) to lock-in a particular interest rate and that effect also would
be reflected in the savings calculation.

PP&L proposed an annual servicing fee of $2 million per year for
servicing the Transition Bonds. The OCA contends that PP&L does not set
forth the basis for determining that fee or state whether the fee is
intended to cover PP&L's actual costs. The OCA states that this fee should
be rejected and that PP&L should only be allowed to recover incremental
costs which it incurs to service the bonds. The OCA further contends that
if PP&L were to profit from servicing the bonds, that profit would
represent a reduction in the securitization savings of the ratepayers.

The CEO submitted that PP&L should receive a reasonable servicing
fee, but only if PP&L committed to management of the assets of the
Sustainable Energy Fund, along with the Transition Bonds, at no additional
cost. In providing these management services, PP&L would increase the
public purpose benefits provided by the Sustainable Energy Fund by avoiding
the need to engage a third party fund manager. This is similar to the way
that PP&L proposes to increase customer securitization savings by avoiding
the need for engaging a third-party bond servicer. As part of the
Settlement Agreement, PP&L agreed to CEO's request and offered to manage
financial investment activity of the Sustainable Energy Fund at no cost to
the fund. Pursuant to the Settlement Agreement, the Board of Directors of
the Fund shall determine in its sole discretion, whether to accept PP&L's
offer.

The Settlement Agreement provides that the amount to be included
in the ITCs for the services to be charged by PP&L will be $1.25 million.
This provision is not intended to limit the actual Servicer Fee that PP&L
may charge the SPC. The actual calculations of net savings will reflect
actual costs of premiums, fees, credit enhancements, and other expenses
related to issuing the Transition Bonds. We are in agreement with the
Settlement Agreement in that it reserves the right for all parties to
review the actual amounts incurred for reasonableness, and that any
adjustment made by the Commission shall be reflected in the CTC
reconciliation process.

ITC Reconciliation and Adjustment

In the instant petition, PP&L states that since the issuance of
the Final Order, it has become apparent from meetings with underwriters and
rating agencies that in order to secure a AAA-rating for the Transition
Bonds, with reasonable credit entitlements it must implement more detailed
reconciliation procedures than were set forth in its initial QRO
application. PP&L has determined that the reconciliation process described
in this petition eliminates the need for the originally approved mechanisms
and requests that the Commission specifically find that PP&L can implement
its proposed reconciliation process in lieu of the other. PP&L claims that
if its proposed reconciliation procedures are not approved, it is likely
that its Transition Bonds will not attain a AAA-rating and that costly
additional credit enhancements will be required to attain a AAA-rating.
PP&L maintains that either result would significantly reduce the savings
that customers will realize from the issuance of the Transition Bond.

The QRO approved by the Commission on August 27, provided for two
tariff supplements relating to the ITC and its reconciliation. One tariff
supplement, the Net Securitization Adjustment (NSA), reflected a provision
for the recovery of all known and estimated Qualified Transition Expenses
(QTEs) consisting of transition or stranded costs, expenses associated with
the issuance and service of Transition Bonds, and related recapitalization
costs. The NSA was designed to periodically reconcile only the difference
between the revenue requirement necessary to amortize the QTE principal
balance and actual revenues, and to adjust the ITC rate accordingly. The
second tariff supplement, the Transition Bond Expense Adjustment (TBEA),
was a reconciliation mechanism to collect or refund the difference between
the estimated Transition Bond Expenses that have been incorporated into the
Transition Bonds being recovered through the ITC, and the actual bond
expenses.

The major Provisions reflected in the Petition for the
Supplemental QRO and subsequent-Settlement Agreement that were not included
in the original QRO are: the use of a single ITC reconciliation rider as
compared to two, with both the revenue and costs being reconciled through
the same mechanism; the reforecasting of sales during the reconciliation
process rather than using the sales forecast approved by the Commission in
the Settlement; reflecting projected uncollectible ITCs and payment lags in
the calculation of the ITC rates; grouping the various rate schedules into
three customer classes for reconciliation purposes; the establishment of
collateral accounts by the transferee of the Intangible Transition Property
funded by both PP&L and ITC revenues to ensure the payment of the QTEs on a
timely basis; and a provision for review and audit by the Commission.

Finally, the instant Petition and Settlement Agreement would
differ from the original QRO in its customer grouping of rate schedules for
reconciliation purposes. PP&L's tariff has approximately 23 rate schedules
and rate riders. In the instant petition, PP&L is proposing a
reconciliation of the ITC by customer class within-three principal customer
class groupings: (1) residential; (2) small commercial and industrial,
including street-lighting; and (3) large commercial and industrial. These
three broad customer class groupings are based upon the voltage level at
which service is taken by the various customers. Because some rate
schedules have only a few customers and a small delivery base, PP&L
believes that it is necessary to reconcile over/under collections by
customer class rather than by individual rate schedule in order to provide
a broad base of deliveries against which to reconcile, to prevent large
rate swings in the reconciliation process, and to reduce the risk of
failure to meet the Reconciliation Funding Requirements. PP&L states that
reconciliation by rate schedule would effectively preclude the issuance of
Transition Bonds for many rate schedules and would significantly increase
the cost of any Securitization which could be accomplished.

Although PP&L proposes to aggregate the over/under collection by
customer class, a separate ITC reconciliation credit/charge will be
calculated for each rate schedule based on the cost allocations approved in
the Final Order. Any over/under collection for a particular Customer Class
will be allocated to each individual Rate Schedule within that Customer
Class. Such allocation will be based upon the ratio of the cumulative ITC
over/under collection applicable to the Customer Class to the projected ITC
revenues for the Customer Class for the period during which the ITC
reconciliation factor will be applied. The resulting allocated over/under
collection will be reflected in the ITC rates for each Rate Schedule within
the customer class.

After all QTEs have been paid in full and the Capital Subaccount
has been fully replenished, any overcollection of ITC revenues, including
an amount equal to the balances remaining in the General Subaccount, the
Overcollateralization Subaccount and the Reserve Subaccount, will be
reflected in the reconciliation of the CTC for the calendar year in which
the Transition Bond principal and interest were paid in full or through a
temporary reduction in distribution rates.

PP&L is proposing to make annual reconciliation filings on
October 1 of each year during the bond period. The filings will include a
schedule of actual over/under collections for the nine months ended August
31, an estimate of over/under collections for the three months ending
November 30, and a recalculation of the ITCs based upon the most recent
forecasts of annual deliveries, uncollectibles, payment lags and other
expenses for the next calendar year. On December 15 of each year, PP&L
will file actual over/under collection data as of November 30, replacing
the estimated data submitted on October 1, along with a tariff supplement
reflecting the new ITCs and supporting data for the ITC rates to become
effective each January 1. The annual rate adjustment and reconciliation
will become effective for service rendered on and after January 1 and would
remain in effect for one year, except possibly during the final bond year.

During the final 12 months of the bond period, PP&L is proposing
to be permitted to make interim reconciliation filings as often as monthly
in order to minimize any possible over/under collection of the ITC for the
final reconciliation. These interim adjusted ITC rates, which may be
monthly or quarterly as determined by PP&L, would continue until the
earlier of the full payment of all QTEs or December 31, 2009, the last day
of the authorized bond period. Such interim reconciliation filings would
become effective on the first day of the next calendar month, with not less
than 15 days' notice.

As previously mentioned, the OCA submitted comments regarding
several items contained in the instant Petition. First, the OCA stated
that the Company's description of the General Subaccount does not mention
any credit for ratepayers related to the interest earned by that account
which is funded with ratepayer monies. The OCA requested a clarification
on the matter. We share the OCA's concern regarding the use of the
interest earned by the subaccounts. However, it should be noted that each
of these subaccounts provide that the primary use of an any interest earned
on the balances in the subaccounts is toward paying the principal and
interest on the Transition Bonds. Any remaining interest in the
Overcollateralization Subaccount and the Reserve Subaccount will be used
for making the payment on the principal and interest on the Transition
Bonds in a latter payment period. The Settlement Agreement provides that
interest earned on the General Subaccount will be treated in the same
fashion as interest on the Overcollateralization Subaccount.

Regarding the proposed time frame for annual filings, the OCA
does not oppose PP&L's proposed annual filing schedule. The OCA does
express a concern that it may be difficult to completely resolve all issues
in the 90-day time period, October 1 to January 1, particularly if other
utilities are on a similar schedule. We, however, believe that the
December 15 filing date of the updated actual twelve-month activity through
November 30 and the January 1 effective date is impractical for reviewing
the filing and submitting a report for a Commission public meeting prior to
January 1. We believe that a more practical process would be for PP&L to
submit monthly updates to its October 1 filing within 15 days following the
conclusion of each calendar month. Such monthly updates, along with the
availability of quarterly reports for review and audit as discussed below,
will allow staff sufficient time to perform a meaningful review of any
proposed ITC rate adjustment. Based upon staff review of the quarterly
filings, monthly updates, etc., a report would be prepared for the
Commission based upon a November 15 filing update that reflects 11 months
of actual data through October 31. Following the Commission's action on
the November 15 filing, a compliance filing would be made on December 15
reflecting an update of the Company's November actual data. Accordingly,
we direct PP&L to include the appropriate language in its ITC
Reconciliation Rider to provide for the monthly updates to its October 1
annual filing and to provide for the December 15 compliance filing.

As indicated previously, PP&L is proposing to reforecast its
annual sales during the reconciliation proceedings rather than utilize the
sales forecast contained in the Settlement approved by the Commission in
the Final Order. The Final Order approved an 11-year sales forecast with a
1.5 percent annual escalator beginning in 1999. Our understanding is that
PP&L and the bond underwriters believe that an 11-year forecast is too long
a period to use for the ITC without risking the potential for large
over/under collections and rate swings annually. In order to mitigate that
potential risk and to assure a AAA-rating on its bonds, PP&L has proposed
that it be permitted to use an annual reforecasting of its sales in its ITC
reconciliation process.

The OCA has commented that it does not oppose the reforecasting
of sales during the reconciliation proceeding, and agrees that this will
help eliminate large over/under collections. However, the OCA has stated
that caution must be utilized in the reforecasting process to assure that
the rate caps are not violated. The Settlement Agreement approves the use
of reforecasting provided that any reforecasting will comply with the rate
cap provisions of Section 2804(4) of the Competition Act. We believe this
is a sufficient guarantee that the rate cap will not be violated.

Another provision in the proposed ITC Reconciliation Rider not
provided for in that originally approved, is the provision for Commission
review and audit of the annual ITC reconciliation filings. The Rider
states that the review and audit must be concluded on a timely basis so as
to permit implementation of changes in the ITC rates by the January 1
annual effective date. Essentially, PP&L has proposed a 16-day time frame
from the date it submits its updated actual 12-month data on December 15,
until January 1, for the Commission staff to accomplish the audit. It is
our understanding that the Company is proposing that the audit be completed
prior to the implementation of the recalculated ITC rates to assure to
underwriters that scheduled recoveries will not be impacted by any
potential audit adjustments after the ITC rates have gone into effect.
Without such assurance, it is unlikely that its Transition Bonds will
attain a AAA-rating without costly additional credit enhancements.

As previously mentioned, we do not believe that the proposed
audit time frame is feasible, particularly if other ITC filings have the
same provision and filing period. The Settlement Agreement includes
amended language to the ITC Reconciliation Rider that provides for PP&L to
submit quarterly reports to the Commission within 30 days of the conclusion
of each calendar year quarter. We believe that such quarterly reports
would be the basis for the required audit and would provide adequate time
to perform the audit and still provide reasonable assurance of the
over/under collection reflected in the ITC rates to be implemented on
January 1.

PP&L stated at paragraph 12 of its Petition, that it will remit
payments of the ITCs to the SPC on account based on a collections curve
which it has developed and is based upon its actual recent collection
experience for retail accounts and also reflects the timing of the amounts
it would expect to receive after bills are sent to customers.
Additionally, PP&L stated that if the actual ITC funds collected from
ratepayers exceeded the payments made, (an overcollection from ratepayers)
PP&L would pay that balance to the Trustee; likewise, if the actual ITC
funds collected from ratepayers are less than the payments made, (an
undercollection from ratepayers) PP&L would either reduce its remittances
to the Trustee, or would require the SPC to refund those excess
remittances.

The OCA responded to this issue by stating that PP&L's proposed
procedure may result in a double counting of both uncollectibles and
payment lags. It is the OCA's position that uncollectibles associated with
the full amount of PP&L's revenues, including its CTC/ITC revenues, were
assigned to the Transmission and Distribution (T&D) rates in the unbundling
process in PP&L's restructuring proceeding at Docket No. R-00973954.
Accordingly, the OCA contended that PP&L should not be allowed to reduce
the amounts paid to the SPC by an uncollectibles factor, and then seek to
recover them in the reconciliation, since ratepayers are fully compensating
PP&L for those uncollectibles through the T&D rates. The OCA also noted
that, under the Commission's payment ordering rules and PP&L's tariff
implementing these rules, the CTC/ITC is the first item to be paid, other
that a pre-retail access arrearage.

In addition, the OCA stated that PP&L's existing rates were also
set to include the lag in billing and collecting of revenues through an
allowance for cash working capital. The OCA believes that since the
revenue billing lag is subsumed within PP&L's rates it is inappropriate for
PP&L to delay or reduce payment of the ITC's into the SPC. According to
the OCA, if that practice is allowed, it would reduce the monies available
in the various funds and will reduce the corresponding interest that could
be earned by these funds.

At paragraph B.6 of the Joint Petition for Full Settlement (Joint
Petition) filed August 12, 1998, the parties agreed that the T&D rate cap
of 1.74 cents per KWH includes 1.73 cents per KWH for all existing costs
and services and .01 cents per KWH for the sustainable energy fund during
the T&D rate cap period. Additionally, that no new fees shall be proposed
or charged during the T&D rate cap period for a cost of service that is
included in the bundled T&D rate.

In our Final Order, we stated that PP&L's procedures for applying
partial payments shall comply with the guideline relating to partial
payments found in the Final Order Re: guidelines for Maintaining Customer
Services at the Same Level of quality Pursuant to 66 Pa. C.S.
section2807(d), and Assuring Conformance with 52 Pa. Code Chapter 56
Pursuant to 66 Pa. C.S. section2809(e) and (f), Docket No. M00960890F0011
(July 10, 1997) (Appendix B, Guideline H).

Guideline H states:

In regard to application of partial payments, the restructuring plans
should direct how payments which are insufficient to cover all charges
should be applied. For a customer who has a pre-retail access
balance, the payment should be applied by the EDC as follows: (1)
outstanding pre-retail access balance or the installment amount for a
payment agreement on this balance; (2) intangible transition charge
(ITC) and competitive transition charge (CTC); (3) EDC transmission
and distribution charges (T&D); (4) supply charges, and (5) non-basic
service charges. If the customer's account develops a post-retail
access balance, partial payments should be applied to the pre-retail
access balance, according to the terms of the pre-retail access
payment agreement, before being applied to any other outstanding post-
retail access charges. For a customer with no pre-retail access
balance but with a post-retail access balance, partial payments should
be applied as follows: (1) balance due for prior ITC, CTC and T&D
service; (2) ITC and CTC; (3) T&D; (4) balance due for prior supply
charges; (5) supply charges, and (6) non-basic service charges.

The Petition included, at paragraph 29, a proposal to include a
provision for uncollectible accounts and payment lags in calculating
monthly ITC remittances. The Settlement at paragraph 3 resolves this issue
as follows: PP&L agrees to credit CTCs as part of the annual reconciliation
of CTCs, in an amount equal to any uncollectible accounts expense included
in ITCs. This refinement to the Petition will avoid any double collection
of uncollectible accounts expense. The Settlement however, is silent on
the OCA issue of payment lags, which was presented by the OCA as a portion
of their uncollectibles issue. While the payment lag of revenue receipts
is separate from the calculation of an uncollectible accounts expense
allowance it is subsumed within the uncollectibles allowance. Therefore,
we believe the Settlement is comprehensive and acceptable regarding these
issues.

Conclusion

The issuance of Transition Bonds is another step on the path to a
more competitive electric industry in the Commonwealth of Pennsylvania. We
note with approval that the various parties were able to resolve their
differences in a timely and efficient manner.

Upon full consideration of the instant Petition and the proposed
settlement and appendices, we find that their approval is in the public
interest;

THEREFORE,

IT IS ORDERED:

1. That the Petition of PP&L, Inc. for issuance of a
Supplemental Qualified Rate Order under Sections 2808 and 2812 of the
Public Utility Code as modified by the Settlement Agreement among the
parties, is hereby granted.

2. That this Commission hereby declares that the Supplemental
Qualified Rate Order issued on behalf of PP&L Inc. (PP&L) shall be
irrevocable for purposes of Section 2812 of the Public Utility Code.
Furthermore, this Commission agrees that it will not directly or
indirectly, by any subsequent action, reduce, postpone, impair or terminate
this Supplemental QRO or the Intangible Transition Charges (ITCs)
authorized to be imposed or collected under this Supplemental QRO or the
initial QRO (Initial QRO) issued as part of the Commission's Final Order
entered on August 27, 1998, at Docket No. R-00973954 (Final Order). This
Commission further declares that Intangible Transition Property (ITP)
includes the right, title, and interest of PP&L and any Assignee in this
Supplemental QRO, the Initial QRO, the ITCs, the rates and other charges
authorized hereby and all revenues, collections, claims, payments, moneys
or proceeds of or arising from the same. PP&L and its Assignee shall have
the right to issue or cause to be issued transition Bonds in accordance
with this Supplemental QRO and the Initial QRO, as clarified, supplemented,
and further delineated hereby until December 31, 2009.

3. That the Petitions to Intervene filed by the Mid-Atlantic
Power Supply Association and PP&L Industrial Customer Alliance be hereby
granted.

4. That the clarifications, supplements and further delineations
contained herein are designed primarily to enhance the prospects that the
Transition Bonds will be assigned a AAA-rating, with reasonable credit
enhancements, and, thereby, maximize savings for the mutual benefit of PP&L
and its customers.

5. That the transactions explained and proposed in Section B,
Paragraphs 10 through 14 of the Petition, as modified by the Settlement
Agreement among the parties, are hereby approved, and the results of the
proposed transactions shall be reflected in calculations of PP&L's ITCs and
in reconciliation adjustments to PP&L's ITCs in the manner and to the
extent explained therein.

6. That savings derived from the issuance of Transition Bonds to
finance a substantial portion of PP&L's stranded costs shall be calculated
in the manner described in Section C, Paragraphs 15 through 18, and in
Appendix A of the Petition, as modified by the Settlement Agreement among
the parties.

7. That 75 percent of the savings derived from the issuance of
Transition Bonds to finance a substantial portion of PP&L's stranded costs,
which constitutes the percentage to be flowed through to customers pursuant
to the Final Order, shall be calculated in the manner described in Section
C, Paragraphs 15 through 18, and in Appendix A of the Petition, as modified
by the Settlement Agreement among the parties.

8. That PP&L shall design ITCs and CTCs associated with the
issuance of Transition Bonds using the methodology explained in Section D,
Paragraphs 19 through 24, and in Appendix B of the Petition, as modified by
the Settlement Agreement among the parties.

9. That the reconciliation procedures set forth in Section E,
Paragraphs 25 through 37, and in Appendix C of the Petition, as modified by
the Settlement Agreement among the parties and by this Order, are approved,
and PP&L and any successor Servicer of the ITP shall follow these
procedures in its periodic reconciliation filings to adjust the ITCs.
These procedures shall be followed by PP&L in lieu of the less specific
"Transition Bond Expense Adjustment" and "Net Securitization Adjustment"
reconciliation procedures set forth in PP&L Inc.'s Restructuring Plan and
Related Court Proceedings" that was filed with the Commission on August 12,
1998.

10. That PP&L and any successor Servicer of the ITP is hereby
authorized to file a tariff supplement which contains the reconciliation
language set forth in Appendix C to the Petition, as modified by the
Settlement Agreement among the parties, and includes the applicable ITCs
and reduced CTCs, calculated on the basis of the methodology explained in
Section D, Paragraphs 19 through 24, and in Appendix A and Appendix B to
the Petition, as modified by the Settlement Agreement among the parties, to
become effective upon three days' notice based upon actual data to the
extent that actual data are available. PP&L and any successor Servicer of
the ITP shall reconcile any differences between estimated data used to
calculate ITCs and CTCs set forth in the tariff supplement to be filed
pursuant to the authority granted by this Ordering Paragraph in the first
annual CTC reconciliation filed after such actual data become available.

11. That PP&L shall apply ITCs in the manner described in
Section F, Paragraphs 38 through 41 of the Petition, as modified by the
Settlement Agreement among the parties. If not terminated on an earlier
date, ITCs may be charged for service rendered through December 31, 2009.

12. That a certificate of public convenience is hereby issued to
PP&L authorizing it to establish or acquire a special purpose company, as a
direct subsidiary of PP&L, to serve as the issuer of the Transition Bonds
("Issuer").

13. That PP&L is authorized to (a) assign, sell, transfer, or
pledge Intangible Transition Property (such term includes all right, title,
and interest of PP&L or any Assignee in the Supplemental Qualified Rate
Order and in all revenues, collections, claims, payments, money, or
proceeds arising from Intangible Transition Charges pursuant to this
Supplemental Qualified Rate Order to the extent this Supplemental Qualified
Rate Order and the rates and other charges authorized hereunder are
declared irrevocable) in an amount sufficient to recover all of its
Qualified Transition Expenses and (b) issue, sell, and refinance, in
reliance on this Supplemental Qualified Rate Order, one or more series of
Transition Bonds, each series in one or more classes, secured by the
Intangible Transition Property created by this Supplemental Qualified Rate
Order; provided that the final maturity of any services of Transition Bonds
shall not exceed ten years from the date of issuance and in no event shall
any Transition Bonds have a final maturity after December 31, 2009.
Notwithstanding the foregoing, PP&L retains sole discretion regarding
whether to assign, sell, or otherwise transfer Intangible Transition
Property created hereby or to issue or cause the Transition Bonds to be
issued or refinanced.

14. That, with this Supplemental QRO and the approvals granted
herein and heretofore in the Final Order, including the Initial QRO
contained therein, PP&L has obtained all regulatory approvals required from
this Commission for the issuance of Transition Bonds and all of the
transactions explained in the Petition and in the Application for a QRO
presented as Appendix E to the "Joint Petition for Full Settlement of PP&L,
Inc.'s Restructuring Plan and Related Court Proceedings" that was filed
with the Commission on August 12, 1998.

15. That a copy of this Order shall be served on all parties of
record and all active parties in PP&L's restructuring proceeding at Docket
No. R-00973954.

BY THE COMMISSION,

James J. McNulty
Secretary

(SEAL)

ORDER ADOPTED: May 21,1999

ORDER ENTERED: MAY 21 1999

Exhibit A

credit enhancements. After the Commission acts on the Petition, PP&L will
review the approved structure with the rating agencies and request that the
Transition Bonds receive a AAA-rating. However, it is possible that
structural changes or additional credit enhancements will be required to
achieve this rating.

9. Savings arise from the difference between the return allowed
by the Commission on unamortized Competitive Transition Charge ("CTC")
balances and the return -- i.e., weighted average interest rate -- on the
Transition Bonds. The August 27 Order (p. 11) and Joint Petition (p. 10,
Appendix A) authorize PP&L to recover a 10.86 percent weighted average
return on unamortized CTC balances. Presently, the weighted average
interest rate applicable to AAA-rated asset-backed securities of varying
maturities (up to a maximum of 10 years) is approximately 6.0-6.5
percent.(1)
The difference between the weighted average interest rate
the
Transition Bonds and the 10.86 percent weighted average return on PP&
unamortized CTC balances (net of all applicable premiums, fees, results of
hedges, expenses, and credit enhancements) creates the savings from the
issuance of Transition Bonds.
--------------------
(1) PP&L may enter into one or more contracts to lock-in a
particular interest rate if the market conditions at
that time seem favorable and if the Transition Bonds
have not yet been issued. Such contracts are commonly
referred to as "hedges." If PP&L enters into such
contracts, their effects will be reflected in the
calculation of the savings from the issuance of
Transition Bonds.

B. PROPOSED TRANSITION BONDS

10. PP&L has arranged for the formation of a special purpose
company ("SPC" or the "Issuer") to issue the Transition Bonds. The SPC is
a Delaware limited liability company. Initially, the SPC has been
established as a subsidiary of CEP Group, Inc. ("CEP"), which is a wholly
owned subsidiary of PP&L. If the PUC approves this Petition, CEP will
distribute its membership interest in the SPC to PP&L, and the SPC will
become a wholly owned subsidiary of PP&L.

11. PP&L currently anticipates that it will initially transfer
the Intangible Transition Property ("ITP") created by the QRO to CEP
Securities Co. LLC ("Securities Co."), a Delaware limited liability company
and a wholly owned indirect subsidiary of PP&L, which in turn will transfer
the ITP to the SPC.(2) The SPC will issue one or more than one series of
Transition Bonds at different times in response to market conditions and
other business circumstances. Transition Bond proceeds will be transferred
to PP&L and those proceeds will be used principally to reduce stranded
costs and related capitalization.
--------------------
(2) This structure may be necessary to retain the
flexibility to issue Transition Bonds at different
times and in more than one series.

12. PP&L, as Servicer for the SPC, will bill and collect the
ITCs for the account of the SPC to meet the funding requirements imposed
pursuant to the periodic adjustment mechanism in Section 2812(b)(4) of the
Competition Act in order to "ensure the recovery of revenues sufficient to
provide for the payment of principal, interest, acquisition or redemption
premiums and for other fees, costs and charges in respect of the Transition
Bonds approved by the Commission [in the QRO]" (the "Reconciliation Funding
Requirements"). See paragraph 33 of this Petition. Because ITC
collections will be the property of the SPC, PP&L will receive these funds
solely as agent for the SPC. PP&L will remit payments of the ITCs to the
SPC on account based on a collections curve which PP&L has developed. This
collections curve is based on PP&Ls actual recent collection experience for
retail accounts and reflects the timing of the amounts PP&L would expect to
receive after bills are sent to customers. If the actual ITC collections
are found to be more than the payments on account, PP&L will pay the
balance to the Trustee for the account of the SPC. If the actual ITC
collections are found to be less than the payments on account, PP&L will
reduce its remittances by the amount of the shortfall or require the SPC to
pay back the excess remittances.

13. The SPC will establish a Collection Account as a trust
account to be held by a bond trustee ("Trustee") as collateral to ensure
the payment of principal and interest on the Transition Bonds and other
Reconciliation Funding Requirements in full and on a timely basis. The
Collection Account will include at least the following subaccounts:

a. The General Subaccount. This is the subaccount into
which the Trustee will deposit the ITC remittances which PP&L, as
Servicer, remits to the Trustee for the account of the SPC. Moneys in
this subaccount will be applied by the Trustee on a periodic basis to
pay expenses of the SPC, to pay principal and interest on the
Transition Bonds and to meet the funding requirements of the other
subaccounts. The moneys in this subaccount will be invested by the
Trustee in interest bearing securities, and amounts equal to the
interest earnings will be periodically released by the Trustee to the
SPC, if not needed during the current period to pay principal and
interest on the Transition Bonds or to meet other obligations. When
the Transition Bonds and related expenses have been paid in full, the
balance remaining in this subaccount will be released to the SPC.
PP&L's customers will receive a credit equal to that amount (plus any
additional ITC collections received after the Transition Bonds have
been paid) through an adjustment to the CT(f or through a temporary
reduction in distribution rates.(3)
------------------------------
(3) The assets of the General Subaccount, the
Overcollateralization Subaccount and the Reserve
Subaccount cannot be returned directly to customers. To
establish such an obligation of the SPC or of PP&L
would subject the transaction to the risk that it would
be recharacterized and that the ITP would be subject to
claims of PP&L's creditors in a bankruptcy case. Such a
risk could preclude a AAA-rating for the Transition
Bonds.

b. The Overcollateralization Subaccount. This subaccount
will be funded over the life of the Transition Bonds from ITC
remittances. The amount and timing of the actual funding Will depend
on the requirements of the rating agencies, but is not expected to
exceed two percent of the original principal amount of the Transition
Bonds. This subaccount will serve as collateral to ensure timely
payment of principal and interest on the Transition Bonds and other
Reconciliation Funding Requirements. To the extent it becomes
necessary to draw on the Overcollateralization Subaccount to pay these
amounts due to a shortfall in the ITC remittances, it will be
replenished through future ITC, remittances to its required level
through the periodic reconciliation process. The moneys in this
subaccount will be invested by the Trustee in interest bearing
securities, and will be used by the Trustee to pay principal and
interest on the Transition Bonds and other Reconciliation Funding
Requirements. When the Transition Bonds and related expenses have
been paid in full, the balance remaining in this subaccount will be
released to the SPC. PP&L's customers will receive a credit equal to
that amount through an adjustment to the CTC or through a temporary
reduction in distribution rates.

c. The Capital Subaccount. This subaccount will be funded
by a capital contribution by PP&L when a series of Transition Bonds is
issued in an amount expected to equal 0.5 percent of the original
principal amount of that series of Transition Bonds, although the
actual amount will depend on the requirements of the rating agencies.
This subaccount will serve as collateral to ensure timely payment of
principal and interest on the Transition Bonds and other
Reconciliation Funding Requirements. To the extent it becomes
necessary to draw on the Capital Subaccount to pay those amounts due
to a shortfall in the ITC remittances, it will be replenished to its
original level through future ITC remittances set in the periodic
reconciliation process. The moneys in this subaccount will be
invested by the Trustee in interest bearing securities, and amounts
equal to the interest earnings will be periodically released by the
Trustee to the SPC, if not needed during the current period to pay
principal and interest on the Transition Bonds or to meet other
obligations. When the Transition Bonds and related expenses have been
paid in full. The moneys remaining in this subaccount will be
released to the SPC. Because the Capital Subaccount, will be funded
by a PP&L capital contribution, PP&L's customers will not receive a
credit associated with any balance remaining in this subaccount when
the Transition Bonds and related expenses have been paid in full.

d. The Reserve Subaccount. This subaccount will hold any
ITC remittances and interest earnings on the Overcollateralization
Subaccount and the Reserve Subaccount in excess of the amounts needed
to pay current principal and interest requirements on the Transition
Bonds and to pay other Reconciliation Funding Requirements (including,
but not limited to, funding or replenishing the Overcollateralization
and Capital Subaccounts). Any balance in this subaccount will be
treated as a credit for purposes of the periodic ITC adjustments. The
moneys allocated to this subaccount will be invested by the Trustee in
interest bearing securities, and the interest earnings generally will
be used by the Trustee to pay principal and interest on the Transition
Bonds and other Reconciliation Funding Requirements.(4) When the
Transition Bonds and related expenses have been paid in full, the
balance remaining in this subaccount will be released to the SPC.
PP&L's customers will receive a credit equal to that amount through an
adjustment to the CTC or through a temporary reduction in distribution
rates.
-------------------------
(4) Periodic ITC revenue shortfalls will not be recorded in
the Reserve Subaccount. Instead, such shortfalls will
be debited against the Overcollateralization Subaccount
or the Capital Subaccount.

14. The Collection Account and the subaccounts described above
are intended to provide for full and timely payment of scheduled principal
and interest on the Transition Bonds and other Reconciliation Funding
Requirements. If ITC remittances to the Trustee exceed the sum of all
Reconciliation Funding Requirements, the excess will be deposited in the
Reserve Subaccount. If ITC remittances to the Trustee are insufficient to
make all scheduled payments of Reconciliation Funding Requirements, the
Reserve Subaccount, the Overcollateralization Subaccount and the Capital
Subaccount will be drawn down to make those payments. These subaccounts
will be drawn down without regard to the level of contributions made by
each customer class and each rate schedule. However, the
Overcollateralization and the Capital Subaccounts must be replenished on a
periodic basis through the reconciliation process and that process will
reflect draw-downs on a customer class basis.

C. CALCULATION AND FLOW-THROUGH OF SAVINGS TO CUSTOMERS

15. As discussed above, the August 27 Order provides that 75
percent of the actual savings (net of all applicable premiums, fees,
results of hedges, expenses, and credit enhancements) are to be flowed
through to customers. Appendix A to this Petition sets forth the method by
which savings from the issuance of Transition Bonds will be calculated and
the manner in which 75 percent of such savings will be flowed through to
customers. In summary, as explained above, the savings from the issuance
of Transition Bonds result from the difference between the weighted average
interest rate on the Transition Bonds and the 10.86 percent weighted
average return on unamortized CTC balances authorized by the Commission in
the August 27 Order (net of all applicable premiums, fees, results of
hedges, expenses, and credit enhancements). The calculations to adjust the
CTC to flow-through 75 percent of the net savings are explained in detail
below, and an example is shown in Appendix A hereto.(5) The example shown
in
Appendix A, which is based on the best information currently available
PP&L, produces average annual rate reductions of approximately 1 percent
throughout the transition period. Moreover, that example shows additional
savings to customers at the end of the Transition Period based upon the
credit by PP&L of an amount equal to the anticipated balance in the
Overcollateralization Subaccount.
---------------------
(5) The flow-through of 75 percent of the net savings to
customers must be accomplished through adjustments to
the CTC. Savings cannot be reflected in the ITCs
because the ITP will have been sold to the SPC and
because the total amount of ITC remittances to the
Trustee must equal the revenue requirement necessary to
meet all scheduled payments of principal and interest
on the Transition Bonds and all other Reconciliation
Funding Requirements.

16. Appendix A shows the calculation and flow-through of net
savings based upon a hypothetical $2.5 billion series of Transition Bonds
issued on July 1, 1999, at a weighted average interest rate of 6.25 percent
(the mid-point of the current interest rate range cited above for AAA-rated
asset-backed securities). Page 1 of Appendix A shows stranded cost
recovery and CTC rate levels approved in the August 27 Order, prior to the
issuance of Transition Bonds. Pages 2 and split the Commission-approved
$2.97 billion stranded cost recovery into two parts -- the $2.3 billion to
be recovered through the net proceeds from the issuance of Transition Bonds
(page 2)(6) and the remainder ($643 million) which would continue to be
recovered through the CTC (page 3).(7) Page 4 sets forth the ITC
remittances
that would be needed to provide for recovery of schedu
principal,
interest and other Reconciliation Funding Requirements on $
billion of
Transition Bonds at a hypothetical weighted average inter
rate of 6.25
percent. Page 5 shows total savings from the issuance
Transition Bonds,
which is the difference between page 1 (CTC reve
requirement prior to

the issuance of Transition Bonds) and the
4 (revenue
requirement for the S2.5 billion in Transition Bonds) and p
33 (the CTC
for stranded costs not recovered through the net proceeds f
the
Transition Bonds). Thus, the estimated total savings on a hypotheti
$2.5 billion issuance of Transition Bonds at a 6.23 percent interest rate
would be approximately $348 million. Finally, page 5 shows a calculation
of the 75 percent of the net savings to be returned to customers.
--------------------------
(6) The $2.3 billion shown on Appendix A, page 2, is the
net amount remaining after one time premiums and fees
(See, Appendix A, page 6) are deducted from the $2,5
billion.

(7) PP&L intends to issue the maximum practical amount of
Transition Bonds in order to optimize savings,
consistent with obtaining a AAA-rating for the
Transition Bonds.

17. Page 6 of Appendix A sets forth the method that PP&L will
use to reflect premiums, fees, credit enhancements, results of hedges and
other expenses in the calculation of net savings from the issuance of
Transition Bonds. One-time premiums and fees, shown at the top of that
page, must be paid up-front from the proceeds of the Transition Bonds.
Annual fees, shown in the middle of the page, are paid monthly over the
lives of the Transition Bonds. The data shown on this page are the best
estimates available to PP&L at the time it filed this Petition, and will be
adjusted in the compliance tariff supplement to reflect PP&L's actual
experience.

18. Three items on page 6 of Appendix A warrant additional
discussion. First, the Servicer fee of $2 million per year assumes that
PP&L will be the Servicer; if another entity becomes the Servicer, that fee
may increase significantly. Second, the $350,000 per year shown for credit
enhancement reflects PP&L's best estimate of those costs. However, PP&L
may be required to incur additional credit enhancement costs to achieve a
AAA-rating for the Transition Bonds. Third, amortization of the results of
hedges are shown as $0. Depending on changes in bond market conditions at
the time the Transition Bonds are priced, hedges could increase or decrease
net savings. Accordingly, the results of hedges cannot be quantified
accurately at this time. Appendix A reflects the best information
currently available to PP&L; the actual results of issuing the Transition
Bonds will be reflected in the calculation of net savings used to compute
the ITCs and CTCs set forth in the compliance tariff supplement.

D. CTC AND ITC RATE DESIGN

19. As explained above, savings from the issuance of Transition
Bonds generally will be reflected through CTC rate reductions. In
calculating these reductions, PP&L first will determine the total CTC
reduction in accordance with the methodology set forth in Appendix A. That
overall CTC reduction will be allocated among PP&L's retail rate schedules
utilizing the same methodology employed to allocate generation-related
stranded costs under the August 27 Order.

20. The ITCs will be determined and adjusted periodically in
much the same manner. Initially, PP&L will determine the amount to be
collected on a monthly basis over the life of the Transition Bonds to pay
scheduled principal and interest on the Transition Bonds and all other
Reconciliation Funding Requirements. This total amount will be allocated
among the individual rate schedules, utilizing the same methodology used
for CTC allocation. This symmetry in the application of the CTC decreases
and the ITC adjustments will assure that all customers receive the
appropriate level of benefits from the issuance of Transition Bonds.

21. Appendix B to this Petition is a schedule showing 1999
proforma ITCs and associated CTCs for the initial application period based
on a hypothetical $2.5 billion Transition Bond issuance in one series on
July 1, 1999, at a 6.25 percent weighted average interest rate, with a ten-
year final stated maturity, plus approximately $173 million in one-time
premiums, fees and other expenses. The ITC and CTC calculations will be
updated and modified at least annually thereafter using the procedures
explained herein. A new tariff supplement will be filed with each
modification of the ITCs and CTCs.

22. Of necessity, the CTC reductions and ITCs shown in Appendix
B are based upon a number of estimates. Data from the actual Transition
Bond issuance will vary from these estimates, and, therefore, the actual
CTC reductions and ITCs will differ from those shown in Appendix B. The
estimates used to produce Appendix B include, among other items: the
principal amount of the Transition Bonds, servicing fees,(8) the number of
series and classes of the Transition Bonds issued, the dates of issuance,
the maturity dates, terms and scheduled principal amortizations of the
Transition Bonds, the expenses of issuing the Transition Bonds, market
interest rates on AAA-rated Transition Bonds, and customer usage of
electricity.
----------------------
(8) Appendix B contains a reasonable estimate for servicing
fees assuming that the servicing is performed by PP&L
or a corporate successor that also would be the
electric distribution company ("EDC") serving PP&L's
service territory. PP&L or a corporate successor can
perform the servicing function efficiently because it
would have a presence in the territory and facilities
and systems for meter reading, billing, etc. If,
however, PP&L or its corporate successor were not
available to perform the servicing function, and if it
became necessary to utilize a third party which was not
an EDC to perform the servicing function, it is
anticipated that the servicing fees would be
substantially greater than the estimated amount
utilized in Appendix A and Appendix B, and the CTCs
would have to be adjusted to reflect that additional
expense.

23. As explained above, the SPC may issue more than one class
and more than one series of Transition Bonds. Further, the various classes
and series may have more than one scheduled principal maturity date. It is
PP&L's intent at this time that all series will have common payment dates
for administrative convenience. Further, common payment dates will
facilitate periodic adjustments to the ITCs.

24. To coordinate the imposition of ITCs with the issuance dates
of the Transition Bonds, the ITCs (and reduced CTCs) must be approved and
in place on the issuance date. In order for PP&L to begin charging the
ITCs and reduced CTCs in a timely manner, PP&L requests that the Commission
approve the methodology to produce the CTC reductions and ITCs shown in
Appendix B. PP&L further requests that the Commission authorize PP&L to
implement a tariff supplement upon three days' notice based upon the
material provided in Appendix A and Appendix B and the remainder of this
Petition without further review by the Commission before the tariff
supplement becomes effective.(9) Such authority is necessary to enable
PP&L
to implement the ITCs and begin passing through savings to custom
immediately upon issuance of the Transition Bonds.
------------------------
(9) Subject to market conditions and other factors, PP&L
plans to price the Transition Bonds in late June or
early July. Based on that pricing information, PP&L
will submit a tariff supplement containing ITC and CTC
rates which reflect actual Transition Bond data.
Shortly thereafter, the Transition Bonds will be
issued.

E. ITC RECONCILIATION AND ADJUSTMENT

25. In meetings with underwriters and rating agencies, it has
become apparent that, in order to secure a AAA-rating for the Transition
Bonds, with reasonable credit enhancements, PP&L must implement more
detailed reconciliation procedures than were set forth in its initial QRO
Application.(10) If the reconciliation procedures explained below are not
approved, it is likely either that PP&L's Transition Bonds will not attain
a AAA-rating or that costly additional credit enhancements will be required
to attain a AAA-rating. Either result would significantly reduce the
savings that customers will realize from the issuance of the Transition
Bonds. The supplemental reconciliation procedures requested by PP&L are
set forth fully in Appendix C (Proposed ITC Reconciliation Rider).(11) The
major features of these reconciliation procedures are summarized below.
--------------------------
(10) Although not referenced in the August 27 Order, PP&L's
Application for a QRO included a proposed "Transition
Bond Expense Adjustment" and a proposed "Net
Securitization Adjustment." PP&L has determined that
the reconciliation process described in this Petition
eliminates the need for these other adjustments and
requests, that the Commission specifically find that
PP&L can implement its proposed reconciliation process
in lieu of these other proposed mechanisms.

(11) In this Petition, PP&L is not proposing to make any
changes to the CTC reconciliation rider approved by the
Commission in its August 27 Order. However, PP&L is
willing to consider changes to the CTC reconciliation
rider to coordinate adjustments of the CTC with
adjustments of the ITC proposed herein.

26. Reconciliation By Customer Class. From a cost allocation
perspective, PP&L has three principal customer classes -- (1) residential;
(2) small commercial and industrial, including street-lighting; and (3)
large commercial and industrial.(12) For tariff purposes, however, PP&L's
tariff contains approximately 23 rate schedules and rate riders. Several
of these rate schedules have only a few customers and/or a relatively small
delivery base.(13) To provide a broad base of deliveries against which to
reconcile, to prevent large rate swings in the reconciliation process, and
to reduce the risk of a failure to meet the Reconciliation Funding
Requirements, it is necessary to reconcile over/under collections by
customer class rather than by individual rate schedule. Reconciliation by
rate schedule would effectively preclude the issuance of Transition Bonds
for many rate schedules and would significantly increase the cost of any
securitization which could be accomplished.
--------------------
(12) These three broad customer classes are based on the
voltage level at which service is taken -- (1)
secondary - residential, (2) secondary-nonresidential,
and (3) primary/ transmission. Secondary-residential is
comprised of residential customers; secondary
nonresidential is comprised of smaller commercial and
industrial, and street lighting customers; and
primary/transmission is comprised of larger commercial
and industrial customers.

(13) For example, only one customer is served under Rate
Schedule LPEP (Power Service to Electric Propulsion),
and only one customer is served under Rate Rider ISA
(Interruptible Service by Agreement). Further, PP&L
delivers only a small amount of electricity under Rate
Schedule RTD (Residential Time of Day) and Rate
Schedule SM (Mercury Vapor Street Lighting).

27. Although PP&L proposes to aggregate the over/under
collection by customer class, a separate ITC reconciliation credit/charge
will be calculated for each rate schedule based on the cost allocations
approved in the August 27 Order. Specifically, PP&L will first calculate
over/under collections for each rate schedule. These individual over/under
collections for each rate schedule then will be combined to produce a total
over/under collection for each of the three customer classes described
above. Then, for each customer class, a ratio will be calculated. The
numerator of the ratio will be the cumulative over/under collection
applicable to the particular customer class. The denominator will be the
projected ITC revenues for the applicable customer class for the period
during which the reconciliation factor will be applied. The resulting
ratio will be applied to the projected ITC revenues for each rate schedule
in that customer class for the period during which the ITC reconciliation
adjustment factor will be applied to produce the appropriate adjustment.

28. Deliveries Forecast. Another important variable in the
reconciliation process is the projection of deliveries used to develop the
ITCs.(14) The rating agencies are particularly sensitive to this issue
given the potential for large variations from forecasted deliveries over
ten-year period. In order to assure adequate ITC revenues to cover al
Reconciliation Funding Requirements and to avoid large undercollections
over time, it is important that PP&L be permitted to reforecast deliveries
as part of the reconciliation process. To address this issue, PP&L
proposes to include in each annual reconciliation a recalculation of its
ITC rates using its most recent corporate forecast of deliveries.
-----------------------
(14) Data supporting the Joint Petition were based upon
projections of sales by PP&L. However, recognizing that
after January 1, 1999 sales are being made by other
suppliers, PP&L will base future rate determinations on
the projected level of deliveries, without regard toxic
identity of the supplier.

29. Uncollectibles and Payment Logs. The projection of ITC
remittances must recognize that not all amounts billed to customers are
paid -- i.e., some become uncollectible and that not all amounts billed
to customers are paid on time. The ITC remittances must be sufficient to
permit full payment of all Reconciliation Funding Requirements on a timely
basis over the life of the Transition Bonds. Therefore, the calculation of
PP&L's monthly ITC remittances will reflect both a projection of
uncollectible ITCs and payment lags based upon PP&L's most recent actual
experience. Uncollectible ITCs will be projected separately for two
customer groups: (1) residential, and (2) all other customers. Payment
lags will be projected separately for each of the three customer classes
described above. As with forecasts of deliveries, uncollectible ITC
amounts and payment lags will be updated annually to the extent necessary
to reflect the most recent actual information.

30. Other Expenses. As discussed above, the estimates of fees
and expenses reflected in this Petition are based upon the best information
currently available. Actual costs, to the extent available, will be
reflected in the initial ITC and CTC rates PP&L will file after pricing the
Transition Bonds. However, if circumstances change over the term of the
Transition Bonds, these costs may change. For example, additional credit
enhancements may be required, and additional servicer fees may be required
if an entity other than PP&L is the servicer. As with the other items
discussed above, these posts will be updated annually to the extent
necessary to reflect the most recent actual information.

31. Annual-Reconciliation Methodology.(15) PP&L proposes the
following annual reconciliation procedure beginning in the first full or
partial calendar year of the term of each series of Transition Bonds and
continuing at least until twelve months prior to the last scheduled date
for the payment of principal on the series of Transition Bonds. The
revenue requirements for all series of Transition Bonds will be reconciled
and adjusted jointly to produce a single set of ITCs for each rate schedule
to be applied to PP&L's customers' usage.
----------------------
(15) PP&L currently plans to price the Transition Bonds in
late June or early July and issue the Transition Bonds
approximately five to ten business days thereafter.
Based on that anticipated schedule, the first annual
reconciliation filing would be made on October 1, 1999,
with any reconciliation adjustment to be effective
January 1, 2000. However, if the date for pricing and
issuance of the Transition Bonds is significantly
delayed, the first annual reconciliation adjustment may
not occur until January 1, 2001.

32. Pursuant to the Commission's Order entered on April 10,
1997, at Docket No. M-00960890F.0006, in Procedures for the Annual Review
of the Competitive Transition Charge and for the Periodic Adjustment to the
Intangible Transition Charge ("Review Order"), annual reconciliation
filings are to be made within 45 days of the anniversary date of the QRO.
PP&L's initial QRO was entered on August 27, 1998. The initial QRO
establishes the QRO anniversary date, regardless of the supplemental QRO
requested herein and the dates of any further supplemental QROs. Pursuant
to the Review Order, PP&L proposes to make annual reconciliation filings on
October 1 of each year, which is 34 days after the anniversary date of the
Commission's initial QRO for PP&L. The annual filings will include a
recalculation of the ITCs based upon the most recent forecasts of annual
deliveries, uncollectibles, payment lags and other expenses. The annual
rate adjustment and the reconciliation will become effective for service
rendered on and after January 1 and would remain in effect for one year
(except possibly during the final bond year).

33. For annual reconciliations, the over/under collection of the
ITC revenue requirement will be the net amounts needed (after taking into
account the application of any amount in the Reserve Subaccount) to pay
scheduled principal and interest on the Transition Bonds, and to recover
other Reconciliation Funding Requirements. The Reserve Subaccount,
Overcollateralization Subaccount and Capital Subaccount will provide cash
resources needed to make scheduled payments of principal and interest on
the Transition Bonds as well as other Reconciliation Funding Requirements
in the event ITC remittances do not produce sufficient revenues. The
Reconciliation Funding Requirements will reflect amounts needed to satisfy
any funding requirements of the Overcollateralization Subaccount and to
replenish the Capital Subaccount and such other accounts or subaccounts as
may be required to obtain the AAA-rating, with reasonable credit
enhancements, and to satisfy other associated QTEs, less any amounts in the
Reserve Subaccount.

34. On October 1 of each year, PP&L will file with the
Commission a schedule of actual over/under collections for the nine months
ended August 31,(16) together with an estimate of over/under collections for
the three months ending on the immediately following November 30. As part
of the October 1 filing, PP&L also will present reforecasts of deliveries,
uncollectibles, payment lags and other expenses for the next calendar year.
Payments of principal and interest for PP&L's Transition Bonds, as well as
other Reconciliation Funding Requirements, will be scheduled either
quarterly on the 25th of March, June, September and December of each year
or semi-annually on the 25th of June and December of each year,(17) through
the final stated maturity of the Transition Bonds.(18) The over/under
collections, estimated and actual, will be based upon the amount of funds
needed to pay scheduled principal and interest and to cover other
Reconciliation Funding Requirements on the December 25 following each
October 1 filing.
---------------------
(16) The actual over/under collections also would include
any over/under collections remaining from prior
reconciliations.

(17) These dates are estimated based upon a hypothetical
initial issuance date of July 1, 1999.

(18) If any series or class of Transition Bonds is not paid
in full on the final stated maturity date of that
series or class, payments of principal and interest on
that series or class may be scheduled on the 25th of
each month thereafter until the series or class is paid
in full, and any resulting higher rate of interest
would be reflected in the QTEs.

35. On December 15, PP&L will file actual over/under collection
data as of November 30, replacing the estimates submitted on October 1. As
part of the December 15 filing, PP&L also will submit a tariff supplement
and supporting data setting forth new ITCs to become effective on the next
January 1. Under this procedure, the Commission will have an opportunity
to review PP&L's annual reconciliation filings including revised forecasts
beginning on October 1. Thus, the Commission"s review can be completed and
an order entered within the 90-day period established by the Competition
Act and the Commission's August 27 Order.(19)
----------------------------
(19) 66 Pa.C.S. section2812(4); August 27 Order, p. 16.

36. Interim Reconciliation Filings. Commencing twelve months
prior to the last scheduled date for the payment of principal on each
series of Transition Bonds, PP&L will have the right, at its option, to
make interim reconciliation filings as often as monthly in order to
minimize any possible over/under collection of ITCs until the next interim
reconciliation adjustment becomes effective. These interim adjustments,
which may be monthly or quarterly as determined by PP&L after consultation
with the rating agencies, would continue until the earlier of (1) payment
of all QTEs or (2) December 31, 2009. Such interim reconciliation filings
will become effective on the first day of the next calendar month, with not
less than 15 days' notice. Interim reconciliation filings will be based
upon, inter alia, the cumulative differences between (1) the Transition
Bond revenue requirements, including scheduled principal and interest on
the Transition Bonds and other Reconciliation Funding Requirements and (2)
actual ITC remittances to the Trustee. Interim reconciliation filing
adjustments would remain in effect until the next interim reconciliation
adjustment becomes effective.

37. Section 2812(b)(4) of the Competition Act requires that
periodic adjustments to the ITCs ensure the recovery of revenues sufficient
to pay all scheduled principal and interest on the Transition Bonds and
other Reconciliation Funding Requirements. Paragraph 20 of the August 27
Order (at pp. 21-22) provides, in part, that ". . . PP&L shall adjust the
non-securitized elements of its generation charges, rather than the
Intangible Transition Charges approved by this Qualified Rate Order, to
bring the charges into compliance with the rate cap provisions of 66
Pa.C.S. section2804(4) and the Joint Petition." The Competition Act and the
August 27 Order provide a number of mechanisms to address a situation under
which ITC charges exceed the applicable rate cap. Examples include
adjustment of other rate components and Commission approval of an exception
to the rate cap. However, if these remedies are not adequate to meet the
above-cited requirements of the Competition Act and the Joint Petition,
PP&L will establish a negative CTC such that the sum of PP&L's generation
charges, plus the ITCs required to pay all QTEs, plus the negative CTC will
comply with the rate cap provisions of the Competition Act.

F. APPLICATION OF THE ITCS

38. PP&L will forecast deliveries, uncollectibles, payment lags
and other expenses and apply ITCs for service rendered on and after the
effective date of the ITCs. At the initiation of the ITCs, at the
expiration of the ITCs, and at each ITC rate change, PP&L will prorate a
customer's usage over the billing month based upon the number of days
before and after the ITC initiation, rate change or termination became
effective. In other words, PP&L will apply ITCs, and changes to ITCs, on a
"service rendered" basis, using standard utility proration techniques that
it has used for many years.(20)
-------------------------
(20) As discussed above, PP&L intends to apply ITC charges
on a "service rendered" basis. However, because PP&L
currently is implementing a new computerized billing
system and the rate proration module of that system has
not been fully tested, PP&L initially may be required
to reflect ITC charges on a "bill rendered" basis.

39. PP&L's ITC charges will continue in effect following the
final stated maturity of the Transition Bonds to the extent needed to
recover any remaining unpaid balance of principal, interest or other
Reconciliation Funding Requirements associated with the Transition Bonds.
The ITC charges will be terminated as described above at the earlier of (1)
December 31, 2009, or (2) a report from the Trustee that all required
payments of principal, interest and other QTEs for the Transition Bonds
have been made and the Capital Subaccount is fully funded.

40. If all required payments of principal, interest and other
QTEs have not been made, or the Capital Subaccount is not fully funded by
the final stated maturity of the Transition Bonds, PP&L will continue to
charge the ITCs (including the Reconciliation Funding Requirements) until
the Capital Subaccount is fully funded and all of those payments have been
made in full, but will not continue ITC charges for service rendered beyond
December 31, 2009.(21) Under these circumstances, PP&L, at its discretion,
may adjust the ITC rates to replenish the Capital Subaccount, pay the
outstanding principal and interest, satisfy the funding requirements of the
Overcollateralization Subaccount and pay all other QTEs associated with the
Transition Bonds as quickly as practical.
-------------------
(21) Although ITC charges will be terminated as of December
31, 2009, prorated bills issued in January 2010 will
reflect such charges for service rendered prior to
January 1, 2010, and PP&L will continue to receive
customer payments of such charges and prior charges
in 2010.

41. Due to the existence of the Overcollateralization Subaccount
and the Capital Subaccount, it is likely, though not certain, that the ITC
will be in an overcollected position when the Capital Subaccount is fully
funded and the Transition Bonds and all other QTEs have been paid in full.
Any amounts remaining in the General Subaccount, Overcollateralization
Subaccount and Reserve Subaccount will be released to the SPC. PP&L's
customers will then receive a credit equal to these amounts either through
a reduction in the CTC, or if the, CTC is not available, through a
temporary reduction in PP&L's distribution rates.(22) The credit, if any,
will be allocated among the customer classes in proportion to the amount of
their contribution to the excess.
---------------------
(22) As explained above, the Capital Subaccount will be
funded by PP&L, not customers, and any balance
remaining in that subaccount will not give rise to a
rate adjustment.

G. OTHER APPROVALS

42. In addition to the approvals requested above, PP&L seeks two
additional approvals related to the issuance of Transition Bonds.

a. First, as explained above in Section B, the Transition
Bonds will be issued through an entity separate from PP&L. It is
proposed that the Transition Bonds be issued by an SPC which, when the
Transition Bonds are issued, will be a direct subsidiary of PP&L.
Section 1102(a)(4) of the Public Utility Code requires that a public
utility obtain a certificate of public convenience before it acquires
five percent or more of the voting capital stock of any corporation.
However, in this case, the SPC%rill be a limited liability company
which does not issue "voting stock." It is not clear whether
Commission approval is required for PP&L to acquire a membership
interest in a limited liability

Exhibit B

BEFORE THE
PENNSYLVANIA PUBLIC UTILITY COMMISSION

PETITION OF PP&L, INC. FOR ISSUANCE OF A :
SUPPLEMENTAL QUALIFIED RATE ORDER : DOCKET
UNDER SECTIONS 2808 AND 2812 OF THE : NO. R-00994637
PUBLIC UTILITY CODE :

SETTLEMENT AGREEMENT

WHEREAS, on April 1, 1999, PP&L, Inc. ("PP&L") filed with the
Pennsylvania Public Utility Commission ("PUC" or the "Commission") a
Petition for Issuance of a Supplemental Qualified Rate Order ("Petition")
at the above-captioned docket.

WHEREAS, on April 21, 1999, the Office of Consumer Advocate filed
an Answer in this proceeding.

WHEREAS, on April 21, 1999, the Mid-Atlantic Power Supply
Association filed a Petition to Intervene in this proceeding.

WHEREAS, on April 22, 1999, the Commission on Economic
Opportunity filed comments in this proceeding.

WHEREAS, on April 30, 1999, the PP&L Industrial Customer Alliance
filed a Petition to Intervene in this proceeding.

WHEREAS, the above parties, desiring to resolve their differences
amicably, met on several occasions to discuss possible settlement of this
proceeding.

WHEREAS, as a result of these discussions, the parties have
reached a settlement of all issues which they now present for approval as
part of the Commission's final order in this proceeding.

NOW THEREFORE, intending to be legally bound, the parties agree,
as follows:

1. With the modifications and revisions set forth below in this
Settlement Agreement, PP&L's Petition should be approved.

2. PP&L's request in Paragraph 28 of the Petition to reforecast
deliveries should be approved; provided, however, that any reforecasting
will comply with Section 2804(4) of the Electricity Generation Customer
Choice and Competition Act ("Act"), 66 Pa.C.S.A. section 2804(4) and the
Commission's final order approving the settlement in PP&L's restructuring
proceeding at Docket No. R-00973954. Compliance with the above-referenced
rate cap provision and Commission Order shall be subject to review by the
parties, in accordance with the reconciliation procedures set forth in
Paragraphs 25-37 of the Petition.

3. PP&L's request in Paragraph 29 of the Petition to include a
provision for uncollectible accounts in calculating Intangible Transition
Charges ("ITCs") should be approved; provided, however, that PP&L agrees to
credit Competitive Transition Charges ("CTCs"), as part of the annual
reconciliation of CTCs, in an amount equal to any uncollectible accounts
expense included in ITCs.

4. Interest earned on the General Subaccount, discussed in
Paragraph 13a of the Petition, shall be treated in the same fashion as
interest on the Overcollateralization Subaccount, discussed in Paragraph
13b of the Petition.

5. The amount to be included in ITCs for the Servicer Fee to be
charged by PP&L will be $1.25 million per year. This provision is not
intended to limit the actual Servicer Fee that PP&L may charge the Special
Purpose Company.

6. PP&L's proposed allocation of ITCs to customer classes and
rate schedules shall be approved; provided, however, the parties reserve
the right to review the final ITCs when filed to determine that they in
fact follow the methodology proposed by PP&L in the Petition. Any
subsequent adjustment by the PUC shall be made in ITC reconciliation
proceedings. Nothing in this paragraph is intended to limit PP&L's
ability, in accordance with the Qualified Rate Order and Supplemental
Qualified Rate Order, to impose ITCs sufficient to recover all scheduled
Qualified Transition Expenses on a timely basis.

7. Page 6 of Appendix A to the Petition sets forth estimated
expenses associated with the issuance and maintenance of the transition
bonds. Each of these expense items, other than the PP&L Servicer Fee, will
be adjusted to reflect actual experience. The parties agree that these
categories of expense are reasonable and appropriately recovered from
customers, but the parties reserve the right to review the actual amounts
incurred for reasonableness. Any adjustment made by the Commission shall
be reflected in the CTC reconciliation process.

8. Appendix A to this settlement agreement sets forth several
technical changes to the ITC Reconciliation Rider. The parties agree that
these changes are reasonable and should be approved by the PUC and
reflected in the compliance tariff filed by PP&L when the Transition Bonds
are issued.

9. Paragraph 37 of the Petition authorizes PP&L to impose
negative CTCs under certain circumstances. The parties agree that this
proposal should be approved; provided, however, that any undercollection
associated with the application of negative CTCs will be recovered in
future periods through the CTCs subject to the provisions of Section
2804(4) of the Act and the restructuring settlement, but in no event may
any such undercollection be recovered for service rendered on and after
January 1, 2010.

10. PP&L agrees to offer to manage financial investment activity
of the Sustainable Energy Fund approved in its restructuring settlement at
no cost to the fund. The Board of Directors of the Fund shall determine in
its sole discretion whether to accept PP&L's offer.

11. The Petition sets forth a proposed Supplemental Qualified
Rate Order. The parties agree that this proposed order should be revised
to reflect this Settlement Agreement and to provide additional "true sale"
findings for further transfers of Intangible Transition Property. A
proposed revised Supplemental QRO is provided as Appendix B to this
Settlement Agreement.

12. With the above changes, the parties agree that PP&L's
Petition for Issuance of a Supplemental Qualified Rate Order should be
approved. In order to permit PP&L to issue transition bonds as soon as
possible and begin crediting savings to customers, the parties request
expedited PUC review of the Settlement Agreement and PP&L's Petition for
Issuance of a Supplemental Qualified Rate Order, and approval, to the
extent practicable, at the Commission's May 21, 1999 Public Meeting.

13. This Settlement Agreement is contingent upon the PUC's
approval of PP&L's Application as revised by this Settlement Agreement
without modification.

14. If the Settlement Agreement is approved and the Supplemental
QRO is issued as requested, the parties agree not to seek further
administrative or judicial review of PP&L's Petition.

ITC RECONCILIATION RIDER

Purpose

This Rider provides for reconciliation of the Intangible
Transition Charge ("ITC") revenue recovery.

Application

This Rider applies to the ITC rates included in each Rate
Schedule in this Tariff.

Intangible Transition Charge Adjustment

The ITC rates included in each Rate Schedule will be adjusted
periodically, as described below, to recover amounts sufficient to cover
scheduled payments of principal and interest on the Transition Bonds, and
all other Reconciliation Funding Requirements, as defined below, as well as
the applicable Pennsylvania Gross Receipts Tax on the amount of the ITC, in
full and on a timely basis.

Reconciliation Funding Requirements are amounts necessary to
ensure the recovery of revenues sufficient to provide for the payment of
principal, interest, acquisition or redemption premiums and for other fees,
costs and charges in respect of the Transition Bonds approved by the
Commission in the Qualified Rate Order. The Reconciliation Funding
Requirements reflect amounts needed to satisfy any funding requirements of
the Overcollateralization Subaccount and to replenish the Capital
Subaccount and such other accounts or subaccounts as may be required to
obtain a AAA-rating, with reasonable credit enhancement, for the Transition
Bonds and to satisfy other associated Qualified Transition Expenses
("QTEs"), less any amounts in the Reserve Subaccount which may include
accrued interest on the balance within this subaccount, as well as any
interest that may have been transferred to this subaccount from other
accounts or subaccounts established by the bond trustee.

Annual Reconciliation Procedures

Beginning in the first full or partial calendar year of the term
of the Transition Bonds and continuing at least until 12 months prior to
the last scheduled date for payment of principal on each series of
Transition Bonds, the ITC will be reconciled on an annual basis.

On October 1 of each year, the Company will file with the
Commission a schedule of actual ITC over/under collections for the nine
months ended August 31, together with an estimate of over/Under collections
for the three months ending on the immediately following November 30. As
part of the October 1 filing, the Company also will submit reforecasts of
deliveries, uncollectibles, payment lags and expenses for the next calendar
year. On December 15, the Company will file actual ITC over/under
collections as of November 30, replacing the estimates submitted on October
1. As part of the December 15 filing, PP&L also will submit a tariff
supplement and supporting data setting forth ITC rates to become effective
on the next January 1.

This reconciliation will be conducted separately for each of the
following three Customer Classes: (1) residential; (2) small commercial and
industrial, including street-lighting customers; and (3) large commercial
and industrial. Any over/under collection for a Customer Class will be
allocated to each individual Rate Schedule included within that Customer
Class based upon the ratio of (1) the cumulative ITC over/under collection
applicable to the Customer Class to (2) the projected ITC revenues for the
Customer Class for the period during which the ITC reconciliation factor
will be applied. Any over/under collection for an individual Rate Schedule
will be reflected In the ITC rates for that Rate Schedule, which will
become effective for service rendered on and after January 1 and will
remain in effect for a period of one year or until new ITC rates are
approved by the Commission.

Interim Reconciliation Procedures

During the last 12 months of the scheduled term of each series of
Transition Bonds and continuing until the ITC is terminated, the ITC will
be reconciled on a quarterly or monthly basis, at the Company's option.

On the 15th day of the month immediately preceding the quarter or
month to be reconciled, the Company will file with the Commission a
schedule of actual ITC over/under collections for the immediately preceding
application period. Any ITC over/under collections will be determined and
allocated in the same manner as described above for the Annual
Reconciliation. Any ITC over/under collection for an individual Rate
Schedule will be reflected in the ITC rates for that Rate Schedule and will
become effective for service rendered on and after the 1st day of the
applicable quarter or month.

Termination of the ITC

The ITC rates will continue for each Rate Schedule until the
earlier of December 31, 2009, or the payment in full of Transition Bond
principal, interest and all other associated QTEs and replenishment of the
Capital Subaccount allocated to that Rate Schedule. After the Transition
Bond principal, interest and all other associated QTEs have been paid in
full and the Capital Subaccount has been fully replenished, any
overcollection of ITC revenues, including an amount equal to the balances
(plus any accrued interest) remaining in the General Subaccount, the
Overcollateralization Subaccount and the Reserve Subaccount, will be
reflected in the reconciliation of the CTC for the calendar year in which
the Transition Bond principal and interest were paid in full or through a
temporary reduction in distribution rates.

If all required payments of principal, interest and other
associated QTEs and replenishment of the Capital Subaccount have not been
made by the final stated maturity of the Transition Bonds, PP&L will
continue to charge the ITC (including all Reconciliation Funding
Requirements) until the Capital Subaccount has been fully replenished and
all of those payments have been made in full, but will not continue ITC
charges for service rendered beyond December 31, 2009. During any such
default period, PP&L may adjust the ITC rates to pay the outstanding
Transition Bond principal and interest, and all other Reconciliation
Funding Requirements, as quickly as practical.

Rate Design

Any ITC over/under collection or change in deliveries,
uncollectibles, payment lags or expenses applicable to an individual Rate
Schedule under the Annual Reconciliation Procedures established in this
Rider will be applied to the ITC rates for that Rate Schedule in a manner
that maintains, to the extent possible, the rate design of and the
relationship among rate components in the Rate Schedule that existed prior
to, application of the adjustment to the ITC rates.

Any ITC over/under collection applicable to an individual Rate
Schedule under the Interim Reconciliation Procedures established in this
Rider will be applied to the ITC rates for that Rate Schedule as a single
usage-bated charge or credit to the ITC rates for that Rate Schedule.

Review by the Commission

Within thirty (30) days of the end of each calendar year quarter,
PP&L will file with the Commission a report of actual ITC over/under
collections for the immediately preceding calendar year quarter.

Filings made by the Company pursuant to the procedures
established in this Rider are subject to review and audit by the
Commission, which review and audit must be concluded on a timely basis so
as to permit implementation of changes in ITC rates by the applicable
deadlines established in this Rider.